Autocracy vs. Democracy

By Dee Dee Myers, Vanity Fair

11 August 12

s the 2012 presidential campaign enters the home stretch, Mitt Romney, self-described "business guy," continues to press the case that he is more qualified to lead the nation out of its economic doldrums than Barack Obama, who has spent his entire career in either government or not-for-profit institutions. Romney's argument is at once utterly familiar - and somewhat unexplored.

So I set out to explore it. What skills make someone successful in business? And how are they similar - or different - from the skills that make someone successful in politics? I decided to pose these questions to people who have had successful careers in both.

Autocracy vs. Democracy

Jack Markell, the governor of Delaware who was a technology and financial-services executive before running for state treasurer in 1998, when asked about the similarities, ticks off five "big things" that he believes are essential to both: a compelling vision, the ability to lay out a plan for getting there, the ability to bring people together - and to hold them accountable - and a tolerance for ambiguity. "You have to make decisions based on imperfect information, since that's what you have," he explains. "If you wait for perfect information, in business, a competitor will pass you, and in government, problems will go unsolved."

Erskine Bowles agrees. In both worlds, "you have to be organized, structured, and focused," he tells me. "You have to set goals, objectives, and timetables. And you have to hold people accountable." Like Romney, Bowles ran a private-equity firm before joining the Clinton administration in 1992, where he led the Small Business Administration and served as chief of staff. He later ran unsuccessfully for the United States Senate, served as chancellor of the University of North Carolina, and led the Simpson-Bowles Commission in crafting a bipartisan plan to reduce the federal debt and deficit.

But the similarities, though real, have their limits, Bowles says. "You can make government operate in a more business-like manner, but you can't operate it like a business." Perhaps the differences begin with credentials. "Business people have to stay with something and move up gradually; you can't leapfrog," explains Bill Daley, who has moved back and forth between the private sector (as a lawyer and financial-services executive) and the public sector (as a Cabinet secretary and White House chief of staff). "In politics, you can be a state senator and decide you want to move up and run for the U.S. Senate and then for president. You can't do that in the private sector," he says.

Once in office, the process for making and implementing decisions takes on a life of its own. "In business, there is a pretty stable group of factors - employees, shareholders, customers, competitors," says Senator Mark Warner of Virginia, who co-founded the telecom company that became Nextel before running for office. "In politics, there are way more": Congress, the public, the press, advocacy organizations, and political parties, to name a few. And leaders have little or no control over any of them.

"The power to persuade is essential to politicians," says Amy Gutmann, president of the University of Pennsylvania and author of the recent book The Spirit of Compromise. "Businessmen also need the power to persuade, but they can get away with focusing on a narrower group than politicians."

"Business is a more autocratic environment," Bowles says. "You and your team make a decision, get buy-in from the board, everybody pulls together, and you get it done. But in politics, you have 535 directors, and they manage every line item in your budget. If they don't approve, you can't get it done. And even if they do approve, it takes forever." Daley adds, "Half of them are constantly trying to undermine your strategy and get you out."

The Art of the Deal

And they do it publicly. "In business, that almost never happens," Bowles says. Politicians quickly learn that almost every aspect of their work unfolds in public, from the application process on the campaign trail to the public debate surrounding every decision. That's not true in business, says Daley. "If Jamie Dimon wants to develop a new strategy, he does it in private. He has to execute that strategy, and he'll be held accountable for the results. But the decision-making process happens behind closed doors."

Not so in politics. And the exposed nature of life in the public square affects leaders' attitudes toward risk - and failure. "In business, you have to take risks. Smart risks, but you have to figure out how to make things happen - or the competition will," says Markell. In government, he says, all the incentives run toward caution. So you need to communicate that it's O.K. to take risks - that it's O.K. to fail. "You have to change the culture," he says.

That's difficult when "every mistake winds up on the front page of The Wall Street Journal or The New York Times," Bowles explains. And then in an opponent's television commercial.

The power to persuade includes the ability to forge consensus - and to compromise. Business leaders who go into politics have to "unlearn the idea that because you think it's right, it will therefore happen," Markell says. You have to listen, to bring people along, including the legislature and the public. And you have to be flexible and willing to include other people's ideas - even when you don't agree. "Business leaders who say they will be the C.E.O. of their state will be in shock. We are here to lead, not command."

Amy Gutmann believes that even though compromise is synonymous with governing, it's become a dirty word - thanks to the rise of what she calls the "permanent campaign." Campaigning and governing require different skills. To succeed at the former you need to articulate a vision, you need to persuade and inspire. To succeed at the latter, you need to execute. "No business leader can survive without executing on a vision," she explains. "But in campaigns, politicians get elected all the time without governing."

That's why having a business leader as president is often so appealing to voters. "There is a bottom line in business," Guttman says. "The electorate is sick and tired of electing people who articulate an idea but can't do anything to get it done."

There's a presumption among voters that people with business experience "won't waste money and that they can read a balance sheet - which is always a great applause line," Warner explains. The "operational parts of the job" can, in fact, be run like a business. "But there are other parts that can't."

Campaigns often make standing on principle the highest of virtues - and listening to your opponents a sure sign of weakness. It's the virtual opposite of what it takes to succeed in office. Squaring the circle takes a powerful combination of skills. But presidents who can campaign and compromise are generally the most successful.

Guttman offers two examples: President Reagan and the 1986 tax-reform bill and President Clinton and the 1997 bipartisan budget agreement. In each case, the president set a broad goal - and convinced both sides that it was important enough to sacrifice dearly held principles to achieve it. While both presidents were at times accused of selling out by their own sides, they are now held in high regard for their ability to bring people together - and to get things done.

Of course, bringing people together means building trust. And that takes an enormous amount of time - more than most C.E.O.'s are used to spending, Bowles says.

But ever the politician, President Clinton understood this, he adds. And in the run-up to the 1997 budget deal, Clinton made him spend "months and months locked in a conference room" with Republican congressional leaders, Speaker Newt Gingrich and Senate Majority Leader Trent Lott. The effort paid off.

Soft Costs

If the process of making and implementing decisions - and the skills required to do both - are different, so too are the measures of success. "A dollar in versus output doesn't equate the same," says Warner. In politics, you have to have a longer timeline. Successful politicians don't think in terms of this quarter or even this year, Warner says. "If a road takes five years to build, and provides 30 years of service, how do you measure its value?"

There are also a lot of what Warner calls "soft costs" in politics. "What responsibility do you have to the less fortunate?" he asks. And what do you do when you can't disown the least productive members of society? "You can't just say, ‘You're no longer an American.'"

There are people in the public sector with a range of experiences that have no equivalent in business, but are essential to governing, like keeping a kid in school or helping someone get and hold a job. The value of those skills can't easily be measured against a bottom line. But leaders, regardless of background, need to understand that they're important.

Everyone I spoke to agreed that if people with business experience think they're going to run government like a business, whether at the local, state, or federal level, all agreed they're bound to fail. It might sound good on the stump. But the very notion misses the profound and important differences in objectives, culture, structure, incentives, obstacles, and stakeholders. So: business vs. politics? It's clear that the skills overlap. But they aren't the same.