How Do Business Execs Do as Candidates and as Governors?

Being a businessperson offers strengths and drawbacks for political life.
by | March 23, 2012
 

Candidates running for governor can either run an inside game, or an outside game. That is, they can run as an experienced politician, or someone who can bring private-sector experience to the job.

I recently noticed a column by Republican consultant Whit Ayres in the magazine Campaigns & Elections. In it he asked, "Why do so many business execs make bad candidates?" He suggested three answers to his question, mostly summarizing that arrogance tends to sink candidates.

I questioned Ayres' premise: Do business execs really make bad candidates? If not, then how do they do in office once elected? I checked with several dozen state sources and found some patterns.

It turns out that being a businessperson offers both strengths and drawbacks as a candidate. Here are some of the factors at play, along with some examples.

Strengths for Business Execs in Campaign Mode

Being an outsider: When the voters' mood is surly, a lack of ties to the political power structure can help. The absence of a voting record deprives the opposition of material they can use to sink a campaign. A background in business can offer a good personal story that forms the core of a candidate's narrative.

When Kentucky Fried Chicken CEO John Y. Brown Jr. (a Democrat) ran against former Kentucky Gov. Louie B. Nunn (a Republican) in 1979, the idea of pitching oneself as a businessman who can turn around a stalled economy was more novel. His son, John Y. Brown III, who now runs a Frankfort-based public affairs firm, is clear-eyed about his father's shortcomings. "There was an over-focus perhaps to finding a business angle or solution to every problem." But he added that his father "was able to offer something different and new and hopeful that voters could feel good, and logical, about supporting."

Personal wealth: While being perceived as a rich person is not always helpful in running for public office, it does offer some advantages. CEOs can usually bankroll enough of the costs to get their campaign rolling, and they typically have access to other wealthy people who can contribute to their campaign. Being really wealthy -- someone on the scale of, say, Michael Bloomberg -- can provide insulation from the grind of fundraising, allowing time to focus on defining a message. It can also provide independence from special interest groups that may otherwise call the shots on particular issues.

Leadership, charisma and experience at selling a plan: "If they've been successful in business, they likely have been able to employ motivational leadership that could translate to government work," said A.G. Block, the former editor of California Journal and now associate director of the University of California Center Sacramento. "They also have had to answer to 'constituents,' [or] stockholders."

A good example of someone with such skills is Mark Warner, a Senate Democrat who was elected governor of Virginia in 2001. Warner's experience as a telecommunications executive is widely credited with his ability to win office and prosper as one of the state's most popular politicians.

"Warner is a tireless salesman," said one longtime observer in Richmond. "He's charismatic, works hard to find win-win situations and gives credit to those who help him. He loves the sale. He loves the action."

Drawbacks for Business Candidates

Lack of familiarity and finesse with key policy issues: Despite some early promise, former eBay CEO Meg Whitman, a Republican, lost by a wide margin to Democrat Jerry Brown in her 2010 gubernatorial bid. While she lost for many reasons, including the negative publicity surrounding her former undocumented immigrant nanny, her expertise in business didn't translate into expertise in government, Block said. One of the things she wanted to do was suspend the state's landmark environmental law AB 32, a law that two-thirds of voters supported, according to a 2010 Public Policy Institute of California poll. "She was a horrid candidate with little knowledge of state government and almost no notion of the role of a governor in the policymaking or political process," Block said.

Risk of being plagued by past business problems: Republican Dick DeVos, the CEO of multi-level marketing giant Amway, took heat for his company's controversial business model during his 2006 campaign for Michigan governor, which he lost to Jennifer Granholm.

Florida Gov. Rick Scott narrowly won his office in 2010 despite his background as a health-care CEO whose company, hospital chain HCA, paid the largest health-care fraud settlement in history. Democrats (and Republicans in the primary) made a major issue of it.

The candidates who faced off in New Hampshire in 2004 -- incumbent Republican Gov. Craig Benson and Democratic challenger John Lynch -- were both businessmen, but the fates of their companies played a role in the outcome. Lynch touted the turnaround of a furniture company that he'd led, whereas Benson's former company, Cabletron, "was collapsing and involved in many lawsuits," said University of New Hampshire political scientist Andrew Smith. Lynch won and proceeded to win three additional terms.

Difficulty dealing with the media: In his 2010 campaign against Democrat Andrew Cuomo, New York Republican Carl Paladino made a series of gaffes that ruined any chance he had of winning the general election -- most notably a confrontation in which Paladino threatened political reporter Fred U. Dicker on tape, saying, "I'll take you out, buddy!"

Pluses for Business Execs in Office

Experience with numbers: Executives-turned-governors often have a facility with numbers that can define their tenure.

Republican Mitch Daniels of Indiana, for instance, honed his skills as a pharmaceutical executive before further polishing them as director of the federal Office of Management and Budget under George W. Bush. Observers in the state credit his background with helping him in office, including efforts to reform the state's Bureau of Motor Vehicles. (He did, however, run into problems when he tried to outsource the state's social services administration, a decision that backfired and is now in litigation.)

In Nevada, Republican Gov. Kenny Guinn came into office in 1999 with a history as a banking and energy executive. "He had an amazing way with numbers and budgets," recalled one Nevada Republican. "I remember walking into his office to find him poring over the state budget, pencil in hand marking it up. I think his ability to understand and explain the ramifications of an individual action to a budget process was a learning experience for a lot of legislators. They may not always have liked it or even agreed, but everyone respected his knowledge and understanding of the matter."

The CEO orientation can also come from running a nonprofit. Republican Gov. Dennis Daugaard of South Dakota served as a leader with the state Children's Home Society for nearly 20 years, and observers say the experience prepared him well for the governorship.

A technocratic approach: In Michigan, Republican Rick Snyder won office in 2010 touting himself as "one tough nerd." For a state hit hard by the recession, this resonated. "As a 'nerd,' Rick Snyder can be moved by evidence," said Ed Sarpolus, a pollster and political analyst in the state. "He likes to verify his beliefs with facts and data."

Having a business background could make a Democratic governor more ideologically moderate, which is potentially a big plus in swing states. A good example is John Hickenlooper, who is having a popular run as governor in the classic "purple" state, Colorado. A microbrewer before he became mayor of Denver, Hickenlooper is "less partisan than his predecessor," one-term Democratic Gov. Bill Ritter, said one Republican in the state. "Should his positive relationship in the business community hold, it will be difficult for a Republican challenger to raise money [to challenge him in 2014]."

Another good example is Brian Schweitzer, the Democratic governor of Montana, who came to the governorship following a career in ranching and irrigation. "I think his business experience has led him to pragmatically pursue things that Democrats don't usually pursue with such vigor -- strict budget discipline; saying no to key constituencies for his party, including teachers and environmentalists; and opposition to tax increases," said one Montana political observer. "It has broadened his appeal in a state where pragmatism is more valued than ideology."

Drawbacks for Business Execs in office

Excessive egotism: "Most of the folks who come in have little understanding of how things work, but are arrogant enough to think they can change 200+ years of American governing," said Eric Herzik, a University of Nevada-Reno political scientist. "It is especially ironic to hear this from folks who also argue we need to get back to constitutional principles. 'Separation of powers' and 'checks and balances' are not business concepts."

"Businesses tend to be dictatorships, where the edict of the CEO is carried out by an army of minions," said Block of the University of California Center Sacramento. "Governance is a messy process where coalition-building is required and governors need to be good listeners willing to compromise. Goals also have social implications that business executives often do not consider when making business decisions. And their constituents in the business world -- their stockholders -- tend to be, for the most part, a homogenous group with one common goal: profits. As governor, the constituency is a varied mishmash with a variety of goals."

For example, Montana Gov. Schweitzer, for all his policy successes, has nonetheless been a bit of a bull in a china shop. "He brought a shrewd sense of bargaining to the governor's office -- some would say a cutthroat mentality, honed from dealing with some pretty tough customers in the Middle East" for his ranching and irrigation business, said a Montana political observer. "Should Schweitzer run for something else, I'm not sure he'd have that many friends willing to help him. He's burned a lot of bridges."

Personnel issues: Despite two generally successful terms, New Mexico Republican Gov. Gary Johnson had a problem filling key state jobs, a history that one New Mexico political observer traces to his background as a construction executive.

"One disadvantage to being an outsider, particularly a limited-government outsider, is finding a critical mass of cabinet and sub-cabinet level talent that both thinks like you do and has the chops to actually manage big, complex government programs, or knows accounting rules for the government rather than the private sector," the observer said. "It was not uncommon for him to simply leave positions unfilled. Sometimes he had a single political appointee fill two or even three posts."

'Pragmatism' can be seen as 'fickleness': There's a risk to being a pragmatist -- one that Republican presidential frontrunner Mitt Romney, the former governor of Massachusetts, began experiencing toward the end of his term in the Bay State. It has continued to hamper him as a presidential candidate. Romney, a former executive with Bain Capital, has been painted as a serial flip-flopper.

For most of his last two years in office, his approval ratings never rose above 50 percent and sunk to just 34 percent by the time he left. A key reason: He had campaigned on moderate positions, then shifted to a more conservative stance as time went on.

"A fundamental part of Romney's problem as a flip-flopper is that his experience in the business world taught him to be a pragmatist," said Jeffrey Berry, a Tufts University political scientist. "If a business isn't succeeding, get rid of it. Don't stick with a loser. But in politics, sticking with your principles is important, and discarding policy stands as you try to move up the political ladder can be dangerous. Opponents are only too happy to point out your lack of consistency."

That Rare Mix of Biz and Political Skills

Perhaps the best preparation for government is a combination of private-sector and public-sector experience. Several of the top-ranking rookie governors in my recent assessment of their first years have had precisely that: Vermont's Democratic Gov. Peter Shumlin founded a college, led the family business with his brother and served as a state legislator. Tennessee's Republican Gov. Bill Haslam worked in the hospitality and retailing business and then served as mayor of Knoxville. Gov. Daugaard served as South Dakota's lieutenant governor; Colorado Gov. Hickenlooper served as mayor of Denver. Another popular governor, Delaware Democrat Jack Markell, worked in telecommunications, banking and consulting before winning election as state treasurer and, ultimately, governor.

Brown, the public-affairs consultant in Kentucky, said that combining the best of a business background and a knack for politics, is relatively rare.

"It takes more than posing as a tough-minded business person who will bring business principles to bear once elected," Brown said. "It takes a politician who has a feel and flair for the political game first and foremost, but who shrewdly integrates his or her business experience and beliefs into a palatable political platform."

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