Fifth & Pacific Companies, Inc. CEO William McComb looks to both the lessons and warnings that publicly-held companies can draw from Washington, D.C. politics. In both scenarios, strong political will is the potential gamechanger needed to address issues, take on risk, or commit to long-term strategies. In this think piece for LinkedIn, Bill McComb discusses how companies can effectively make big, bold, brave decisions.
This article, When Boards and CEOs Act Like Congress, is reprinted in full with permission from LinkedIn, where it originally appeared.
With the federal fiscal year closing on September 30, and the debt-ceiling debate looming yet again, the high price of congressional indecision is becoming increasingly apparent. Smart, practical bi-partisan choices need to be made on the debt-ceiling now. Not to mention the tax code, continuous improvement efforts at ACA, and foreign affairs. Yet most don’t realize our plague of indecision reaches far beyond the walls of Congress into our corporations, boards and C-suites. Always, the source is the same — a lack of political will.
Political will is the collective force that brings together hearts and minds, mustering the commitment and resources to stop and “pay the piper” by addressing strategies and policies in our midst that are unsustainable. Or to take on risky, long-term challenges — especially those that go against popular opinion or “the easy way.”
But political will isn’t strictly “political” in the narrow sense of the word. You need political will to run public companies, universities and other large organizations well. For example, just like Congress, a public company’s leaders faces diverse constituents — from employees and unions to shareholders and partners to regulators and customers. And just as in electoral politics, each group has its own agenda that is all too often in competition with others’ top priorities.
Public companies, it’s fair to say, face the same political forces as Members of Congress, and to similar effect. Big, brave and bold choices become extremely difficult and all too often are sanitized to the point of least resistance. The results are predictable.
Take Yahoo. Despite a revolving door of senior leaders, Yahoo never really faced up to its fundamentals problems. Until it brought in Marissa Mayer as CEO. She opened her tenure with boldness. First, she made the unpopular but instantly recognized as a smart decision to end the cherished right to work from home. Then she hit again with the strategic acquisition of Tumblr for a billion plus. While the verdict is still out on whether she can bring Yahoo back to past glory, I’m betting Marissa’s political will is just what Yahoo needs to succeed. It has already, at a minimum, energized the company and made it top-of-mind again.
Political will isn’t just important in turnaround situations. Just the opposite — with strong political will, a company won’t need a turnaround. Political will matters day-to-day, week-to-week, and month-to-month, and it’s a qualitative measure smart investors ought to constantly think about when evaluating the future of a public company. Just consider quarterly earnings.
Every three months, boards, CEOs and their teams face a crucial test of political will. How will they choose to present and describe performance and prospects? Does management have the guts to come clean if it means a big earnings correction? Does the Board have the long-term perspective necessary to change an acquisition strategy? Or dismiss a CEO? To admit mistakes and missteps?
All of these factors conspire to challenge a company’s political will. Great leaders face up to the challenge, and recognize that political will is necessary at all levels of an organization. Great leaders make sure the right signals are sent, internalizing political will throughout a company.
Making big, brave, and bold decisions on capital spending, strategic direction, mergers and acquisitions, and distribution strategies (to name a few) will never be easy. Often there isn’t a clear-cut answer. Yet when a business lacks the political will to face these choices, over time, it loses market share, fails to innovate and see its competitive advantages steadily diminished. While we can all easily spot this deficit in Washington, D.C. and state government, it isn’t always so obvious on the board, CEO and, ultimately, corporate level.
Political will demands courage and the willingness to take risks and lead and drive change. It requires great communications skills, vision, and restlessness in combatting the status quo. And it is marked by a strong connection to the future. All that sounds big and daunting. Yet it can be addressed daily in your department, division or group. Ask yourself what signals you send as a leader, and how much political will your group has collectively in your company. If you are running an organization—any organization—take a moment to reflect on the concept.
Your job, and mine, is to make sure that as leaders and innovators, we don’t act like Congress. Not now! Not ever!