December, 1992

Fruits of Thought

The Dollar Elections

Is there a lesson for business in Governor Clinton’s victory over President Bush? I think so. Business, like politics, places an unmerciful premium on meeting the perceived needs of the public. But it’s not enough to keep meeting the same need. Conditions change, and the irony is that it is the very success of a business or a political party in meeting a need that leads people to place higher value on satisfying other needs and desires.

George Bush lost the election for many reasons. The economy is bad, he ran an awful campaign, he broke his promise to the people on taxes which he made four years ago. But in the end, all this couldn’t do him in. What was necessary to defeat a Republican for President was a sea of change in the issues that are important to the people. In this sense the Republicans were a victim of their own success. For the change in the relative importance of issues was caused by Republican victories that moved some issues right off the political screen.

When tales of Clinton’s trip to Moscow didn’t resonate with voters, it was because the cold war is over, because on the Republican watch, the Berlin Wall fell and suddenly the Communist threat seemed to unravel. This may have been an issue that might have single-handedly turned an election when the Soviet Union was invading Afghanistan, but it was nothing this time around.

The same applies to economic policy. Not that long ago, inflation was considered the nation’s number one economic problem, but the Republicans reduced the rate to a level where it’s no longer an issue with voters.

In other words whatever the flaws of President Bush, the basic forces at work in this campaign were the issues had shifted away from the issues that held together a grand Republican coalition to elect first Reagan and then Bush.

Remember Churchill, who is widely considered to have been among the greatest Democratic leaders of all human history. Intelligent, inspiring, he led his country through its finest hour. Yet the war was scarcely over when, while he was at the Potsdam Conference planning the post-war world, he was unceremoniously dumped by the British electorate.

Why did he lose the election? He was no less a leader than he was during the war. He lost because the situation had shifted. The British electorate wasn’t worrying about winning wars. They didn’t want more promises of blood, sweat and tears. The issues had shifted to post-war domestic concerns and Churchill wasn’t riding that wave.

Losing elections isn’t always the worst thing that can happen to a political party. Governing is an all-consuming process. Often it doesn’t leave enough time for reading and reflecting. In opposition, a party that is awakened to the need to analyze its own positions as a result of losing an election, often develops the new ideas that will win the election four or eight or 20 years in the future.

We have elections in business too. Every day people vote not with ballots but with dollars. But in business we have the disadvantage that our elections don’t always give business people the wake-up call that political elections do.

Political elections are held on one day, at one time, in one place and the winners are clear. In business, the dollar elections are continuous, and the winners and losers may become clear only over an extended period of time.

But one point is clear: in politics or business, failure can come not only from failing to do things as well as you’ve done them before, but also by continuing to do exactly what you’ve done before. In other words, politicians and business people fail when they do not change sufficiently to meet changing circumstances and market needs.

Not that long ago a couple of management consultants wrote a book in which they selected and profiled the best-run large companies in America. The companies were carefully studied to determine the cause of their success so that others could duplicate their techniques.

A few years later the consultants went back and investigated the companies again. Many had experienced severe difficulties. How could this happen? How could these formerly successful and well managed companies become losers? Did they drop their formerly successful strategies? No. In fact what the consultants found was that the companies had continued their formerly successful strategies even though the environment had changed. What the companies needed were new approaches, not the old, formerly successful ways. This is as true with a small produce company as a massive industrial giant.

Perhaps a particular wholesaler once could have been successful simply displaying his wares on the walk and waiting for customers to come and pick up. Customers would buy the product because they were so pleased to have the variety available, but the quality may have been inconsistent so it was necessary for them to see it themselves. After years of the wholesaler complaining to the shippers of inconsistent quality, the shippers finally get it right and now every box is consistent. So the customers no longer need to see the stuff and want to buy over the phone and have it delivered to them. If this wholesaler doesn’t change his way of business to accommodate the telephone orders and deliveries, the dollar votes will turn against him and he’ll be out of business.

The lessons of history are always vague, painted with a broad brush, not a fine point. But this much is clear: business must strive to stay aware of a changing world. If you say that “I grow X and ship it in 40 pound cartons,” or if you say, “I retail produce and do it in bulk style” and stop listening and learning, you are likely to wake up one morning to find the tide of history has passed you by and that you lost the dollar election you’re participating in every single day.  pb