Friday, July 07, 2006

President Bush has a Harvard MBA

President George W. Bush is the very first President to hold a Masters Degree in Business Administration. Even better (or worse, depending on your perspective), his MBA is from Harvard Business School, where postgraduate management training was invented in the early part of the last century, and which to many stands as a symbol of the good, the bad, and the ugly faces of modern management. Harvard MBAs indisputably lead more major corporations, receive higher starting salaries fresh out of school, and carry with them more élan and glamour than the graduates of any rival business schools Рfacts which do not necessarily lead to admiration and love.

The comparatively small amount of attention paid by the political press to the President’s Harvard MBA partially reflects a generalized ignorance of, and hostility toward, the degree itself. More importantly, acknowledging that he learned any valuable intellectual perspectives would contradict the storyline that young W was a party animal, who coasted through his elite education, scarcely cracking a book. In other words, as the left never tires of claiming, he is too “stupid” to have picked up any tricks across the Charles River from Harvard Square.

There is simply no way on earth that the son of the then-Ambassador to China (technically, head of the Beijing Liaison Office), or anyone else, could have coasted through Harvard Business School with a “gentleman’s C.” I never, ever heard of a case of an incompetent student being allowed to graduate, simply because a certain family was prominent. On the contrary, I did hear stories of well-born students having to leave prior to graduation. The academic standards were a point of considerable pride.

An inability to learn and apply the lessons of the classroom and the voluminous nightly study materials, from regression analysis to strategy-formulation to marketing to human behavior in organizations, was simply not tolerated. Grading took place on a strict curve, and those who found themselves on the lower range of the curve in too many subjects hit the dreaded “screen” and had to supply convincing rationales to the Academic Performance Committee as to why they should be allowed to attend the second year of the program, much less graduate. The screen was a vital component of the HBS quality assurance program, itself an essential method of protecting the value of the school’s MBA “brand.” Harvard Business School would no sooner voluntarily graduate an incompetent MBA holder than Coca Cola would ship-out bottles containing dead mice.

Accepting the premise that George W. Bush actually learned the lessons taught him at Harvard Business School, there are a number of characteristics of his administration which become far more understandable. Here are a few of the more important ways in which his Harvard MBA explains the way he governs.

The very first lesson drummed-into new students, as they file into the classrooms of Aldrich Hall, is that management consists of decision-making under conditions of uncertainty. There is never perfect information, and decisions often have to be made even when you’d really prefer to know a lot more. Given this reality, students are taught many techniques for analyzing the data which is available, extracting the non-obvious facets, learning how read into it the reasonable inferences which can be made, while quantifying the risks of doing so, and learning the costs and value of obtaining additional data.

The job of the executive is to weigh probabilities in evaluating imperfect information; to assess the costs and benefits of acting or not acting; and to construct scenarios around the various possible time frames for taking action, taking into account the probable reactions of the other vital actors. That political opponents at home carp at him over his imperfect data at the time is no surprise, and no reason to regret his decision. The costs of not acting were simply too great, and the downside potential of erroneous information too low to prefer inaction. Better data would have been preferable, of course, but President Bush shows no sign of remorse for doing what he knows was the prudent thing under the circumstances.

A second broad and important lesson the President learned at Harvard Business School is to embrace a finite number of strategic goals, and to make each one of those goals serve as many desirable ends as possible. The truism of this lesson is that if everything is a priority, then nothing is a priority. If you can’t focus on everything, then you need to be able to focus on those few goals which will have the broadest impact, leading to a future capacity to attain other desirable ends. No exact number of goals is the limit, but three is an awfully good number to aim at. Those goals should be mutually consistent, so that the step-by-step accomplishment of each one aids in the achievement of the others.

There is both evidence and logic to suggest that George W. Bush has chosen just a small handful of major goals. His current number one priority was thrust upon him: winning a complete victory in the War on Terror. There is no evidence that this was on his initial short list of priorities. But after 9/11, he made himself very clear, very quickly, that his priorities had drastically changed. He also set out a realistic time frame – decades – for this number one goal. From this broad goal cascade a series of subordinate tasks, from persuading dictators that it is in their interests to eschew support for terror groups, to strengthening American military, intelligence and domestic law enforcement capabilities, for example.

I think his second broad goal is to build a long-lasting pattern of Republican political dominance of government, by forging a new grand coalition of voting blocs, adding to the existing GOP stalwart groups (conservatives, low tax lovers, the traditionally religious, and small business owners) a substantial number of lower income, but upward-mobility-aspiring members of every group, including ethnic minorities, especially Hispanics, but also as many blacks as possible.

If there is any single theme which unites all these people, it is a belief in the American Dream. The freedom to improve one’s lot in life, along with the ability to marshal the necessary resources without hindrance by oppressive regulations, taxes, or other governmental interference, is one of the cornerstones of this coalition. The goal is not simply to attract poeple by serving their interests, but to convince them to identify themselves with the Republicans, as the political instrument of their dreams.

In the short run, issues of importance to the conservative base may seem to be getting short shrift: government spending, especially on expansion of entitlements and such amenities as the NEA, may help reach out to swing voters, but do not inspire the base. Look for President Bush to address his base directly, as well as symbolically, prior to the election. But understand that he will put more priority on the broad goal of reaching out to expand his voting support than he will on catering to his base, who will, when all is said and done, place so much weight on securing the Presidency for a War on Terror activist (see Goal #1) that they will turn out and vote for his re-election

A third major goal, closely related, is to get and keep the economy growing at a healthy pace. The President inherited an economy moving into recession as he took office. Then, 9/11 knocked the stuffing out of many industries, and dealt a huge financial and psychological blow to the nation. Aggressive tax cuts, augmented by cooperative Federal Reserve management of the money supply and interest rates, have now restored the economy to robust growth. Complaints about low job growth miss two points: that in the early stages of an economic recovery, employers defer adding staff, and that the economy as a whole is moving away from the full-time-job model of work towards independent contracting forms of work, thus omitting many people’s work (including my own) from being counted as a “job.”

A healthy economy which creates opportunities for work and self-advancement generates new members for the American Dream Coalition. A robust and successful conduct of the War on Terror secures domestic safety, encouraging investment and growth, and brings pride as an American to all groups in society. All of these factors encourage more people to identify as Republicans, securing the political goal of the President. The three goals mutually reinforce one another.

Another basic lesson young George W. Bush learned in the classrooms of Harvard Business School is that different managers have legitimately different styles of operating as executives. There is no “one right way” to manage. Successful executives develop a style which is true to their own nature, and which builds on their strengths. George W. Bush is a natural delegator, an executive who seeks the best possible people to work for him, instills loyalty (by practicing it himself), and then gives them plenty of room to operate. His “sins” as an executive have been, and are likely to remain those of a loose leash, allowing ineffective subordinates too much time and too much room. This is why it has taken him so long to remove certain cabinet officials.

The case study method as practiced at Harvard Business School features intense discussions of alternative plans for defining and then resolving the problems described in the B-school’s famous cases. A well-structured spirited discussion has the virtue of systematically revealing the implications of different courses of action, allowing deeper analysis, and ultimately leading to better decisions. President Bush’s preference for keeping senior advisors of different persuasions, such as Colin Powell and Paul Wolfowitz, reflects the value he places on hearing the best case made for alternative courses of action. Critics who speak of a power struggle which needs to be resolved in favor of one side or the other, completely miss the point.

One final note on George W. Bush’s management style and his Harvard Business School background does not derive from the classroom, per se. One feature of life there is that a subculture of poker players exists. Poker is a natural fit with the inclinations, talents, and skills of many future entrepreneurs. A close reading of the odds, combined with the ability to out-psych the opposition, leads to capital accumulation in many fields, aside from the poker table.

By reputation, the President was a very avid and skillful poker player when he was an MBA student. One of the secrets of a successful poker player is to encourage your opponent to bet a lot of chips on a losing hand. This is a pattern of behavior one sees repeatedly in George W. Bush’s political career. He is not one to loudly proclaim his strengths at the beginning of a campaign. Instead, he bides his time, does not respond forcefully, a least at first, to critiques from his enemies, no matter how loud and annoying they get. If anything, this apparent passivity only goads them into making their case more emphatically.

Only time will tell, whether Saddam ever had any WMDs. Their non-existence has not been proven. Only time will tell whether or not Osama bin Laden (or his corpse) will be taken into custody by American Troops. Only time will tell whether or not Iraq will continue to make progress toward a transition toward a peaceful democratic government. George W. Bush knows much more information about these topics than his domestic political opponents do. At the moment, they are betting a lot of their chips on one side of these questions.

We will see by November who has the winning hand.