Can senior politicians teach executives how to lead?

The role of CEOs is becoming increasingly political. Corporations are now expected to address geopolitical, environmental and social issues that may not always be aligned with their business mission. Image: Shutterstock

Though business and politics might seem like different worlds, there are increasing commonalities between leadership in these realms. As I explain in the second edition of Los Presidentes Españoles, which explores the success and failures of Spanish leaders since the return of democracy in 1978, executives can learn a lot from the strategies employed by political leaders.

After all, prime ministers and presidents are also managers. They preside over cabinets – their executive committees – through which they direct matters of the state. They often lead their political parties while simultaneously taking responsibility for the government’s performance and facing up to public opinion, which can be more turbulent and unforgiving than any stock market. 

Political balancing acts

Meanwhile, the role of CEOs is becoming increasingly political. Corporations are now expected to address geopolitical, environmental and social issues that may not always be aligned with their business mission. Senior managers often find themselves dragged into predicaments that they are not prepared for yet are unable to stay neutral or satisfy all stakeholders. 

Similarly, politicians often need to make unpopular or imperfect decisions, such as German Chancellor Angela Merkel’s move to open the German border to Syrian refugees in 2015. Merkel received international praise for her perceived act of compassion, but also faced political tensions over immigration within her country. 

To navigate sensitive issues and the attendant tensions, politicians and business executives alike have to utilise a set of unique tools. While the latter use economic and intellectual capital to accomplish their objectives, politicians have an additional resource: political capital.

Political capital

Political capital can be composed of many and varied resources including credibility, and reliability, and can be used as currency to build alliances, coalitions, collective action or networks of support. It is purely relational, lacking in distinctive or concrete content, yet without it nothing of importance can be accomplished in the political realm. 

Gerald Ford is an example of a US president with scant political capital, as are the string of British prime ministers since David Cameron resigned post-Brexit. Each of these leaders expended so much time and energy maintaining control that they actually achieved little of note. Political leaders are therefore very mindful of the value of this resource.

A lack of political capital explains Bill Clinton’s failed attempt in 1993 to reform the US health and pensions system – a highly charged political act. It was years later that Barack Obama, having invested significant time and effort into ensuring he had the necessary support in place, successfully pushed through healthcare transformation.

Seasoned political leaders are good at nurturing and conserving their political capital; it’s a skill that business leaders need to learn. You can consider these tips: 

1. Pick your battles 

The first question that a leader should ask is whether it is really necessary to engage, whether it’s in response to calls for a quick comment or a push for action. In politics, thinking slow is often a better course of action than thinking fast. Always ask yourself if your political move today will increase or diminish your future strategic freedom.

As the distinguished French sociologist Raymond Aron said: “The art of politics consists of distinguishing vital interests from marginal interests and in not investing or risking major resources in defending a secondary position.”

It could be argued that British Prime Minister Tony Blair’s enthusiastic alliance with US President George W. Bush in the invasion of Iraq was one such unnecessary risk. His commitment to the conflict – one not shared by the majority of the UK public – ultimately obscured, if not erased, his legacy of modernising the Labour party and of social democracy.

2. Block out the noise

An important addition to the previous point is to not lose one’s focus on what really matters. Leaders need to know when and how to tune out the pressure and distractions of their role. For example, Spanish prime minister Felipe González dedicated time to the art of bonsai – an exercise in delicacy, patience and attention to detail.

His successor, Mariano Rajoy, was known as an avid reader of sports news. But he told me that leaders should not read the political press as it has “too much babble”. It’s important to avoid getting overwhelmed by “white noise” while staying on top of the key developments. Keeping a clear view of the facts that really matter can make a big difference when it comes to making difficult decisions.

Also read:  Business and politics should never mix or should they?

3. A soft approach

No one likes a tough leader (except in a crisis), so only brandish your political power as a last resort. Use negotiation, debate and charm to get people on your side; power is most effective when it is restrained and understated. Heed the advice of the late British leader Margaret Thatcher: If you have to say you are powerful, it’s because you are not.

Learn a lesson from Spanish prime minister José María Aznar, who was photographed with his feet on a table and smoking a Cuban cigar at a critical meeting with President Bush to discuss the second Iraq war. In this unnecessary staged show of bravado, Aznar revealed his potential insecurities. In politics – and business – less is often more.

4. Discretion is key

Save your opponents from disgrace because you never know when you might need their support in the future. This is why politics is often played out backstage. “No one should see how budgets or sausages are made”, German Chancellor Otto von Bismarck is purported to have said. 

The power of discretion was evident during the Cuban Missile Crisis, when US Attorney-General Robert Kennedy conducted secret negotiations with the Soviet ambassador to secure the withdrawal of Russian missiles in Cuba in exchange for the removal of US missiles from Turkey. The official narrative credited the US blockade of Cuba for defusing the crisis, but the true story was the discreet diplomatic compromise. Interestingly, the Soviets went along with the official US story, to make President John F. Kennedy’s position more palatable to US public opinion.

5. Seek out the right advisers

Being at the top of the hierarchy is a unique experience – one that is cognitively and emotionally demanding. Only those who have held similar positions can truly help you. Therefore, ensure you have access to wise predecessors. 

For example, Gonzalez, the Spanish premier, enlisted the support and advice of fellow social democrats such as former German Chancellors Willy Brandt and Helmut Schmidt, and Jacques Delors, former President of the European Commission. He even became a good friend of conservative German leader Helmut Kohl as he sought to negotiate the unique challenges of running a country. As a CEO, don’t be afraid to seek advice and guidance from your peers and predecessors, and even your apparent rivals. 

While considering these points can make a big difference, they should not outweigh one central truth: Good leaders know what their values truly are. These values can help you decide what is truly vital, easing the often difficult relationship between ends and means.

[This article is republished courtesy of INSEAD Knowledge, the portal to the latest business insights and views of The Business School of the World. Copyright INSEAD 2024]