Of late, I’ve been following large organizations in historic flux. Consider, on the one hand, the Democratic and Republican parties of the U.S., and on the other, the Communist Party of the People’s Republic of China. The three may seem to be polar opposites but they have much in common. And if my partisan readers are mystified, perhaps angered, by my apparent equation between political parties in America and China, I only ask a few minutes of your valuable time to suggest the sociological similarities. From these similarities we can discern general principles at work, some of which can be applied to the management of corporations.
The Democratic Party: Change vs. Experience
Before Hillary Clinton lost her first caucus or primary, she had already ceded the high ground of political positioning. Her superficially sensible but strategically flawed decision to embrace “experience” as her prime distinguishing characteristic crowned Barack Obama, uncontested, with the shining mantle of “change.” The more she stressed Obama’s inexperience, the more she solidified herself as the “Status Quo Candidate.”
The promise and inspiration of change-something different in the future than what we had in the past-is what energizes the Obama juggernaut. Obama is the novelty, the Hope of the New, while Hillary, by reiterating her impressive but monotonous litany of wonk-founded positions and intricate proposals, seems by comparison downright dull.
There is nothing about change that makes it inherently better than experience; each makes sense in the right conditions. Context is everything, and the context of what Americans want in 2008 is change, not experience. Democrats even more so.
The Republican Party: Ideology vs. Practicality
When Rush Limbaugh, the leader of right-wing talk radio, attacks John McCain, and when Ann Coulter, the outrageously aggressive conservative personality, says she would rather campaign for Hillary Clinton than support McCain, you know something’s up in the GOP. Although McCain’s positions on certain issues have deviated from conservative orthodoxy, he is unambiguously more conservative than any Democrat running. Why then would any conservative not support him in an axial election that will shape America‘s future (including the likely appointment of Supreme Court justices)?
Here’s how certain right-wing Republicans think: Anyone other than their image of what an orthodox conservative candidate should be is so distasteful, so repugnant, that they would rather lose the election than have their party win with a non-core conservative as its leader. A loss by McCain, they believe, would enable “real conservatives” to take charge thereafter. That such behavior might ensure Republicans remaining the minority party for the next generation is somehow not relevant. When the Romans laid siege to Jerusalem in 70 AD, it was sectarian infighting among the defenders that hastened their collective demise.
The Communist Party: Intra-Party Democracy
I follow the political philosophy of China‘s senior leaders, and I watch for signs of political reform. Recently, I spoke with Politburo member Li Yuanchao, a long-time associate of President Hu Jintao, on “Intra-Party Democracy,” which follows from President Hu’s call for greater democracy in society by first strengthening democracy with the Communist Party.
Minister Li regards Intra-Party Democracy as the cornerstone of political reform because it achieves multiple objectives: empowers individual Party members; increases transparency; subjects higher bodies to the supervision of lower bodies; introduces voting to prevent “arbitrary decision-making;” solicits public opinion of candidates; and expands a system of direct elections at local levels. All this would have been unspeakable, unthinkable, until recent years.
I am convinced that on political reform there is now a major shift in how China‘s leaders think. The process is nuanced and gradual, but leaders are committed to bring about demonstrable change. There is now a real roadmap. Basically, the plan is this: first, to build democracy in the Party and then to expand it into the general populace. By strengthening Intra-Party Democracy, Li says directly, “We pave the way for the people’s democracy.”
Why would a ruling party seek to enhance democracy? First, it is the right thing to do, and Chinese leaders recognize this. Second, as another minister told me, “If the Party does not serve the people’s interest, it will no longer be the ruling party.” It used to be that Party leaders dictated what they wanted and the people had to follow. Now the people assert what they need and want, and the Party must provide and deliver it.
Principles of Adaption
So here we have the Democratic and Republican parties of America, and the Communist Party of China, each trying to adapt, as best each can, to their current conditions. Let’s try to discern some general principles operating here.
The Past is Past. No matter how strong the organization was in previous times, no matter its triumphs, it is likely different today. Organizations that work by interacting with the broad public are inherently dynamic, and organizations that do not know this ossify. Historians should handle past glories; current leaders should not fight the last war.
Determine Core. What is the essence of the organization? What differentiates it, maintains its uniqueness? The danger is that a series of beliefs becomes, over time, welded inseparably together so that, if you are a Republican, you must subscribe to a specific position on each and every one of a long list of often unrelated issues. John McCain doesn’t, which is why he has a problem with the Republican right wing, but at the same time this is why he is so strong with Independents and conservative Democrats.
Fit Current Conditions. Once the organization determines not to ossify and to focus on its core beliefs, the crucial step is to match those core beliefs to the real world. For Democrats, it’s choosing between experience and change. For Republicans, it’s accepting a less-than-perfect conservative leader. For Chinese Communists, it’s figuring out the proper course of political reform.
Align Speed of Change. When change is required, assess its optimum pace. For the Democratic Party, there is urgency since its members are clamoring for change. For the Communist Party, stability for China is essential, so change must be evolutionary not revolutionary.
Know Your Constituency. Whom do you serve? The Chinese Communist Party has come to realize that their leaders must serve the people’s interest, in reality not just in theory; not the reverse, as it once was. Companies call this “Know Your Customer.”
Align Leaders. Do leaders fit strategies or determine them? Both, of course, and the process is often a positive feedback cycle. Barack Obama has surged because change is a Democratic need, and his surge amplifies the centrality of change in their party. Since the beginning of reform in China (in 1978, 2008 being its 30th anniversary), each successive generation of Chinese leaders has furthered the nature and style of reform-their expression is “Advance with the Times.”
Recognize Internecine Conflict. I do not say “avoid internecine conflict,” because that is obvious, and conflict is often unavoidable. But to recognize its unwelcome emergence is to contain its insidious enervation. In America, the Republican Party has the more serious problem because ideological conflict between conservatives and moderates is fundamental. (The conflict in the Democratic Party is personality driven; there are no substantive policy differences between Obama and Clinton). In China, at least since 1989, any disagreement among leaders has been more about the speed of reform than the need for reform. (Every few years, though, left wing critics in China, often academics and retired cadres, criticize some of the undesirable side effects of reform, such as income imbalances and corruption; China‘s leaders wisely respond by calling for more reform, not less.)
Strengthen Organization. In today’s turbulent world, the most important task for an organization is to make itself more robust, better able to weather unforeseen storms. Robustness, more than growth, is the highest contemporary good. The Democratic Party must avoid alienating either Obama’s or Clinton’s supporters. The Republican Party must want election victory more than ideological purity. The Chinese Communist Party must serve the needs of the people. Summing up, if I had to select a single principle, indeed a single word, to characterize the optimum relationship between a publicly interacting organization, whether political or commercial, and its dynamic, mediasaturated environment, that principle, that word, would be alignment.
Robert Lawrence Kuhn, an international investment banker and corporate strategist, is senior advisor to Citigroup. 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 new book will be the inside story of how China’s leaders view 30 years of reform and opening up, historical legacy and future impact.