Five Leadership Lessons From Obama's Second Month

This article originally appeared in Forbes Magazine.

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 (EBAY) and Home Depot (HD) that failed to localize their images to fit local tastes and suffered as a result.

For instance, Wal-Mart (WMT) 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 (YUM) 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 (PG) 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 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 (AAPL) or Google (GOOG), 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.

Shaun Rein is the Founder and Managing Director of the China Market Research Group, www.cmrconsulting.com.cn , a strategic market intelligence firm focused on China.

Comments

[PastTense:]

"Those high ratings reflect the success the president has enjoyed in demonstrating leadership and confidence."

Nonsense. Obama is still in a honeymoon period, which any new president will get. People are simply giving him the benefit of the doubt--he has only been president for two months.

"Obama has done well creating a State Department full of talent, led by Hillary Clinton and superstar diplomats George Mitchell and Richard Holbrooke."

Again, this is totally premature. I haven't noticed any foreign policy triumphs--they may or may not happen.

"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."

Yes, Obama is good at PR, salesmanship...But this phoniness is making some of us more and more uncomfortable.

Before you draw any conclusions about the success of President Obama you need to wait and see if he is successful.

Mar 20 11:10 AM

[grainger:]

You confuse being a good leader with being a good politician. The two are not the same. Mr. Obama is definitely lacking in leadership. He says many things that are politically popular, but he is positioning himself. It is unclear that he has a firm guiding principle as to where the country should go. His pronouncements often conflict with each other.
Doing "whatever works" is not exactly leadership. Quite often more than one tactic may actually work. He seems to just throw things out there until something happens.

Mar 20 11:48 AM

[wheresmymoney:]

I also disagree with President Obamas poll ratings and himself being popular. His ratings are going down on a daily basis. They are now about 56% approval and 43% disapproval. These are not exact statistics but everyday people are getting frustrated with him. Last nite on a talk show the host asked the question does Obama ever work? His stimulis bill was not even read or written by him or his staff but by congress who never read it either, mostly because of the time limit forced on them. He hires people that now we know are crooks and others just lying about the AIG bonuses to cover themselves up. Obama is responsible to make sure Tim Geithner has enough help and there are 16 positions left vacant in the treasury deparatment, Tim cannot do it alone, even if he now admits he knew about the contracts with the bonuses to AIG. How could he not have? He will be Obamas fall man, I sort of feel sorry for him, seeing him up there all alone, and no help on his staff to help him. Obamas main focus should be on our economy and he runs off to Calif. to be on Leno and go to a town hall meeting with his tele-prompters. He can't even answer questions on his own without someone telling him what to say. He acts like he is still running for office trying to impress people about his programs which so far have been a disastrous failure. Here millions of Americans have been laid off, our country is becoming bankrupt because of him spending trillions and trillions of dollars, which is ridicoulous and goes on TV being interviewed about his picks for the sports scores he thinks will win. Even a famous coach of one of the teams he picked said Obama should focus on the economy and not worry about sport sheets. All his campaign promises have been broken, such as I will veto every pork put in a bill, line by line. What a joke that is. I would like to know what Mr. Obama does all day? Does he care about the American people or is he just having fun at our exspense? He is going to tax us on gasoline, energy, capitol gains, not being able to deduct mortgage, not being able to deduct for charity donations, taxing payroll taxes, etc. Then he says only the people or small business that makes $250,000 will be taxed, that is a lie. I think his mission is to ruin America because that is what he is doing. Just think of his national health care system, what will happen when we can't choose our own doctors. Where will he get the money to pay for it? He is very dishonest and lies all the time, says one things and then does the opposite that he promised us. I am greatly dissapointed in his first two months. Just think if he can do this much damage is two months where will American be in four years from now? I agree with the article that to be sucessful you need qualified people that know what they are doing, that is what makes you a sucess. This is something Obamba should think about, and get rid of these clowns he has appointed as his cabinet members. How many had to step down because they had not paid their taxes, ect. If he buys up 8 billion dollars in treasuary bonds like he says he will, it will cause defalation, our money will be worthless.! Right now he will also cause inflation, I remember the double digit interest rates of the past. What Obama needs to do is lower taxes, to help us spend money to stimulate our economy, get rid of mark to market, stop the cap and trade, get rid of trade agreement he made with Mexico to stop their trucks coming in, etc. My daughter works in Cailf. at the county hospital and says every one of her patients are illegal aliens, they dont speak English, and they are getting free health care. Not to mention all the wealfare they get, food stamps, this is another example is why the state of Calif. is bankrupt. Obama also needs to deport all of these people taking jobs away from Americans and giving it to people who he will give citizenship to, just to get relected. Watching the news know with him as President is like watching a sopa opera everyday, while millions of Americans are unemployed and more losing there jobs. Obama ought to roll up his sleeves and "Get To Work" and do something before we are in a real depression we can't ever get out of!!!

Mar 20 12:53 PM

[Mad Hedge F...:]

He has much to learn. I thought President Obama did a pretty good job with comedian Jay Leno last night. With some pundits already pronouncing his administration a failure, he has the moxie to appear on a late night talk show. For the last eight years, presidential visits to California have been about as frequent as Bigfoot sightings. You can diss all those rumors about Treasury secretary Tim Geithner resigning anytime soon. After 59 days in the White House his bowling score is up to 129. All of his favorite picks for the Final Four basketball championships were in politically sensitive swing states (North Carolina, Indiana, Iowa). While playing basketball, he doesn’t get knocked down as much while the secret service is watching, guns at hand. Obama still has the magic touch, speaking with the deliberateness of a trial lawyer, but with the folksy charm of your local barber. One thing is for sure though. Your taxes are going up, baby.

Mar 20 03:48 PM

[Tony Petroski:]

This is about as silly an article as I've seen posted on Seeking Alpha. I understand it originated elsewhere. I'm willing to give B.O. the benefit of the doubt on what is no doubt a very shaky start, but it's way to early to be writing the "leadership" book, "Oprah, Obama and the
Chicago Way: What you can learn by manipulating all around you."

Mar 20 08:30 PM

[fireball:]

lie,cheat, switch, trick, fleece the people.
the problem is where he wants to lead. fdr was a great leader, so was hitler. the destination was lousy.

Mar 21 11:55 AM

[Jimbo:]

I don't know what kind of fermented Koolaid Shaun has been drinking but it has to be at least 101 proof. Shaun should revisit Seeking Alpha in 2012.

Mar 21 12:15 PM

[Capt tom:]

I fully agree with this article. A good leader seeks advice, encourages followers and doesn't shoot from the hip. A good example is his business leaders council, filled with leading CEO's of both political parties. They are working hard to help the president, who is listening.

Mar 21 02:04 PM

[Editrice:]

Shaun, I very much enjoy your theoretical essays. They represent a broader and less parochial view of the workings of the market and its relationship with "the real world" than many of the SA comments. Keep up the good work and don't be discouraged by critics who resort to insults and offer no intelligent alternative framework(s) for thinking about and discussing these issues.

Mar 21 02:40 PM

[TJ Marta:]

Your expertise is supposedly China. Stick to that. I'm a bit shocked that Alpha would allow articles that veer into political name calling. Alpha should be better than this.

Mar 21 03:49 PM

[1,000,000 S...:]

Good article, in general.

Mar 21 05:17 PM

[Bobco23:]

So what will his rating be a year from now?

Inflation and the national debt will be way up; the former indicated by the market's focus on commodities and the later promised by b.o. Reported unemployment will be over 10% (officially) and real unemployment even higher. The economy will stagnate with higher taxes and lower demand. More of his staff will be discoved to have engaged in tax cheating. His lofty generalizing speeches will wear thin. Mockery will begin. All we need is a 911 incident to complete his "leadership."

Mar 21 09:53 PM

[Dan H:]

Market the product, claim strong impact, fertile qualities, use local vernacular, put a great package around it. When you open the box, all you will find is a turd.

Noone has opened the box ....YET!.

We need real change. Not SOS politics in a new package. We need folks who will sware to uphold the Constitution with the guts to do it!.

Mar 21 10:49 PM

[Et tu, Brute!:]

Europe is on its way to despising the Obama Administration already. In month two.

Yep, sounds like a winner to me!

Mar 21 11:03 PM

[nutty buddy:]

Get your filthy stinking paws off me
You damn dirty Democrat!

Mar 22 08:10 AM

[fairytrixy:]

Hey compared to the fabulous former cockroach that scurried around in the White House for 8 years, I'm impressed with someone who came all the way to California in the light of day.
Some of us will pay more taxes, and some of us will maybe stop paying it off with a lower standard of living. Maybe just maybe someone will figure out a way to explain to those who pay more taxes things like 3 years ago in California the schools got 38mil, the prisons got 7billion! I do not know about other states but the idea of local branding tells me that if there is anyone to question about taxes going up in this state it is the GOVERNATOR.... Federal taxes goingup is a no brainer, the war was damn expensive and it is not over yet, Who has a better solution that does not involve those who make more need to think about the long haul, you can't take it with you.

Mar 23 03:17 AM

[smerritt:]

I can only pray that Shaun Rein becomes an analyst for my competition. I have never in my life seen such weak analysis of the real situation. Having a political love affair can definately cloud the facts as we see in the mainstream media. Very, very disturbing.

Mar 23 09:12 AM

[Sheengem:]

Rein has been simply suggesting foreign companies be expensive. But we Chinese actually need right-priced things, Pizza Hut and other brands Rein mentioned are just not affordable for most households. It's not about going expensive, but the company's target market. Players can make huge profits for just being affordable, like Shoebox.

Apr 08 02:23 AM