Five Leadership Lessons From Obama's

First Month
Thu, Feb 26 02:30 PM
Shaun Rein, Forbes.com
It has been a little more than a month since President Obama was sworn in as the 44th
President of the United States. He's riding a wave of massive popularity and has
assembled a team of this generation's best and brightest, but the economy still is lurching,
with stock-market indexes hitting decade-old lows. Americans are scared, and senior
executives are facing the most challenging business climate of their lifetimes.
As new paradigms for leadership emerge and old strategies go out the door, corporate
chiefs need to rethink how they manage. Some companies will come out of the downturn
stronger, others in bankruptcy. More than ever, strong, decisive and confident leadership
will be the difference between thriving and collapsing.
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We can take a page from Obama's playbook and his Feb. 24 speech to Congress for tips
on what to do and what not to do. His first month has been marked by some great
foresight and a few misguided moves. Here are five key lessons from his first weeks in
office.
Lesson 1: Have a Strong Brand and Position in the World
Right away the president started rebranding the nation. America was known as the beacon
of freedom and a better way of life until its standing in the world took a hit during the
Bush administration. Obama signed legislation to close the prison at Guantanamo Bay on
his first day in office. He has taken practical rather than ideological stands on Iran and
Cuba. He has reached out to Muslims and people of sometimes unfriendly nations to
encourage them to look to America as a benevolent superpower--and a good economic
partner.

Senior executives need similarly to use the downturn to hone their corporate brand
images to incorporate new realities, as consumers rethink their needs, look for value
and cut back on discretionary spending.
Starbucks has announced that it will enter the instant coffee market after spending
decades positioning itself as a daily luxury treat and distancing itself from the Nestls
and Maxwell Houses of the world. The company realizes the world has changed and it
can no longer rely on consumers shelling out $4 for lattes with whipped cream and
cinnamon.
What worked in selling to consumers before may be irrelevant now. Senior executives
need to see if their brands' positioning needs to be changed, just as Obama is making over
America's image.
Lesson 2: Don't Lose Sight of the Long Term
In her first trip to China as Secretary of State, Hillary Clinton pushed the Chinese
government to cooperate to lower greenhouse emissions. Getting the Chinese to buy
more Treasury bills or ensure human rights played second fiddle to pursuing the longterm goal of reducing the costs of pollution and reliance on oil. It's expensive, but it's a
must do. When the economy gets going again, China and the U.S. will need a healthy
environment and freedom from the whims of oil barons in South America, the Middle
East and Africa.
Corporate leaders likewise need to shed fear and continue to make the investments
and decisions for future growth even at a cost to their quarterly numbers. Intel is
using the downturn to invest more than $7 billion in innovation, to distance itself
from weakened competitors. Who do you think will be best poised to benefit when
the business cycle changes? Intel, or its competitors that are slashing their
innovation and sales budgets?
The worst thing to do right now is let fear paralyze you so you can't make the
decisions that will keep your company competitive in the long run. You may need to
invest more in certain areas and cut back in others; you may even need to cut
everywhere. But you need to be guided by thoughtful, careful analysis rather than
fear.
Lesson 3: Smart P.R. Means Managing Expectations
President Obama has continually lowered expectations about his ability to right the
economy quickly. This has given him time to maneuver and allowed for more upside
potential. He has maintained very high approval ratings despite the economy's continued
slide. Managing the expectations of investors and employees is critical now. One of the
biggest mistakes senior executives make is trying to put too positive a spin on a situation.

When General Motors took bailout money last fall, its management raised
expectations that it could figure out how to right itself by February. Now that the
company is running back to Congress for another $12 billion, confidence that it will
ever right anything is gone. It is hard to keep going back to the trough. Congress
and the American taxpayer do not want to feel duped.
The world's best salesmen know that it is better to break conservative quota numbers than
to miss overly optimistic projections. Once companies start announcing numbers that
blow past analysts' forecasts, investor confidence will grow. That will be critical to
starting the recovery.
One caveat, though: Don't push expectations too far down or you'll run the risk of
demoralizing the troops. Obama has to walk a fine line, dampening expectations but not
freezing the gears of business. That is why he took a more upbeat position during his
speech to Congress than he had in recent weeks. And corporate chieftains can't be overly
downcast or investors will hammer their stock and top-performing employees will jump
ship.
While Obama has made some great moves, he has also made some errors we can learn
from.
Lesson 4: Build Consensus--But Don't Let a Minority Hijack the Majority
Obama made being bipartisan and reaching across the ideological divide a big part of his
campaign message. And he has stuck to it once taking office. He has appointed a
Republican Secretary of Defense, Robert Gates, asked a conservative to be Secretary of
Commerce, Judd Gregg, and has regularly stepped across the aisle to Republicans in
Congress in a way Bush never did with Democrats.
He has been smart to try to build consensus, but he has gone too far. He has spent too
much time trying to placate Republicans. By giving them too much voice, he has reenergized them, and he let his stimulus packaged get delayed just when decisive action
was needed.
In China, on the other hand, the government pushed through stimulus measures fast
enough to buoy consumer confidence. My firm, China Market Research Group,
interviewed several hundred Chinese consumers in six cities in January, and 80% of them
said they had full confidence that the government would implement the policies needed
to right China's economy and maintain stable growth. Gross domestic product is growing
rather than contracting.
Senior executives need to be nimble and move fast to adjust to new business
realities. Decisions must not be slowed by endless committees trying to get everyone
to buy in.

Lesson 5: Conduct Superior Due Diligence, Repeatedly

Obama has had problems vetting candidates for Cabinet positions. From Bill Richardson
to Tom Daschle, nominees have had skeletons in the closet far more problematic than
Obama's investigators found. In approving them and then having to retract their
nominations, Obama damaged his reputation for careful due diligence.
Companies cannot make this mistake. They have to spend whatever due diligence
costs. In an age where Allen Stanford's alleged $8 billion Ponzi scheme pales in
comparison wtih Bernard Madoff's much bigger one, no one can take reputations at
face value. I have been in far too many meetings where someone said, let's do
business with so-and-so--he comes from a good family. The days of trust based on
reputation are gone. Companies need to conduct due diligence, repeatedly.
In the Great Depression, superior leaders and minds emerged from the ashes. This crisis,
too, will see winning executive teams take their companies further beyond their
competitors. The biggest CEO of all, the president of the United States, is sure to
continue to provide outsized examples of what and what not to do to accomplish that.
Shaun Rein is the founder and managing director of the China Market Research Group, a
strategic market intelligence firm focused on China.
Shaun Rein, Forbes.com

Column : Obamanomics and India

Subhomoy Bhattacharjee
Fri, Feb 27 02:30 AM
Within the enormous caverns of the Barack Obama's $787 billion stimulus plan is a
nugget for US companies to spend a few billions to construct roads and bridges, mass
transit rails and national parks. The US president is right in expecting a massive spin off
for his economy from the measure that will improve the top lines of construction
companies, if not their profits and lead to a surge in job creation. In more or less the same
period the European governments too plan a similar push to their infrastructure
investments.
This is one part of the plan that should be of most concern to India, probably even more
than the proposal to cut tax breaks for firms which ship jobs overseas. Because, in the
same time frame ie within the next two years or 2012, we also plan to spend about $500
billion to develop our infrastructure in a massive way. The dampener on outsourcing will
be moderated as Indian and US companies will be on the same wave length on this
cut costs. But that benefit will not work in the race to capture the global infra funds.
Put simply, after a nice lull of several years, companies planning to invest in Indian infra
sectors will now face steep competition in attracting the attention of global infra fund
managers. They will have to sound convincing that India offers a better deal than the US
or Europe in the infrastructure business, in the next few years. This will include the rules
for doing business and the rules for raising finance. All this has to be done, in the midst of
the ripples that have already begun in the global financial markets about the Obama plan.
At least one global fund house has already begun mobilising finance at Libor plus 500
bps to invest in US infrastructure.
We also have to remember that even for domestic infra funds, the rules for investment
abroad have been simplified. Few fund managers at this stage will be able to say that
given a chance they will prefer to invest in a special purpose vehicle to develop a road
project in India than one in the US. These are not academic exercises but real bread and
butter choices that companies in very harsh financial markets will be making very soon.
If that sounds challenging there is no doubt it is and talking to the Indian companies has
made me sure that they too think the Obama plan will impact them big. So it is very
urgent that we get our act right on the stuff that crimp infra investment in India.

And here, instead of moaning about the problems, I feel there is cause for cheer if one
looks at some things we have recently got right. Of these, the one that needs a big round
of applause is a government proposal to allow single bidders for projects, especially for
roads and highways. This might seem like playing with government money but it is not.
Of the 34 projects that the NHAI had advertised, only 16 have received any bids. Of
these, six stretches have got only one bid.
Before readers begin to draw pictures of cartels playing cahoots with rules, it is worth
recounting that the railways face the same problem. Its flagship project to construct a
locomotive factory at Madhepura in Bihar has received only one financial bid out of the
three companies that had put in technical bids. The phase II of the Mumbai metro project
has done worse. It has got no bidders from among the seven companies that put in
technical bids.
The central government is plainly waking up to the sudden drying of funds in
infrastructure sector. But what is most needed at this juncture is similar realisation among
state governments too. Indian infra projects with the glorious exception of the Delhi
Metro have consistently been delayed in completion, largely due to state level
bottlenecks. The latest flash report of the ministry of programme implementation shows
that 47% of the 523 biggest projects involving the government are running delayed. The
more important piece of statistic is that this has raised the cumulative cost of these
projects by over 11%. The implications are obvious. Since infra project developers rarely
get funding at less than 14-16% rate of interest in normal circumstances, an 11% cost
over run means adding one more per cent to the project cost.
So, it is quite pleasing that governments, both at the centre and states, have revised their
take on land acquisition. On February 23, for the first time in nearly two years states and
the Centre publicly acknowledged that they need to go for the jugular to get land for
projects. Infra projects were almost paralysed as a fall out of the problems in acquiring
land from 2007 onwards. But at a meeting of the state chief secretaries with the cabinet
secretary to work out ways to make the government stimulus package work, ministry
officials, to quote the government release, told states to give "special attention to land
acquisition wherever projects are stalled on account of this reason". In Indian government
speak that could mean a big step forward.
Would these be enough? I doubt it. In the next few months, several Indian entities will
approach the international markets to raise debt to finance their projects. To ensure they
have any reasonable chance to compete, the entire infra project approval and delivery
mechanism needs to be redrawn very fast.
-subhomoy.bhattacharjee @expressindia.com