Strategic Management in a Time of Trump: Four Takeaways
Tuesday 6 November 2018 will be a landmark day.
As well as being Melbourne Cup Day it is the day on which the United States mid-term elections will be held.
The mid-terms are a bellwether event: a cross-roads at which a major Western society chooses to continue along a pathway that has emerged and gained massive traction over the past couple of years; reverts to a more standard form of political discourse and functioning; or takes yet another turn down a different (third) route. It is therefore an ideal time to take stock, and identify some perspectives on what’s happening from the point of view of strategic management.
The pathway of the last couple of years to which I refer is of course the seismic shift in both the form and substance of politics represented by Brexit and Trump politics, which has seen:
- A rise of nationalist and protectionist tendencies
- Relatedly, a rise in populism (especially in relation to matters of race and immigration), jingoism and ‘prairie politics’
- A ‘loosening’ of the standards of behaviour and conduct at the highest levels of political leadership, an associated casualisation in the use of language, and a marked reduction in the importance of facts, evidence and expertise, and
- The de-integration of the West, most particularly in English-speaking countries, and its retreat from a leadership role internationally.
This will not be news to most readers. While this e-newsletter focuses on strategy, management, organisational development, and other issues of relevance to executives and senior managers (rather than political commentary or partisan polemics) shifts in the environment provide fodder for strategic consideration and learnings for decision-makers.
In both the managerial and political spheres, leadership, goal clarity and the marshalling of human effort into joint purpose are paramount: therefore there are takeaways for executives and managers from what we see in the political sphere…
1. On Competence in Operations and Marketing
It is no secret that there is chaos in the White House. There has been a procession of high-level staffing departures and firings, mixed and incoherent messaging coupled with sudden about-faces in positions. In the face of this chaos, the question can reasonably be posed: how could Trump amass and manage such a fortune in real estate and business (which indicates some level of competence) when the West Wing is liable to such disarray?
The answer is twofold.
In the first instance, as a recent and extensive New York Times investigation published in early October 2018 has laid out, it was Trump’s father Fred who built the Trump fortune and bank-rolled virtually every one of Donald’s ventures. Owing to a series of family trusts and complex web of financial arrangements, Donald was a millionaire by the age of 8, and by the age of 29 had collected nearly US$9 million from his father. By 1990, Fred Trump had transferred US$46 million (in today’s dollars) to Donald.
Fred also bailed son Donald out of his financial troubles. In one notable instance in 1990, Donald Trump’s Castle casino did not have sufficient funds to make a bond payment: father Fred arranged for $3.35 million in chips to be bought which were not gambled, so stocking the reserves of the ‘house’ and avoiding default on the bond.
In all, the New York Times identified 295 streams of revenue by which Fred Trump enriched Donald over five decades. The competence and business operations were managed, bankrolled or rescued by Fred Trump. The myth of Donald trump as self-made man (and by extension, the associated picture of business and operational competence) has been dispelled.
Secondly, Donald Trump’s greatest skill is his marketing and ability to generate publicity and profile. He is a marketer and campaigner par excellence. Many of his real estate deals are not actual developments carried out by him or his companies, they are developments completed by others to which he has a licensing agreement for his name to be used and signage rights granted for a fee. Thus, his expertise is in propagating his name and profile, not in executing property developments. Many of the much-vaunted deals – especially of recent years – are not real estate deals, but marketing arrangements.
The takeaways:
- Marketing, profile and publicity are critical at any time, but most particularly their importance in the age of social media and real-time news cannot be understated. Perceptions count, and issue-framing, marketing and publicity are key drivers of results in business, not-for-profits and some Government organisations.
- This critical role of marketing is an adjunct to – and not a substitute for – operational competence, and coherence in strategy and process.
2. On Stakeholders: Knowing and Engaging Them
Regular readers of this e-newsletter will be familiar with the importance placed on identifying and managing stakeholders – those who have ‘skin in the game’ of accomplishing your goals and priorities (either as a supporter or detractor).
The chaos noted earlier – and in particular the string of departures and firings – speaks to the importance of knowing and positively engaging your stakeholders.
Immediately after FBI Director James Comey was fired in 2017 an unnamed source inside the FBI was quoted as saying that Trump had “essentially declared war on a lot of people in the FBI … I think there will be a concerted effort to respond over time in kind.”
Comey was, of course, instrumental in the setting up of the special investigation into Russian interference in the 2016 election (the Mueller Inquiry). Other intelligence officials at odds with the administration include Andrew McCabe (former Deputy Director of the FBI), James Clapper (ex-Director of National Intelligence) and John Brennan (former Director of the CIA).
Added to these are the mainstream media who have been pilloried for trading in ‘fake news’.
Just one moment’s thought about the combination of the above two stakeholder sets shows what instability the White House has created for itself: an intelligence community (whose day-to-day business inherently involves large scale access to confidential information and clandestine operations) and a mainstream media alienated and disparaged by the President who are hungry for copy, and you can see what a significant ‘track’ of resistance the administration has created for itself.
Throw in racial minorities and those from lesser-developed countries (“s***hole countries in Africa”), the justice bureaucracy (Rod Rosenstein) and the corporate sphere (Rex Tillerson) and you have significant pockets of alienated people and institutions who can make life more difficult for you than it would otherwise be.
The takeaway:
Know and manage your stakeholders, whether that means cultivating, engaging or neutralising them. Know where you’re vulnerable. Make your stakeholders part of your plans. The ‘shared-power world’ we inhabit where there are many players – but none with absolute control – means that marshalling disparate forces into joint performance is necessary for success: know that, and get good at it.
3. On Leadership and Barbarism
‘… malignantly fortified by the deliberate cultivation of a neo-barbarism in themselves…’
This phrase – penned many years ago by historian Arnold Toynbee – was made in reference to the Italian Fascists’ military foray into Ethiopia in 1935.
However the phrase has an eerie resonance today, with outbreaks of partisan and extremist violence including Charlottesville in 2017 and the shooting last Saturday at a synagogue in Pittsburgh which was the worst anti-Semitic incident in US history.
In 2016, then-candidate Trump told audience members on the day of the Iowa caucuses in the Republican primaries that he would pay their legal fees if they “knocked the crap” out of protesters. In the same year he warned that his supporters “could riot” if he didn’t receive the Republican nomination for the presidency.
Whether through actively inciting violence, or providing tacit support via the absence of condemnation, or creating a general climate of hostility and unrest, what is clear is that neo-barbarism requires leadership and ‘deliberate cultivation’.
The role of leadership is vital, both in its positive and negative displays. Leadership is a prerequisite for any marshalling of human effort (creative or destructive). It sets direction and tone.
What is being enabled and sponsored by leadership in your organisation?
The takeaway:
What leadership needs to be enabled – or disabled – in your organisation or institution?
4. On Legitimacy and Credibility: Their Decline and Creation
There has been a well-documented decline in the legitimacy and credibility of political institutions in the West; trust in institutions has tangibly been on the decline. Think of the declines in trust of corporates (the governance lapses of Enron and others in the early 2000s, and most recently, the Royal Commission into Banking), and the church and various hitherto trusted civic groups (Royal Commission into Institutional Responses to Child Sexual Abuse).
A global study of trust – the Edelman Trust Barometer – identified in early 2017 that:
Trust is in crisis around the world. The general population’s trust in all four key institutions — business, government, NGOs, and media — has declined broadly, a phenomenon not reported since Edelman began tracking trust … in 2012.
A year later the Edelman study revealed ‘a world of seemingly stagnant distrust. People’s trust in business, government, NGOs and media remained largely unchanged from 2017 — 20 of 28 markets surveyed now lie in distruster territory.’
Credibility, it seems, is in short supply.
The upshot for executives and decision-makers is that in an increasingly trust-deprived world, it is more important than ever that we create credibility in our own organisations and institutions. The task is to generate our own localised sources of trust and legitimacy. Doing this means having a mission which is lived through the day-to-day functioning of the organisation and with which we keep faith with our clients and stakeholders. It also entails having clearly identified performance standards (specified ahead of time rather than after the fact) and tone-at-the-top which conveys confidence, expertise, and the kind of benevolent leadership conducive to productive long-term relationships.
This is of course easier said than done, all the more in the context of fraying institutional legitimacy. But that only makes the task that much more urgent.
The takeaway:
In a trust-deprived world, it is incumbent on executives and decision-makers to generate their own localised sources of credibility. Legitimacy is won, rather than inherited, and an organisation or institution’s animating impulse, values, performance standards, skills, and place in its environment must all be thought-through and constantly re-evaluated.
* * *
These are challenging times and the strategic environment is in many respects more complex than anything in living memory. When you watch the Melbourne Cup (the race that stops a nation) spare a thought for the takeaways associated with the mid-term elections (the race that stops a civilisation?).
Whatever the results, I hope this e-newsletter helps you gain your bearings in the new and demanding environment in which we find ourselves.
Warm regards,
Michael
References:
David Barstow, Susanne Craig and Russ Buettner (2018) ‘Trump Engaged in Suspect Tax Schemes as He Reaped Riches From His Father’ New York Times 2 October.
Barbara C. Crosby and John M. Bryson (2005) Leadership for the Common Good: Tackling Public Problems in a Shared-Power World Jossey-Bass.
Edelman Trust Barometer www.edelman.com/trust-barometer accessed 29 October 2018.
Philip Rucker, Ashley Parker, Sari Horwitz and Robert Costa (2017) ‘Inside Trump’s Anger and Impatience — and his Sudden Decision to Fire Comey’ The Washington Post 10 May.
Arnold Toynbee (1987) A Study of History: Abridgement of Volumes I-VI Oxford University Press, p.162.
© Michael Carman 2018