Five Leadership Lessons From Obama's Second Month

Here is the second one of Shaun's texts. I don't know about the competition one and I really question this parallel he makes between public administration and business administration. Companies, for example, are about people, he says. Are government the same?

I believe that few months are too short of a horizon to start getting lessons and drawing conclusions. The world we live in has too much of a short-term vision, we loose patience and we expect too much too fast. I believe the best leadership lesson from Obama is to have accepted to take the lead NOW. Two months after he did, I don't think these lessons, although interesting from a business perspective, are really those we can learn from his leadership.


Shaun Rein, 03.19.09, 06:15 PM EDT

Once again, he has gotten more right than wrong, and we can all learn from his experience.

In the last week or so, we've seen a mini bull run on the stock market, but the U.S. economy is still in bad shape. Another half-million Americans lost their jobs during Barack Obama's second month in office. But the president's approval ratings remain high, despite the rocky economy and the uncertain futures of millions of Americans. Those high ratings reflect the success the president has enjoyed in demonstrating leadership and confidence.
In a follow-up to my Feb. 5 column on lessons corporate leaders could draw from the president's first month in office, here are some lessons to take from his second--from both his best moves and his blunders.

Lesson 1: Localize your Brand
President Obama had Hillary Clinton present different images to different parts of the world on her first tour abroad as Secretary of State, even as she kept to the core American ideals of freedom and democracy. In Asia, she was relaxed and unscripted, answering questions from Korean schoolgirls about her favorite rock 'n' roll bands and how she had first fallen in love with Bill. In the Middle East she presented another image, a more cautious and conservative one that fit better with the ideals of conservative Muslim states.

In presenting those different images, Clinton effectively localized America's brand. Global brands often try to take the exact position that worked in the U.S. to foreign markets. But what works in one country often fails in another. There are all too many business school case studies of companies like eBay (nasdaq: EBAY - news - people ) and Home Depot (nyse: HD - news - people ) that failed to localize their images to fit local tastes and suffered as a result.

For instance, Wal-Mart (nyse: WMT - news - people ) has botched selling to China's emerging middle class, 250 million strong, because its "everyday low price" image doesn't resonate there. In China, people worry constantly about counterfeit baby formula and shoddy products. More affluent consumers, not value-conscious ones, are the patrons of big-box retailers. They go there because they trust they'll be buying genuine products. More price-sensitive shoppers stick to dingy mom-and-pop shops that operate on paper-thin margins and offer everyday low prices--and everyday poor quality.

Pizza Hut, the Yum! Brands (nyse: YUM - news - people ) chain, is hardly upscale in the U.S., but it has enjoyed considerable success in China by branding itself as a place for the upper-middle class to go to on dates or gatherings with colleagues. The restaurants have modern design and fabulous service. They cater to members of China's middle class who aspire to a more comfortable and better life.

As companies look to new growth markets like China during these difficult times, their executives need to determine how to leverage their core brands in those markets. In so doing, they need to adapt to fit local tastes, as both Obama and Pizza Hut have done.

Lesson 2: Embarrass the Competition
In the last month, jiggly, pill-popping Rush Limbaugh emerged as the poster boy for the GOP. When he said on national radio that he hoped Obama would fail, he gave White House Chief of Staff Rahm Emanuel fuel for roasting the Republican leadership. Egged on by Emanuel, Limbaugh won a verbal boxing match with Republican National Committee Chairman Michael Steele, exposing the weakness and dividedness of the GOP and disenfranchising a good chunk of more moderate voters.

Business leaders should take heed during these times of changing consumer habits and launch marketing campaigns that will weaken the competition. Procter & Gamble (nyse: PG - news - people ) has done this recently in promotions for its Olay brand, which positions itself as high-end yet inexpensive. This resonates with women who feel they must cut back on their cosmetic purchases.

Olay's advertisements encourage consumers not to waste money on competitors' unnecessarily expensive face creams. The brand's Regenerist Micro-Sculpting Cream, less than $30 in drug stores, is "more effective than the department store cream costing $350. You just don't get a chic shopping bag." The pitch makes spending money on expensive cosmetics in this economy seem ridiculous.

As consumers look to stretch their shopping dollars, marketers need to differentiate from their competition more than ever and show why they are more worthy, just as Obama's underlings have done regarding the GOP.

Lesson 3: Listen to the Research
Obama's administration uses research methods like polling and focus groups to better understand its constituents' needs. White House polling to get a pulse on trends is not new, but the Obama administration has used it more aggressively than others, not only to gauge the popularity of policies but also to learn how to sell them to the American people and Congress.
Most notably, Obama used polling to help win support for his stimulus package. Based on data from focus groups, his advisers encouraged lawmakers to say investment instead of infrastructure and recovery instead of recession. These words had been found to be more appealing to voters.

The president didn't need sophisticated research to know that the American people were angry about giving hundreds of billions of their tax dollars to the financial institutions that caused the economic mess, and about outlandish executive pay and bonus packages. But he has made sure to react swiftly and surely. He switched this week to a much harder line against AIG (nyse: AIG - news - people ) and other institutions receiving TARP funding, directing Treasury Secretary Timothy Geithner to use all possible legal measures to get back the $165 million in bonuses given to executives at AIG's troubled financial products unit.

Now more than ever, companies must switch from being product-focused to being consumer-focused. Just as knowledge from polls has been key in helping Obama maintain his high approval ratings and pass major policy initiatives, knowledge from consumer research will be key for companies that are going to grow in this challenging market.

Companies like P&G will come out of the downturn stronger than the competition because of their commitment to understanding consumers, just like during the Great Depression. Since 2000, P&G has turned its business around by spending more than $1 billion on consumer research and dedication to innovation to better meet consumer needs. Companies like P&G that focus on what consumers need now will be the ones that emerge ahead when the economy picks up again.

While Obama made some great moves in his second month in office, he again failed in important areas, too.

Lesson 4: Avoid Number Traps
To pass his stimulus package, Obama promised that it would "create or save" 3.5 million new jobs. While it is important to be strong and clear in the face of adversity, to build confidence among the American people, Obama took a risk floating such a precise number--though the "or save" part should make the number harder to hold against him. He leaves himself open to charges that he never reached that number. He gave his critics fodder to lambaste him.
Corporate chieftans outlining future goals should always be confident and transparent but should never get tied down unnecessarily. GE's stock price got hammered when CEO Jeffrey Immelt said on CNBC that the company would absolutely not cut its dividend--only to turn around and do so a few weeks later.

In this downturn you should give specifics on how you plan to reach your goals and on the policies you plan to enact to achieve them, rather than on precise growth targets. A focus on quarterly numbers is shortsighted and can prove very damaging to morale and the stock price if the numbers fall short of expectations.

Lesson 5: Closely Manage Your H.R.
Obama has done well creating a State Department full of talent, led by Hillary Clinton and superstar diplomats George Mitchell and Richard Holbrooke. But he has left the Treasury Department understaffed and floundering just when it needs manpower the most. Beneath Treasury Secretary Timothy Geithner, hardly any top deputies have been named. In the words of former Treasury spokesman Tony Fratto, the secretary is "fighting a war on multiple fronts without generals there to help him."

Geithner's aides are stretched thin, and he has an army of advisers but no one else with any real authority. British government officials have complained that they couldn't reach anyone to talk to, and the insurance giant AIG has floundered without anyone from the Treasury really explaining to it the terms of the bailout.

Companies are always about people--quality people. In these difficult times more than ever, companies need the best people to help steer them. They need to attract talent and distribute it between divisions. It's no good to have all your stars in one department and leave others high and dry.

The strongest, most innovative companies always make sure they acquire talent in all areas, from research and development to marketing to sales. Top talent always wants to go where it is valued, to companies such as Apple (nasdaq: AAPL - news - people ) or Google (nasdaq: GOOG - news - people ), and that's why, despite getting hit hard, they are still doing better than everyone else.

Companies should continue to watch closely and learn from Obama's leadership initiatives as a key source of insight into what works in this challenging economy. His second month has been rockier than his first. Let's hope that his third is better and that the U.S. economy really does come out of its recession later this year, as Federal Reserve Chairman Ben S. Bernanke predicted last week.

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