Sunday 23 October 2016

Richard Curran: If firms were run like parties, they'd go bust

Published 27/02/2016 | 02:30

Michael O’Leary. Photo: Matthew Lloyd/Bloomberg
Michael O’Leary. Photo: Matthew Lloyd/Bloomberg

After one of the dullest General Election campaigns in recent history, many feel disillusioned with politicians, their shortcomings and their genetic pre-disposition towards making promises they can't deliver.

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Political party leaders are often compared to chief executives and the question is whether they would survive in the cut-and-thrust world of business.

During the darkest days of the recession, some people suggested that Ryanair chief executive Michael O'Leary could get the country's finances back on track in less than a year. The obvious retort was that he could, but nobody would want to live here when he was finished.

I once asked Michael O'Leary whether he believed he could have turned things around quickly and he replied that he could - but he would never get re-elected.

Comparisons between political leaders and corporate ones are not perfect, but they do provide a useful prism through which to view the performances of our senior politicians.

Two things emerged in the General Election campaign that would simply not be tolerated in the corporate world.

Party leaders made financial commitments in manifestos that they know full well they will not be able to deliver.

Central to the success of running a large stock market company is doing what you say. It is about devising a strategy, based on research and available finances, managing expectations and then delivering on it.

Chief executives who over-promise and under-deliver will be savagely dumped by investors, who sell their stock. They could even be sued or charged for misleading the market.

Yet in politics, election manifestos are seen as perfectly acceptable works of fiction.

Another corporate taboo is publicly and persistently dumping on the track record of your competitors without focusing enough on what you are going to do.

Many corporation executives shy away from saying how rubbish their competitors are, because they are worried about getting sued, being caught out telling lies or letting a nasty war of words distract them from running their business.

Our political leaders constantly focus on the failings (many historical) of the opposition, without spelling out what they will do differently. In the corporate world, the best way to sell a product is to emphasise how good it is, instead of just talking about how bad its competitors are.

Another significant difference between politics and the corporate world is that new party political leaders always surface from internal appointments. Imagine a business world in which every single new chief executive was appointed from within the ranks of existing senior management. It would be a recipe for stagnation, underperformance, a depleted talent pool and a lack of outside perspective.

Central to a corporation's success is its brand. Watching the four main party leaders' television debate last week raised questions about their brand.

Enda Kenny landed the top job in the party after judiciously serving his time. His rise was as much by default as destiny.

The Fine Gael brand has been on top for five years, having swept to power after its main larger rival became embroiled in the political equivalent of a share price collapse caused by a major accounting scandal. The power rush left Fine Gael disconnected from its customers - the voters.

Its election campaign, based on having turned around the economy, was like a corporation seeking investors based on last year's financial results, instead of its plans for the next five years.

Fianna Fáil was the big player that gambled, took too many risks and lost five years ago. The former No 1 player in the market was so busy in a dogfight with the No 3 player (Sinn Féin) that it ended up looking too similar to the rather tired market leader.

Gerry Adams, as the head of Sinn Féin, is the classic company founder who has been around too long. There at the start of the venture, in the trenches when all of its challenges were different, he is incapable of making the adjustment to the corporation's current needs.

Company founders play a huge part in the early days, but often flounder as the business gets bigger and the challenges change.

Joan Burton has been the chief executive of the No 4 player in the market. The strategy has been to do joint ventures with bigger players as a way of getting growth. This has consistently backfired, as it never seems to bag any profit when the joint ventures are wound up. It is a damaged brand.

Would any of those four leaders be head-hunted by the corporate sector to run a large business? I think not. It is wrong to eulogise business leaders too much, because their moral compass is often more faulty than politicians.

However, they are results-driven. If you don't get the results, you get punished. Politics is the same, except business is less of a game. Mislead your customers and you are finished. Lose touch with your customers and you are finished.

Politicians are highly tenacious. They can be dogged and determined. Look at how Enda Kenny rebuilt Fine Gael after the disaster of 2002. That showed a kind of organisational leadership, perhaps worthy of a good CEO.

Micheál Martin has been in the trenches since Fianna Fáil's implosion in 2011. That too takes a kind of organisational leadership. Gerry Adams has been in all kinds of trenches, I suspect, over many decades.

At least two of those party leaders might be sought by the private sector to sit on a corporate board. But it wouldn't be because of their leadership experience, insight or strategic brains. It would be because of their political contacts and knowledge of the state system. Unfortunately, there has been a disconnect between good politics and good policies. What passes for 'good politics' in Ireland is often the antithesis of 'good policies'. Short-term thinking, populism and quick fixes have been too highly valued.

Perhaps at some point we will discover that genuinely long-term good politics should always be based on good policies. In the meantime, don't expect to see Enda, Micheál, Joan or Gerry on the FTSE 100 for the moment.

Irish Independent

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