Economy

Business Leaders Build Trust, Politicians Compel Compliance

P .J. O’Rourke, renowned for delivering insightful commentary with humor, recently passed away. In his book Parliament of Whores he delivered this zinger about authority:

Authority has always attracted the lowest elements in the human race. All through history, mankind has been bullied by scum. Those who lord it over their fellows and toss commands in every direction and would boss the grass in the meadow about which way to bend in the wind are the most depraved kind of prostitutes. They will submit to any indignity, perform any vile act, do anything to achieve power. The worst off-sloughings of the planet are the ingredients of sovereignty. Every government is a parliament of whores. The trouble is, in a democracy the whores are us.

During Covid, it is hard to argue with the idea that we have been “bullied by scum” who will stop at nothing to achieve more power.

The unvaccinated have had a bullseye on their backs as politicians whip up tribal us vs. them thinking. Their Prime Minister Mario Draghi would cast out unvaccinated Italians: “The unvaccinated are not part of our society.” 

Canada’s despotic Prime Minister, Justin Trudeau, had no worries about going over the top when he said this about the unvaccinated: “They don’t believe in science/progress and are very often misogynistic and racist. It’s a very small group of people, but that doesn’t shy away from the fact that they take up some space. This leads us, as a leader and as a country, to make a choice. Do we tolerate these people?”

In 2013, Trudeau expressed his envy of the Chinese Premier’s dictatorial powers. Trudeau imagined he would only use such force to implement a green utopia: “There is a level of admiration I actually have for China because their basic dictatorship is allowing them to actually turn their economy around on a dime and say we need to go greenest fastest.” 

Like his Canadian colleague, President Biden has worked overtime following the totalitarian playbook of dividing people with us vs. them demagogic rhetoric. Biden is certain the unvaccinated will be punished, if not by his mandates, then by his reading of “the science” tea leaves: “We are looking at a winter of severe illness and death for the unvaccinated.” 

The French President Emmanuel Macron merely wants to “piss off” those who make different choices: “The unvaccinated, I really want to piss them off. And so, we’re going to continue doing so, until the end. That’s the strategy.”

Can you imagine a business leader wanting to “piss off” his customers? Can you imagine business leaders pronouncing they won’t “tolerate” those who won’t buy their products? These questions are, of course, ridiculous. 

Business Leaders Check Their Ego

For decades, business leaders have shifted away from coercive leadership styles, common among politicians, in favor of collaborative organizational cultures. 

Suppose you are a new MBA seeking a career in business. During a job interview, you are asked this question: What type of leadership style do you value? Your business career would be jeopardized if you answered, “I’d like to be an iron-fisted authoritarian who rules by decree and seeks no input from my employees on any strategic matters whatsoever.”  

As Donald Walters observes in his book The Art of Leadership, if you associate leadership with privilege and power, you may “have the necessary instincts to command a flock of sheep, or to hold determined sway over a band of cut-throats (each of whom will, of course, be merely biding his time until he can cut your throat and grab your position).” Exercising authoritarian privileges is not the aim of genuine leaders.

Individuals driven to gain and exercise destructive power are far more common in politics than in business. The question is, why?   

In business, most employees do not want to work for authoritarian leaders, and most leaders do not want to lead in such a manner. In a classic Harvard Business Review article, Daniel Goleman reported the findings from a survey of nearly 4,000 executives. The executives said that “coercive leaders” were the most disliked. Such business leaders were reputed to create “a reign of terror, bullying and demeaning… roaring… displeasure at the slightest misstep,” negatively impacting organizational culture. Moreover, the survey respondents said coercive business leaders were usually the “least effective.” 

Contrary to what many think, humility is a trait highly valued in business. The late Harvard professor Clayton Christensen, famed for his work on innovation, observed that “humility was defined not by self-deprecating behavior or attitudes but by the esteem with which you regard others.” When we need a mindset correction, this understanding of humility is a healing balm as we become increasingly aware of leadership mindsets that do not serve our organization. 

Humility helps leaders realize, as Friedrich Hayek instructs, the knowledge needed to make decisions is dispersed. In business, collaborative leaders recognize and draw from the deep well of knowledge and skills found within the organization’s people. In politics, authoritarians try to impose their will on others.

In his book Good to Great, Jim Collins examined high-performance companies. These companies had returns, sustained for 15 years or more, of about 7 times the market’s average return. Collins found such companies were led by what he calls Level 5 leaders. Level 5 leaders, Collins explains, successfully blend extraordinary “personal humility and professional will.” Collins found that every organization with a Level 5 leader had transformed itself from a “good to great” organization.

Collins’ research showed that leadership “will” is not about personality or personal greatness. In interviews he conducted, Collins observed outstanding leaders didn’t talk about themselves, while other less-effective leaders were extremely “I-centric.” “I-centric,” who accepted all the credit for success in their organizations and shifted all responsibility for failures to malevolent forces external to themselves. 

If Level 5 leaders are so valued in business, why are “I-centric” leaders the norm in politics? President Biden ran as a unifier, yet as President he has continued his Senatorial behavior, as one opposing politician put it, “of bullying opponents and demagoguing those who disagreed with him.” This observer continues, Biden “was focused on accruing power, not bridging differences or taking courageous stands.” He is notoriously thin-skinned, objecting with anger at the mildest of questions from reporters who dare question him. 

Recently Biden shared a bizarre story of how early in his political career, he got revenge on a complaining Republican by placing a dead dog on the front porch of the person’s home. Biden’s story reveals the mindset of politicians. A business leader to be successful adopts a mindset of empathy to discover and fulfill the highest needs of consumers. A political leader adopting a mindset of revenge can rise to the office of President. 

In his book Wired to Care, Dev Patnaik examines profitable companies and argues that their success “requires them to leave their own agendas behind, and actually care about how other people see the world.” Patnaik points out that, “Empathy drives growth because it tells an organization what’s valuable to the people outside its walls.” 

Empathy is a rare trait in politicians. No wonder a recent Pew Research Center survey reveals that only two percent of adults have a “great deal of confidence” that elected officials can be trusted “to act in the public’s best interests.” To be fair, confidence in business leaders is not much higher, but the survey does not distinguish between crony firms, such as Pfizer, and firms acting relatively free of government favor, such as L.L. Bean. Cronies are subsidized or protected by government; they are not constrained by market forces.

Trust

Trust is an essential ingredient for business success, writes Rich Karlgaard in The Soft Edge: Where Great Companies Find Lasting Success:

Decades of research have highlighted the central role of trust in organizations. At the micro level, trust has been linked to outcomes like employee satisfaction, effort and performance, office citizenship, collaboration and teamwork, leadership effectiveness, and negotiation success. At the macro level, trust has been credited as a driving force in organizational change and survival, entrepreneurship, strategic alliances, mergers and acquisitions, and even national economic health.

Similarly, in The Speed of Trust, Stephen M.R. Covey makes the business case for growing a high-trust culture. Lack of trust is like a tax on an organization because it increases the cost of “communication, collaboration, execution, innovation, strategy, engagement, partnering and relationships with all stakeholders.”

In short, as A. G. Lafley, former CEO of Procter and Gamble, explained in Playing to Win, integrity and trust are “the fundamental basis for doing business with consumers, customers, partners, suppliers, and each other.”

Except if you are selling crony products, you will need to cultivate consumer trust. Lafley wrote, 

I explicitly placed the consumer at the center of it all. I prioritized the consumer ahead of all other stakeholders, including customers, shareholders, and employees. I started with consumers, because the purpose of a business is to create consumers and to serve them better than anyone else can. No consumers, no business.

In his Forbes essay “A Virtuous Cycle,” James Surowiecki helps us understand why trust is so essential. Using examples from history, he shows how it came to be that under capitalism, “observant businessmen came to see, being trustworthy was more lucrative than being Machiavellian. Honesty was the best policy.”

Being trustworthy doesn’t depend on a business being led by good people. Surowiecki observes that being trustworthy arose as a foundation for good business “because the benefits of trust—that is, of being trusting and of being trustworthy—are potentially immense and because a successful market system teaches people to recognize those benefits.” He continues to explain why trust is essential in markets:

At this point, it’s been well demonstrated that flourishing economies require a healthy level of trust in the reliability and fairness of everyday transactions. If you assumed every potential deal was a rip-off or that the products you were buying were probably going to be lemons, then very little business would get done. More important, the costs of the transactions that did take place would be exorbitant, since you’d have to do enormous work to investigate each deal and you’d have to rely on the threat of legal action to enforce every contract. For an economy to prosper, what’s needed is not a Pollyannaish faith that everyone else has your best interests at heart–“caveat emptor” remains an important truth—but a basic confidence in the promises and commitments that people make about their products and services.

We might leave it at that and conclude that politicians will never be trustworthy because the government’s power of coercion backs their actions. 

Yet throughout history, a few political leaders have stood out who were motivated by deeper values despite having the power of coercion. We can learn from them, not because it is likely that other politicians will learn from their example, but because through their example, we see why our current leadership, devoid of human decency, deserves our scorn. Roman Emperor and Stoic philosopher Marcus Aurelius is one such politician. 

Aurelius left us a record of his thinking in his timeless Meditations. I would subtitle his book A Guide to Subtracting Dysfunctional Thinking, because Aurelius reflected on all the mindset barriers he worked daily to overcome. In markets, those leaders who cannot subtract their dysfunctional thinking tend to fail; in politics, they may thrive. Business leaders must challenge the judgments that cloud their mind lest they make poor decisions. Politicians, such as Trudeau and Biden, can run with their judgments without a shred of humility to stand in their way.

Remember, Aurelius wrote his Meditations as a guide to correct himself. He never thought others would read his wisdom. “Keep reminding yourself,” he wrote, “of the way things are connected, of their relatedness. All things are implicated in one another and in sympathy with each other.”

Like other Stoics, Aurelius believed that “Everything is interwoven, and the web is holy; none of its parts are unconnected. They are composed harmoniously, and together they compose the world.”

Aurelius admonished himself: “Stop being aimless, stop letting your emotions override what your mind tells you, stop being hypocritical, self-centered, irritable.”

“Hypocritical, self-centered, irritable” describes almost all political leaders. While claiming to care for others, today, the Covid policies endorsed by most politicians rip off that veneer.

Markets without coercion work harmoniously. While pursuing their interests, business leaders have an incentive to serve the welfare of others. Business leaders challenge their assumptions. Politicians act on unexamined assumptions and compel others to obey. In Aurelius’ words, “We need to eliminate unnecessary assumptions…to eliminate the unnecessary actions that follow.”

The Roman historian Herodian explained that Aurelius walked the walk, “Alone of the Emperors, he gave proof of his learning not by mere words or knowledge of philosophical doctrines but by his blameless character and temperate way of life.” 

Because examples such as Aurelius are so rare in politics, we can see why America’s Founders believed politicians were never to be trusted. The powers given to government were carefully delineated and checked. 

Today, we are witnessing a dramatic expansion of government power. In America, because of vaccine mandates, healthcare workers and others who put their lives at risk during the pandemic’s peak have been cruelly fired. In Trudeau’s Canada, personal savings have been seized and lives altered of citizens who merely made a donation to support the truckers’ protest. Unchecked political egos, devoid of empathy and driven to increase authoritarian power, should never be allowed to abuse the public. 

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