Permanence & Politics
March 5 2008 by Robert Lawrence Kuhn
It struck me when I was writing two articles at the same time, both on politics, largely late at night. One was for an American publication on the new generation of Chinese leadership, appointed last October at the 17th National Congress of the Communist Party, which is held every five years. The second was for a Chinese publication on the American presidential campaign, which is held every four years. The simultaneity was coincidental, but as it turned out, revelatory.
On Chinese Politics for
My article on the new Chinese leaders noted that by appointing two younger men to the Politburo Standing Committee,
At 54 and 52, with Ph.D. degrees in law and economics, respectively, Xi and Li are widely anticipated to become the future senior leaders of
The contrast to the American system seemed especially sharp during this hectic season of presidential primaries, where week-to-week during 2007 we could hardly handicap our likely next leader.
On American Politics for
A few months ago, I had written an article in
So I was writing for my Chinese readers right after one of the most startling and dramatic weeks in American politics. First, Barack Obama made history in his stunning victory in the
With all the hype and frenzy, it is sometimes hard to remember how important the American election really is. Indeed, I have a concern. How could such swings in political passions and fortunes occur so quickly, and what are the long-term implications of such volatility? Such instant, unanticipated tsunami waves of change would have been unthinkable in previous elections.
Why now? One reason is the instant nature of news and information, from 24-hour cable news to the Internet. It is as if the entire country is hard-wired together and resonates together. This deep connection is driven by in-your-face emotion. There is little time for reflection. There is minimal inertia in the system. Any influence can move opinions rapidly, perhaps too rapidly.
All this political action may seem like fun; it’s certainly exciting to watch. But with so much at stake, so much volatility may not be so healthy.
Which System Works Better?
Those being my two articles, one on Chinese politics for America and the other on American politics for China, I began to reflect on the obvious question of which system works better? I have, as you’d expect, a built-in prejudice that Western multi-party democracy, in Winston Churchill’s famous adage … is the worst form of government ever devised by man, except for any of the alternatives. Virtually all Americans believe that our political system, notwithstanding our election-year capriciousness, is surely best for our country and likely best for every country. Most (but not all) Chinese believe that their system, assuming the continuation of reforms, is best suited for the realities of
Applications to Corporate Governance
I began to think about the broader ramifications of predictable stability versus dynamic uncertainty in the governance of institutions, particularly in the selection of their senior leaders. Can what we see in the process of choosing our government leaders help in the process of choosing our corporate leaders? I came up with some general principles. See what you think.
Competition among leadership candidates is good; transparent competition is (usually) better.
Lack of competition allows entrenched leaders to become enshrined; there is high inertia to change as policies and positions become ossified and unable to adapt. The Chinese system does have competing interests. At the highest levels, competitions are opaque to the public; though at lower levels, they are beginning to emerge through the development of what is called “Intra- Party Democracy,” which empowers individual party members as never before and develops degrees of transparency in Party operations.
In leading corporations, when internal candidates vie for senior positions, the competitive process stress-tests candidates and puts even subordinates on alert. Selecting the successor to Jack Welch at GE was the classic case.
Stability in leadership is the default objective.
Stability in leadership operates optimally at the extremes, both under normal conditions and during times of high exigency when change could be destructive not just disruptive. (Obviously, if leadership is the cause of problems, then the organization has no choice but to change it.)
Dynamic uncertainty in leadership is optimal only under specific conditions.
When change should disrupt the status quo, but not destroy the organization, that is the time for dynamic uncertainty.
When changing leaders, assess the tension between stability and dynamic uncertainty.
Given the different situations in the
It usually just happens that an organization either has stability or dynamic uncertainty in maintaining or selecting its leaders. I’m saying that this dichotomy-how best to match the leadership-selecting process with the needs of the organization- should be a proactive choice, not a reactive accident.
Robert Lawrence Kuhn, an international investment banker and corporate strategist, is senior adviser to Citi group. He is co-editor-in-chief of China’s Banking and Financial Markets: The Internal Report of the Chinese Government and author of the No. 1 best-selling book in China in 2005, The Man Who Changed China: The Life and Legacy of Jiang Zemin. Dr. Kuhn’s articles describing and explaining investment banking are posted at www.chiefexecutive.net/investment