Five Leadership Lessons From Obama's First Month

This article originally appeared in Forbes Magazine.

The president has done three things that all CEOs should do--and two they should avoid.

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.

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 (SBUX) 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 Nestlés 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 long-term 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 (INTC) 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 (GM) 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 re-energized 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 with 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.

Comments

[old flyer:]

On the most vital point in evaluating Obama's early leadership you blew it badly.In trying to link presidential leadership with that of corporations .You dislayed a complete misunderstanding of the demands on one who bears the awesome responsibilities of leading a nation. we are in a crisis of confidnce..Every individual who has an inch of paper or a minute of air time is emphasizing gloom and predicting disaster and corporate leadership is either joinining in the chorus or is bunkered down and mute.The people had no place to turn for encouragement as President Obama was over singing in the national dirge until hissomewhat lighter note in the last message to Congress.Obama is not the CEO of America Inc.he is the leader of a great nation ,a troubled nation at the moment ,but still the richest and most powerful on earth,FDR took office during the greatest depression ever and Winston Churchill saw his armies driven from Europe at Dunkirque in one of the greatest retreats in military history,These two great historical figures could have addresed their people with an inventory of woes but instead in words of magnificent power they uplifted their people and in the darkest hours of two nations gave those people hope and inspiration and a conviction of future victory.That is Presidential leadership and Obama has yet to achieve it. For the good of the whole country and it's people I pray he finds within himself the abilities to so lead.

Mar 01 09:45 AM

[User 176610:]

The writer has his head where there is little sunshine or reality.

Mar 01 10:07 AM

[beenburnedt...:]

I didn't get a lot out of this article. Haven't picked up a Forbes magazine lately and now I know why. Mr. Rein must have some thoughtful things to write about when it comes to predicting how, when, and why China will become the new world financial leader.

Mar 01 10:11 AM

[sunnsea:]

Good post. There are certain leadership qualities that are applicable whether your the President of the U.S., large corporation or of an auto body shop. On your point 4, Obama did spend too much time courting Republicans, many of whom are terrorized by right-wing talk radio and Fox Noise that they will never appear to be willing to compromise. This reminds me a lot of Blazing Saddles, which had its 35th anniversary this week. The white folks of Rock Ridge do not want Sherrif Bart to be there but after defeating Mongo (read Wall St.) one old lady sneaks a fresh home-made pie to him through the back of the jailhouse as a thank you...later Bart says, "I'm rapidly becoming an underground success around here." and his deputy (Gene Wilder) replies "why in another 25 years they'll be shaking your hand in broad daylight."

Mar 01 10:28 AM

[Ferdinand E...:]

Mr Rein, China is not going to be able to reduce its CO2 emissions and maintain their desired rate of growth. They are going to do what they can, by which I mean increasing their nuclear inventory, but that's about it. And, incidentally, when the economies of the US and China get going, emissions will increase. Finally, let me use this opportunity to say that I hope Ms Clinton was not naive enough to suggest that China should attempt to install the kind of cap-and-trade arrangement that President Obama seems to favor.

Mar 01 10:31 AM

[tricky dick:]

In light of Consumer Reports taste test of brewed collee, Starbucks did the smart thing facing up to reality...."Competitio... is the life of business and the death of profit"

Mar 01 11:51 AM

[pacman1947:]

It would be informative to compare Bush with Obama on issues of leadership mistakes and style.

Bush's appointees set entirely new standards for meeting low expectations. Of the more than 10,000 presidential appointees, I can think of none who jump out to the forefront of bright young stars or mental giants. They seem to me to have been a cadre of embarrassing disappointments.

Bush was on vacation from the moment he was elected until 9/11. I recall he was reading a goat story while we were attacked.

Bush's cowboy style and bullying tactics, destroying the lives of the poor and disenfranchising the weak display his greatest faults. His pathological lies led us to war and the loss of nearly all American prestige and credibility.

Being a friend to Obama will lead you to greatness. Only enemies of Bush could aspire to that goal.

Obama's greatest strength is that he takes on the powerful and the wealthy. He stands on his word and his ethics. He brings new ideas, vigor, and logic to the table. He believes in science and the promise of innovation. Bush was and is the exact opposite on all counts.

CEOs and foreign leaders can learn from Obama, even in his mistakes. Bush learned and taught nothing, and refuses to admit mistakes. CEOs learned nothing from Bush, which is the reason that so many have run their companies into the ground.

Good article here, in that you broach a touchy subject in today's world.

Mar 01 12:26 PM

[OnTarget:]

This is drivel...there is nothing intellectual to the article nor this post. In fact, it is offensive, political posturing and double-speak. If Obama actually delivers on his promises (that half of Americans voted against, not a "mandate" as the media seems to claim) do you understand the landscape that will result? The promises sound wonderful, until payday arrives.

Who wouldn't want everything promised? The problem is there is no free lunch; too much was over-promised. If we actually try to achieve Obama's goals we will bankrupt ourselves and wind up with much less than we currently have, healthcare or otherwise.

History is yet again repeating itself. If I am correct, and it is repeating, then what leadership skills has Obama really brought to the table? I see no new ideas or vision...only populist pandering at the expense of achievers, however they may be defined. You can pick apart the agenda to any level of detail by mere examination of outcome.

He has risen to power the same way many others before him has - by alienating achievers. But all of us will pay...

On Mar 01 12:26 PM pacman1947 wrote:

> It would be informative to compare Bush with Obama on issues of leadership
> mistakes and style.
>
> Bush's appointees set entirely new standards for meeting low expectations.
> Of the more than 10,000 presidential appointees, I can think of none
> who jump out to the forefront of bright young stars or mental giants.
> They seem to me to have been a cadre of embarrassing disappointments.
>
>
> Bush was on vacation from the moment he was elected until 9/11. I
> recall he was reading a goat story while we were attacked.
>
> Bush's cowboy style and bullying tactics, destroying the lives of
> the poor and disenfranchising the weak display his greatest faults.
> His pathological lies led us to war and the loss of nearly all American
> prestige and credibility.
>
> Being a friend to Obama will lead you to greatness. Only enemies
> of Bush could aspire to that goal.
>
> Obama's greatest strength is that he takes on the powerful and the
> wealthy. He stands on his word and his ethics. He brings new ideas,
> vigor, and logic to the table. He believes in science and the promise
> of innovation. Bush was and is the exact opposite on all counts.
>
>
> CEOs and foreign leaders can learn from Obama, even in his mistakes.
> Bush learned and taught nothing, and refuses to admit mistakes. CEOs
> learned nothing from Bush, which is the reason that so many have
> run their companies into the ground.
>
> Good article here, in that you broach a touchy subject in today's
> world.

Mar 01 01:51 PM

[John Lounsbury:]

On item 4: If Obama wants bipartisanship to occur, he must get Republicans to propose things they would like to see considered and included in legislation. I think he blew it by assuming if he talked to Republicans and got a few compromises incorporated, that they would support the stimulus package. They didn't.

If you want bipartisanship, you must have both parties at the table in writing major legislation so that compromises occur in the generation of legislation, not just as the time to vote arrives.

All that being said, the "loyal opposition" must be loyal to the concept of bipartisanship. Unfortunately, I am cynical enough to believe that, all too often, the party out of power has too many people who are trying to position for a future political advantage rather than aid the party in power trying to solve problems. Right now, that is Republcans. Not too long age it was Democrats.

On item #5: Never trust your friends without verification. If you view your friends through the lense of your own experiences, you will fail to verify factors you mistakenly think you know about them.

Mar 01 03:20 PM

[TimR:]

Obama and the congress are attempting to rule entirely from the left. Ths is foolish and self-destructive. It also means that the Republicans will likely take advantage of the enormous vacancy in the center that is opening up.

This article is essentially a puff-piece praising Obama. It hardly seems necessary. The election is over.

Mar 01 05:34 PM

[fireball:]

seems he intends to "rule" just as the rest.
the u.s. citizens are mushrooms. keep 'em in the dark and feed them generous quantities of horse manure.

Mar 01 06:20 PM

[Jimbo:]

I don't know what pacman has been smoking, but it has got to be real good stuff.

Mar 01 07:53 PM

[Niner:]

like a reformed sinner I have seen the error of my ways and I'm now as reformed Republican. Mr Bush and his "pathological lies" did greatly influence my decision to reform.

I voted for Georgie the first time and not the second and I reserve the right to change my mind about President Obama come the next election. but, I sure do like what I hear from him.




On Mar 01 12:26 PM pacman1947 wrote:

> It would be informative to compare Bush with Obama on issues of leadership
> mistakes and style.
>
> Bush's appointees set entirely new standards for meeting low expectations.
> Of the more than 10,000 presidential appointees, I can think of none
> who jump out to the forefront of bright young stars or mental giants.
> They seem to me to have been a cadre of embarrassing disappointments.
>
>
> Bush was on vacation from the moment he was elected until 9/11. I
> recall he was reading a goat story while we were attacked.
>
> Bush's cowboy style and bullying tactics, destroying the lives of
> the poor and disenfranchising the weak display his greatest faults.
> His pathological lies led us to war and the loss of nearly all American
> prestige and credibility.
>
> Being a friend to Obama will lead you to greatness. Only enemies
> of Bush could aspire to that goal.
>
> Obama's greatest strength is that he takes on the powerful and the
> wealthy. He stands on his word and his ethics. He brings new ideas,
> vigor, and logic to the table. He believes in science and the promise
> of innovation. Bush was and is the exact opposite on all counts.
>
>
> CEOs and foreign leaders can learn from Obama, even in his mistakes.
> Bush learned and taught nothing, and refuses to admit mistakes. CEOs
> learned nothing from Bush, which is the reason that so many have
> run their companies into the ground.
>
> Good article here, in that you broach a touchy subject in today's
> world.

Mar 01 09:19 PM

[Muddy:]

TO MR REIN,
The coolaid you just wrote about:
Lession 1. Blame your predecessor for the problems so you don't have to take responsibilty for the outcome of your decissions.
Lession 2. Beg your credit card company (China) to loan you more money to run up your debt even higher.
Lession 3. The underlings cant think for themselves, so tell them what to think.
Lession 4. Minority should be ignored and opressed.
Lession 5. Hiring more government regulators (SEC) will ensure due dilligence in monitoring business practices.
I hate to be sacastic but Seriously think before you write!

Mar 02 12:43 AM

[Joseph Sherman:]

I agree with Rein's lessons, but I disagree with his approach to Starbucks slightly. Starbucks may make short-term profits by entering the instant coffee market, but what are the long-term implications its brand? Why should anyone pay a high price for a Starbucks coffee if a similar product is available at the local grocery store?

Mar 02 05:49 PM