Romney Runs Against History in Touting CEO Credentials

Shortly after his election as governor of Massachusetts, Mitt Romney gathered the people who would fill the state’s top jobs for a get-acquainted luncheon.

As the group tucked in to plates of pasta salad and greens, Romney -- like the management consultant he once was -- distributed a paper explaining his operating style. About a dozen bullet points, including “talk to each other, not about each other” and “family first,” filled the pages.

Beyond the bromides, Romney outlined the disciplined, data- driven process that had made him wealthy and then helped him rescue the 2002 Winter Olympics from scandal.

“I have never seen such self-awareness about one’s own style,” says Dan Winslow, who became Massachusetts’s chief legal counsel. “He wanted us to understand it.”

If the presumptive Republican nominee wins the presidency, the approach he spelled out over lunch at the Seaport Boston Hotel is the style he’d bring to the White House.

Some historians doubt it would work in Washington.

Since 1900, few former businessmen have made it to the Oval Office. The most prominent was the nation’s 31st president, Herbert Hoover, whose handling of the economy during the Great Depression cemented his reputation as a failure.

“Our greatest presidents, like Lincoln and FDR, were career politicians,” says Bruce Miroff, an expert on the presidency at the State University of New York in Albany.

Unfamiliar Constraints

The presidency’s unique requirements mean that everyone who holds the office needs some on-the-job training, something Romney has done before. Still, the White House would bring unfamiliar constraints. There’s no equivalent in the corporate world to the separation of powers that often thwarts a president’s will. And the job demands political savvy more than managerial excellence.

“Our entire system of government is meant to preclude models and skills used in the corporate world, which may be why presidents with business experience are not our most successful presidents,” says Barbara Perry, a senior fellow at the University of Virginia’s Miller Center.

Coming from a profit-centered environment where they enjoy unrivaled authority, executives often stumble amid politics’ fungible goals and multiple power centers, says Mickey Edwards, who served eight terms as a Republican congressman from Oklahoma. And compared with the iron logic of a balance sheet, the politician’s ability to read the public mood -- an essential skill for governing -- is amorphous.

Taking Abuse

“You have to like politics,” says former U.S. Representative William Frenzel, 83, a Minnesota Republican, who spent 20 years in Congress after a 16-year business career. “You can’t object to glad-handing. You can’t object to taking some abuse from people you have no reason to take abuse from.”

The late Richard Neustadt, author of the classic study “Presidential Power and the Modern Presidents,” rejected the analogy of the president as an all-powerful CEO, writing: “Presidential power is the power to persuade.”

George W. Bush was the first president with a master’s in business administration. His father, George H.W. Bush, made a fortune in oil before entering politics. In their pre-Oval Office days, Jimmy Carter ran a peanut farm and warehouse and Hoover was a wealthy mining executive and financier.

Of that group, only George W. Bush was re-elected.

‘Didn’t Inhale’

Now, at a time of broad dissatisfaction with the economy, Romney, 65, is banking on his private-industry resume to appeal to voters soured on government dysfunction. In a February ABC News/Washington Post poll, 48 percent said his business experience was a major reason to support Romney compared with 12 percent citing it as a reason to oppose him.

On the campaign trail, Romney has played down his tenure as governor while arguing that his track record as a corporate- turnaround artist qualifies him to fix the nation’s economy. His campaign estimates his fortune at as much as $250 million.

“I spent my life in the private sector, not in government,” he said during a Sept. 22 debate. “I only spent four years as a governor. I didn’t inhale. I’m a business guy.”

Romney’s first top executive post came in 1984 when his boss, Bill Bain, asked him to leave his job as a Bain & Co. management consultant to start up a private-equity spinoff, Bain Capital LLC. There the traits that would become familiar to Romney-watchers first emerged: an appetite for data, a rigorous work ethic and an aversion to waste.

Keeping Focused

Those who worked with Romney describe him as a confident executive, who surrounded himself with smart people and encouraged them to debate their way to a solution in his presence. Meetings began on time, usually with Romney -- a fan of “Seinfeld” and “The Simpsons” -- cracking a joke.

Economist Jonathan Gruber of the Massachusetts Institute of Technology advised the Romney administration for more than a year as it developed its 2006 health-care overhaul. At one meeting, while Romney’s advisers dwelled on the downsides of various proposals, the governor kept the discussion focused on health-care coverage as a problem that needed to be solved.

“As a Democrat, coming out of that meeting, I was like, wow, this guy’s really got what it takes to be president,” says Gruber.

Gruber now says he’s disappointed with what he calls Romney’s “disingenuous” campaigning.

Unlike corporate chieftains, who are obligated to represent a narrow interest, presidents must embody the entire society. Romney’s experience running a privately held finance company did little to cultivate mass market sensibilities, perhaps explaining the frequent missteps that have left him with a reputation for changing policy positions.

Competing Interests

“Business executives lead teams of like-minded individuals and communicate the interests that they share, often in opposition to, or at least in disregard of, others’ interests,” Miroff wrote in a follow-up e-mail. Politicians “must appeal to numerous interests, many of them composed of ordinary Americans.”

In Salt Lake City, arriving after a bribery scandal cost the 2002 Olympics their local leadership, Romney transformed a potential disaster into a success that Harvard Business School later turned into a case study of management acumen. Romney’s approach, nonetheless, disappointed some community activists. Glenn Bailey, then head of Impact 2002 and Beyond, a group that wanted benefits from the games to be widely shared, says Romney didn’t act on the fair housing and diversity issues the group raised.

“He’s a corporate CEO,” says Bailey, now with the anti- poverty group Crossroads Urban Center in Salt Lake City. “He expects people to jump when he tells them to.”

Seeing Differences

Along with 25 years in finance, Romney spent four years as governor and three running the Olympics. Those positions exposed him to some of the differences between public and private power.

“President Obama can’t match Mitt Romney’s record and experience,” says Andrea Saul, a campaign spokeswoman.

When Barack Obama was elected in 2008, he was in his first U.S. Senate term and his experience was limited to academia and work as a community organizer, drawing mockery from Republicans such as then-Alaska Governor Sarah Palin.

Romney would confront needed adjustments in the White House. Even his thirst for data could prove problematic, as earlier presidents captivated by the quantifiable found. President Lyndon Johnson relied on warped “body counts” as indicators of phantom progress in the Vietnam War, and flawed intelligence on Iraqi weapons programs distorted internal White House debates over the invasion of Iraq.

“The calculations a president has to make are not reducible to numbers,” says Miroff.

From presiding over a $23 billion state budget or the Olympic Games’ $1.3 billion, Romney would oversee the federal government’s almost $3.8 trillion in spending.

No Cell Phones

Lacking the line-item veto he wielded in the statehouse, Romney would bring a reputation for frugality to the task of shrinking the budget deficit. Geoffrey Rehnert, who was among the first executives hired at Bain Capital, remembers Romney’s reluctance to authorize purchase of an early cellular telephone.

Rehnert, who was working pretty much nonstop in the firm’s startup phase, wanted the cell phone so he could return client calls while driving to appointments.

“Cell phones initially were expensive; Mitt thought it was a waste,” Rehnert says, recalling that Romney wanted him to use a pay phone instead.

Rehnert, now co-CEO of Boston private-equity firm Audax Group, got his phone only after what he recalls as “a spirited debate.”

Making Them Stretch

While former colleagues say Romney brought a comfortable- with-command style to each of his top jobs, he did more than bark orders. “He’s as good an executive as I’ve ever seen,” says Tom Stemberg, founder of Staples Inc., the office supply company Romney funded at Bain.

Stemberg, who later worked on Romney’s gubernatorial transition team, recalled a Staples offsite board meeting in Maastricht, Netherlands, in the early 1990s, when the company’s division heads took turns announcing modest earnings targets.

“It’s after dinner. People are getting tired. Some directors are rolling their eyes,” Stemberg recalls. “Mitt was wide awake and he started to give us a little spiel.”

Citing his experience with superlative management teams at corporations such as General Electric Co. (GE), Romney told the exhausted executives: You can decide to be mediocre or you can decide to be a great company.

With that, the division chiefs, who moments earlier had offered up easily reachable goals, began competing to promise the loftiest earnings.

“He would get you to stretch,” Stemberg says.

CEO Model

Tim Murphy, who was secretary of health and human services in Massachusetts from 2005 to 2007, says Romney’s “CEO model” explained some initial statehouse stumbles, including an ambitious plan to reorganize state government, which ultimately ran aground.

By the time Romney tackled health care, he demonstrated a more subtle style, Murphy says. Over a year and a half of effort, the Republican governor -- working with Democratic Senator Ted Kennedy -- managed to bring home a landmark law.

That 2006 success involved cooperating with the same Democratic legislature that had blocked his earlier initiatives.

Says Murphy, “This is a guy who learns.”

To contact the reporter on this story: David J. Lynch in Washington at dlynch27@bloomberg.net

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.