Do business leaders make better political leaders? A look at Kevin O’Leary

Kevin O’Leary has just announced that he is running for the leadership of the Conservative Party of Canada.  His qualifications?  He has built a business, understands business, has negotiated deals, and knows his way around financial statements.   This background, O’Leary argues, makes him uniquely qualified to stabilize the Canadian economy, deal with a newly nationalistic U.S. on trade matters, and address such varied and complex issues as tax policy, international relations, and climate change.  Mr. O’Leary believes that his business acumen, as well as his lack of political experience, would make him the right man at the right time to lead the country.

Since Donald Trump improbably parlayed his business background and his position as a political outsider to occupancy of the White House, many critics have focused on Trump’s temperament, his questionable policies, and his continuing lack of familiarity with facts.  Some have questioned the actual success of the Trump business empire.  Very few, however, have questioned his basic premise – that a business background produces good, effective political leaders.   Now that O’Leary wants to travel the same route as Trump, let’s look at that premise.

Business leaders do not have a good track record in government

Contrary to what O’Leary argues, being a business leader is not a necessary, nor a sufficient qualification for being a political leader.

If business leaders were consistently able to capitalize on their business acumen in heading a government, history would be rich with examples of successful transitions.  Instead, we have a range of results.  In Canada, most prime ministers have come to the job with a background in law.  Most recently, Justin Trudeau was a teacher.  Stephen Harper was a lobbyist.  Going back a few years, however, we have had several businessmen.  After leaving the CEO position at the Iron Ore Company of Canada, Brian Mulroney entered Parliament as opposition party leader, having engineered the ousting of former leader Joe Clark.  Mulroney served as prime minister for almost nine years.  Paul Martin ran Canada Steamship Lines, then spent years as Jean Chretien’s Finance Minister before taking over as prime minister.

How did those two experienced business leaders do as PM?  Not particularly well.

Mulroney arrived with grand promises of fiscal management, then oversaw deficit spending for all of his tenure.  He introduced the much hated GST, and the much maligned Free Trade Agreement.  He improved relations between Ottawa and the west by cancelling the despised National Energy Program, but failed in his bid to appease Quebecers in constitutional reform.  Mulroney the businessman was not particularly respected as a political or economic leader – when he finally left town, his party was reduced to insignificance (Tory, party of two?).

Mr. Martin fared somewhat better on the economic front.  As finance minister he managed the accounts to produce significant surpluses.  Under his watch, Canada’s ratio of debt-to-GDP ratio fell by 20%.  His performance in that role was praised by business and financial leaders.   He was an effective fiscal manager, but never a visionary political leader.  During his term as prime minister he never gained the enthusiastic support of his party or the Canadian public, and gained a reputation as “Mr. Dithers.”   His government fell in 2006, barely 2 years into its mandate.

In the U.S., a number of leaders have made the leap from business to politics.  As in Canada, there’s usually an intermediate step into politics before the individual assumes a political leadership position, whereby a leader is able to learn the different challenges of governing.  Even so, success in business has not been a precursor to success in government.   Jimmy Carter and George W. Bush had successful backgrounds in business, but are regarded as fairly weak presidents.  Prior to entering public life George H.W. Bush became wealthy developing an oil company.  This experience did not serve him particularly well when faced with economic challenges – he was soundly defeated after one term.  Note that Ronald Reagan, whom Republicans idolize as the most business-friendly president, was not a businessman.

The one U.S. president who entered the office as an “outsider,” with a successful career in business behind him but no direct political experience, was Herbert Hoover.  Hoover managed to apply his business acumen in leading the US, and the rest of the world, into a great depression which lasted the better part of a decade.  There’s your prime example of a businessman running a country.

Government is not a business

Why are business leaders not necessarily successes in politics?  Because running a government is far different from running a business.  A business is, regardless of size, usually a fairly simple enterprise, with readily identifiable groups of stakeholders.  It is oriented to one primary objective – growth of monetary profit for its owners over a defined period.  A government’s considerations go far beyond just economic.  It must take on activities that businesses will not – services that are undertaken for the public good rather than for economic gain.  It deals with a broad array of social issues, and even its economic issues must be evaluated against the sometimes conflicting needs of many industries and businesses.  In short, a government has a far more complex mandate than any business.

It’s been said that a CEO is more a dictator than a democratic leader.   CEOs have a high degree of control over their operations.  For example, the business leader can reconfigure businesses according to market needs.  If a business line is unprofitable, the business leader can sell or exit that business.  He/she can configure the mission or mandate, structure an organization to deliver that mandate, and can pick and choose the individuals to implement the agenda.  Compare that to a government leader, whose freedom to act is far more limited.  The government leader deals with a vast array of stakeholders, some of whom actively oppose the government’s policies and directions.  When developing and/or enacting policies, the government leader must do so through representatives elected by the population at-large, not appointed by him or her.  All the while, the government head is held to measures of success that are nebulous as well as conflicting.

Government and business both present challenging environments, but they are not the same.  Leadership positions in each require certain skills, knowledge and personal qualities – qualifications that sometimes overlap, but do not perfectly align.

Not all business experience is equal

Even if one believes in the suitability of a business background for political leadership, context matters – not all businesses would foster the managerial skills or leadership behaviour relevant to a political environment.

Different types of business require different skills to effectively run.  An entrepreneur is not necessarily the appropriate leader once his or her company reaches maturity.  A leader of a company with a large unionized work force is not the one for a company with a highly skilled professional staff.  A head of a real estate developer, skilled in managing discrete projects to completion within clearly identifiable budgets and parameters, is not necessarily the right person to lead a technology-driven enterprise focused on growth.  Leaders of companies oriented to passive investing are different than those focused on active management.

I could go on.  The point is that “business leadership” is not a singular descriptor.   For qualities that may be relevant in evaluating potential success as a political leader, one has to look beyond a position as a CEO, for example, to the personal qualities and capabilities of a candidate.

There are indeed attributes and abilities of good leaders that may be evident in CEOs or others in business, and would be required of any strong political leader.  These include:

• Ability to develop and articulate a vision
• Consistency of purpose
• Persuasiveness
• Ability to involve and address a broad range of stakeholders
• Ability to attract, retain and motivate a high-performing team
• Honesty

Are these qualities evident in all business leaders?  No.  Therefore, just having a business background, even a successful business background, is not enough to qualify a person for national political leadership.  One has to look at who the individual is, rather than the position he or she has held.

So, what about O’Leary?

O’Leary’s business record is spotty at best, and highlights more of his skills in self-promotion than his skills in managing an enterprise.  If all he has as a selling point is that he is a businessman, that’s not good enough – he has to demonstrate to a broad cross-section of the country that he brings relevant leadership skills and a willingness to learn about the particular demands of the political environment.  He must demonstrate that he understands and accepts the complexity of running a government.

He’s not off to a good start.  O’Leary announced his candidacy by re-emphasizing his business experience and denouncing the current prime minister for “never having run a business” and “never having negotiated deals.”   His approach mirrors the persona he developed within the reality shows Shark Tank and Dragon’s Den, where he proudly took on the role of “resident asshole.”  Although he dismisses some of his more outrageous statements on television as him just playing a role, he has done nothing to dissuade his critics from commenting that the character on television reflects the man himself.

O’Leary has also shown contempt for government and its participants.  He says that if he wins the leadership of the Conservatives, he would not seek a seat in parliament until later, that “that’s a waste of time.”  In other words, he doesn’t think that learning about the political process is a priority for the leader of one of Canada’s major political parties, one with no previous political experience.

So, in the absence of any evidence of relevant leadership skills, we are left with Kevin O’Leary, businessman, with a reputation as a pitbull.

Consider the thoughts of Henry Mintzberg, well-respected management guru and professor at McGill University, who says, “pitbull (executives) don’t add anything at all.” Mintzberg, as quoted by journalist Bruce Livesey, said companies function best when CEOs recognize that companies are collaborative efforts and they show flexibility and emotional health.   When asked specifically about O’Leary, Mintzberg added, “I don’t know how he manages his companies, but his stereotype is dysfunctional.”

Do we really want a dysfunctional pitbull running the country?