Why CEOs Tend to Make Bad Politicians

You’d think that with the presidency of Donald Trump, this country would have gotten over the idea of putting a wealthy CEO in the Oval Office. But perhaps people recognize that Trump was actually a failed businessman who only got by on the inheritance from his father and the support of Russian oligarchs. So now we face the specter of successful CEOs like Michael Bloomberg and Howard Shultz entering the 2020 presidential race.

When people suggest that our government should be run more like a business, they ignore critical ways that our democracy operates on principles that require a totally different set of skills. That is the point Nick Hanauer just made.

I wanted to riff on why business people like Howard Shultz usually make terrible political leaders. Put aside Howard’s policy positions on economics which are straight up trickle down economics. I have spent my entire life both building businesses AND doing policy and politics. Today, I run a team entirely devoted to policy and politics. What I can tell you is that the tow [sic] domains are completely different, and require profoundly different skills.

The biggest difference is that in business, everyone who surrounds you WORKS FOR YOU. You can fire them, at any time. As a business leader, you define the goals, the culture, the terms of service, everything. If people do not comply, you fire them or they leave…

There is a particular type of personality and ego type that ends up being a charismatic business leader. These people are usually the last people who you would want to put in charge of a democratic process…

Running businesses well is super hard. The people who do it well are often extremely talented. But good ballet dancers are also extremely talented. We do not often recruit them to run large businesses. Be highly suspect of business leaders as political leaders.

Hanauer did a better job of describing the skill set that is necessary to succeed in business. But former PespsiCo CEO Indra Nooyi explained how being president is very different during an interview with Fareed Zakaria back in 2011. Zakaria asked Nooyi what she thought about President Obama as a leader.

NOOYI: I think he’s a remarkable individual, but let me put this in context, Fareed. Just imagine that you are the CEO of a company. Just bear with me for a while, while I talk you through the story. Imagine you are the CEO of a company and your executive team, half want you to succeed, half want you to fail.

ZAKARIA: Republicans and Democrats.

NOOYI: Yes. And then imagine that your functional team, you can’t hire them without the approval of your executive team.

ZAKARIA: Half of whom want you to fail.

NOOYI: That’s exactly right. Also imagine that every word you say is debated in the public media every minute of the day. Also remember that your board of directors is a fragmented group who really cannot get together to fire the executive team if they don’t tow your line.

ZAKARIA: The American public.

NOOYI: That’s exactly right. That’s the environment in which the president of the United States is working today. It’s not as if the president is maintaining a successful country. The president is turning around a difficult situation. So all things considered, you’d say he’s doing a pretty good job.

I promise not to make too big of a deal about the fact that the one CEO who happens to really understand the difference between running a business and running a country is also a woman of color. I’ll simply note it in passing.

Based on what I’ve seen so far, I don’t tend to agree with either Bloomberg or Schultz on several important issues. But at least Bloomberg, having been a mayor, understands that the road to his aspirations of being president begins by gaining the support of Democrats to win the primary. Schultz has already abandoned all of that and has assumed that he alone can speak for that ubiquitous “silent majority” that so many politicians assume is out there.

The arrogance and bothsiderism of that was pointed out by none other than Matthew Dowd, who has been both a Democrat and a Republican, but now identifies as an independent.

In the end, Schultz is behaving exactly as one would expect from someone who has become accustomed to the power of being a CEO. Rather than debate and compromise within the Democratic Party, he is contemplating running for president all on his own. That is precisely the kind of thing that makes CEOs bad politicians.

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Nancy LeTourneau

Nancy LeTourneau is a contributing writer for the Washington Monthly. Follow her on Twitter @Smartypants60.