Do CEOs Make Good Politicians?

November 2 2006 by Dale Buss

This year’s race for governor of Michigan should have been tailor- made for Richard DeVos, the former CEO of Amway Corp., one of the state’s biggest employers. After all, in Jennifer Granholm he faced an incumbent who had presided over a rise in Michigan‘s unemployment rate to 7.2 percent, by far the nation’s worst.

But in an early-October televised debate, Granholm was able to score points against the erstwhile corporate chieftain by pointing out that DeVos as CEO actually had created thousands of low-paying jobs in China- while trimming jobs in Michigan.

Still, Michigan‘s pocketbook pain gave DeVos his chance to unseat Granholm. And in general, when CEOs become political candidates they tend to campaign naturally on their grasp of economic and financial issues.

Jack Davis brought his business expertise to bear in his campaigns for the House in New York State‘s 26^th District, where the founder and owner of the I Squared R Element Co. lost as a Republican in 2004 and ran as a Democrat this year, largely on a trade-protectionist platform.

He also was plying his executive competence. “I know how to control budgets and get people to do what they need to do,” Davis said. “As a chief executive, I’ve been selling myself for years.” But typically, a CEO or former CEO still must offer something else as a candidate besides a managerial air and a strong corporate track record. Ideally, they should be able to deal comfortably with a variety of constituencies, ranging from clergy members to environmentalists. And they need to be able to engage confidently in cultural discourse, over issues such as abortion and immigration, as well as in money- speak.

“If your only experience was running a company as CEO, you’ll find a rude awakening-because you won’t have the life experiences to be a credible candidate,” said Steve Grossman, CEO of his own marketing company, who ran unsuccessfully for governor of Massachusetts in 2002 and served as chairman of the National Democratic Party under President Bill Clinton.

When CEOs win a race, however, then a different dynamic begins to apply: Governing is more like pushing a rope than cracking a whip. “Once you get in office, you have to start to build consensus, and CEOs get startled,” Judith Glaser, executive coach and author of The DNA of Leadership, says.

“Many CEOs end up in cabinet posts such as commerce secretary instead of running for office. Still others began in politics, then ended up at a corporate helm,” Glaser continues. “Some have done both, such as Defense Secretary Donald Rumsfeld, an Illinoisan who served four terms in the House, ending in 1969, and in 1977 became CEO of G.D. Searle.”

But while CEOs quickly find out that “politics is a world unlike any other,” they also “usually have a record of keeping their constituents happy because they know something about customer relations and communications,” said Steve Katz, an advisor and counsel to four U.S. senators and one House member, and now a business consultant.

While they tend to push common levers with voters, however, CEOs’ motivations for running for office are more diverse. Some simply relish the challenge of proving their leadership acumen in a completely different venue. Others, having made their mark in the business world and satisfied their life’s ego needs, genuinely want to give back. Of course, such altruism is easier to express when you’re one of the handfuls of billionaire CEOs who has run for office, including New York City Mayor Michael Bloomberg, Forbes magazine scion Steve Forbes Jr. and H. Ross Perot, the computer entrepreneur and maverick presidential candidate in 1992.

Nevertheless, Amo Houghton still wonders why he’s the only former CEO of a Fortune 500 company ever to be elected to the House. “That’s one of the great sadness of the system,” said the ex-chief of Corning. Houghton is glad he ran. “I liked the people and the issues,” he said. “But there was some dirty stuff that went on-just like business.”

10 WHO TRADED OFFICES FOR OFFICE-SEEKING

Name	Rudy Boschwitz	Michael Bloomberg	Herman Cain	Jon Corzine	Richard DeVos
Age	76	64	60	69	50
Undergraduate Degree	NYU School of Commerce, at 19	Johns Hopkins	Purdue	Illinois	Northwood
CEO of	Home Valu (nee Plywood Minnesota), Minneapolis, 1963-1978	Bloomberg LP, New York, 1981-2001	Godfathers Pizza, Omaha, 1986-1996	Goldman Sachs, New York, 1994-1999	Northwood Alticor (nee Amway), Grand Rapids, Mich., 1993-2002
Party	Republican	Republican	Republican	Democrat	Republican
Political track record	Elected in 1978 and 1984 to U.S. Senate from Minnesota.	Elected mayor of New York in the first post-9/11 election and re-elected in 2005 by biggest margin ever for a Republican.	Lost in 2004 Republican primary for U.S. senate from Georgia.	Won race for U.S. senator from New Jersey in 2000, then won for governor of New Jersey in 2005 and stepped down from the Senate.	Ran for governor of Michigan this year.
Learned from	Margaret Thatcher. “I like people who understand what they’re for and stick with it.”	Rudy Giuliani, his predecessor, that moderation in all things is the key to governing Gotham.	Lincoln. “He wasn’t a career politician when he got into politics. And he lost a lot before he got elected.”	Putsch at Goldman Sachs, which forced him out in 1999: that politics wasn’t any riskier than business.	Bill Clinton: “It’s the economy, stupid”-especially in recession-torn Michigan.
Stakes	Less than $50,000 in his own campaign. “But I didn’t mind the moneyraising part of it.”	More than $73 million of his own money, yet he’s still the 34th-richest American, according to Forbes. And, for Bloomberg employees, concern for whether the distracted mayor decides to sell his company.	An investment of more than $1 million of his own money in his campaign; loss as an African-American shining star was blow to GOP.	Massive: His personal spending of $62.8 million on his Senate campaign was the most in history, including more than $35 million on the primary alone.	Spent more than $10 million to finance early TV-ad campaign alone.
Chatter	”Bob Dole liked to say that, since I was born abroad and couldn’t run for president, I was the only senator he could trust.”	Despite his denials about interest in 2008 presidential race, he or associates apparently bought up nearly all the relevant domain names, including Bloomberg2008.com; he did something similar before the mayoral campaign in 2000.	Reform of tax code and Social Security tripped his trigger. “I was sick and tired of politicians lying to people about the big issues that we were supposed to be working on and telling them everything was OK- when it wasn’t OK.”	May have taken to heart the comment by his ex-wife in 2005 that he “let his family down, and he’ll probably let New Jersey down, too”-an observation that his opponent actually used in a campaign ad.	Endorsement by Lee Iacocca- former Chrysler CEO, Statue of Liberty revitalizer, of presidential timbre- provided a key-shot of credibility.

Name	Steve Grossman	Amo Houghton	Ned Lamont	H. Ross Perot	Mitt Romney
Age	60	80	52	76	59
Undergraduate Degree	Princeton	Harvard	Harvard	U.S.Naval Academy	Brigham Young University
CEO of	Grossman Marketing Group, Somerville, Mass., 1975-present	Corning, Corning, New York, 1964-1983	Lamont Digital Systems, Greenwich, Conn., 1984-present	EDS, Dallas, 1962-1986; and Perot Systems, Plano, Texas, 1988-2000	Bain Capital, Boston, Mass., (co-founder and managing partner, 1984-1999)
Party	Democrat	Republican	Democrat	Independent	Republican
Political track record	Lost in 2002 Democratic primary for governor of Massachusetts.	First won election to House in 1987 and served through this year.	Won race for selectman of Greenwich, Conn., eight years ago before beating incumbent Sen. Joseph Lieberman in September primary for U.S. senate from Connecticut. Faces Lieberman’s independent bid in November.	Candidate for president in 1992 who at one early point led both Clinton and Bush in the polls, then ran again in 1996 against Clinton and Dole and didn’t do as well.	Lost to Ted Kennedy in 1994 race for U.S. senator from Mass., by Kennedy’s slimmest victory margin ever; won governorship in 2002 in part on strength of business record and as organizer of 2002 Winter Olympics in Salt Lake City.
Learned from	Co-running the losing 1988 presidential campaign of Michael Dukakis.	John Chaffee, moderate Republican and late U.S. senator from Rhode Island.	Legacy of great grandfather Thomas Lamont, who was a partner in J.P. Morgan; and his wife, Ann Greenlee Huntress, an aptly named venture capitalist.	His father, Gabriel Ross Perot, a legendarily sly cotton and horse trader in parts of Texas.	Dad George Romney, former Michigan governor and failed presidential candidate.
Stakes	Spent more than $1 million on his run.	He spent relative pocket change on his campaign. “Most of it you get back from fundraisers and contributors.”	A big chunk of his personal fortune of up to $332 million.	Losses in race for presidency represented modern zenith of American third-party movement.	Campaign spent more than $7 million on his race against Kennedy, but his close loss made him a national political figure.
Chatter	”It’s difficult for a Democrat to run successfully in a primary because of voters’ suspicions that their values and his values don’t line up.”	”I didn’t run on any particular principle. Most men of principle are damn fools.”	MoveOn.org crowed about their success in “making” Lamont, but they didn’t count on Lieberman’s stubbornness.	His memorable warning that NAFTA’s adoption would create a “giant sucking sound” from U.S. job losses to Mexico has taken its place as a Hall of Fame presidential-campaign sound bite.	Having announced he won’t seek re-election as governor, he’s sniffing around possible presidential bid in 2008; but his Mormonism may be an issue with the Christian Right.