http://www.businessweek.com/managing/content/dec2008/ca20081223_660120.htm

My Leadership Perspective December 23, 2008, 2:12PM EST

Obama Needs a New Campaign

The incoming President must focus on one target—energy independence—and employ the same discipline he brought to the election battle

By Nikos Mourkogiannis

Barack Obama’s election has impressed the world as few achievements in recent past have and has helped change the way people overseas view the U.S. This President is going to Washington enjoying the support not only of many U.S. citizens but also the good wishes of many citizens of this planet. Indeed, Barack Obama is the closest thing to a truly global leader that the world has ever had.

Of course, this level of support comes with high expectations, and therein lies the true challenge of this Presidency. Barack Obama is expected to continue the bail out of banks, to execute the bailout of the car industry, find a way to bail us out of a failed policy in the Middle East and in Guantánamo, and to bail out both beleaguered states and cities. He is expected to stop the decline of the U.S. as defined by a myriad of constituencies that are trying to control his agenda even before he has a chance to move to Washington.

Obama cannot hope to win reelection in four years if he chooses to undertake all of these bailouts. What the U.S. needs is a buildup. Obama cannot afford to fight defensively on so many fronts. He needs to concentrate on one, employing the same discipline he exhibited during the primaries and the general campaign. He needs to choose a target and organize a campaign behind it. He should expect all to support his campaign and not waste his political capital supporting campaigns conceived and defined by others. Progress toward the target will generate its own momentum.

The Key to Reelection

The reason he needs to do this is because the history of the U.S. Presidency is clear: Those who used their first year in office to define their permanent campaign won reelection. Those who dissipated their energy among many initiatives did not. Jimmy Carter is a clear example of the latter, while Ronald Reagan and even George W. Bush are examples of the former. It is said—and Ronald Reagan never denied it—that when he was awakened by his National Security Adviser about an international crisis during his first year in office, he had one reaction: “Cut taxes.” Such was his singlemindedness and commitment to his campaign.

Of all the issues in front of the incoming Administration it is energy independence that is the most promising politically. First, campaigning for energy independence allows for an appeal to national security. The Presidency as pulpit is most effective when it is used to advocate steps advancing U.S. security. This is how the highways were built by President Eisenhower and why President Kennedy told us we had to go to the moon.

Second, energy independence resonates with the U.S. character because it reinforces both U.S. exceptionalism and U.S. patriotism. Furthermore, it allows for the momentum that only popular mobilization can give to a campaign. People can install solar panels; people can make a difference—and a statement—by buying hybrid cars.

However, the best attribute of an energy-independence campaign is neither the national security theme nor the organizational advantage of continuous popular mobilization. It is the latitude that it will create for redefining some key issues. We live in the era of ideas. Those who redefine the issues of the day win in the long run. Let’s look at three ways an Obama Administration focused on energy independence could redefine existing problems so they are easier to deal with.

Tax Carbon
It is in the U.S. interest to frame our stance on Iraq from the perspective of safeguarding our oil supplies for the next five years. Most Americans would support such a shift in our criteria for exiting Iraq away from strictly military considerations (as has been the case to date). Indeed, Americans will understand such a policy even if most are still wondering about the exact purpose of going there in the first place.

Citizens are currently evenly divided on whether the Big Three automakers should be bailed out. However, we can unite behind a program that replaces the fleets used by the federal and state governments with all the hybrids and clean cars that Detroit could produce for the next five years. This would not be a bailout, yet such a plan would allow the Big Three to build up and develop economies of scale faster than their competitors.

We are also divided as a nation on taxes. Indeed, our party system is broadly defined by preferences on taxation. Even so, there seems to be agreement on one thing: the need for a fundamental change in taxation. By taxing neither labor nor capital but carbon, we could both unite on two key issues: energy independence and the need for tax reform.

Green Jobs for the Future
This cannot be achieved overnight, but even with oil trading well below $50, there is no time to waste. And the money raised from tax reform should be used to create green jobs for the future and traditional jobs for those who need them and where they are needed urgently: along our highways, in the downtown, all over our ailing and underfunded civil infrastructure, which includes our national grid.

The temptation just to create jobs will be great given the deteriorating state of the economy. However, mere job creation is easy, and jobs created for the sake of creation can be ephemeral. The jobs need to be created for a purpose. And they need to be sustainable, which means they depend on a specific revenue program that cuts across the existing divide on taxes and does not increase the debt or the budget deficit.

Much will become possible if the U.S. citizens can get behind a purpose, and that is what the concept of a campaign conveys. Many of the things expected of the new Administration will not happen unless Obama does what he does best: subjugate

Investor’s Business Daily

Issue date: Nov. 14, 2008

Column: IBD’s 10 Secrets To Success

Be Honest And Dependable; Take Responsibility

Follow A Solid Purpose

By Steve Watkins

Be clear about your company’s purpose in order to reach the next level of success. Sure, everyone is in it to make money. But finding something deeper helps your firm stand above others in the long run.

Keys to developing a purpose:

* Find your base. Nikos Mourkogiannis, a leadership consultant and author of the book “Purpose,” starts by asking company leaders why they’re in business and how they’d like to be remembered. Put why before how. “Without the discipline of purpose, you can talk about the hows forever,” he told IBD. “Purpose creates something that stands the test of time.”

* Look at the goal. If you make airplane engines, do you want to innovate or do you want to make them safer? “You’re going to the underlying purpose,” Mourkogiannis said. “Purpose is a game of champions, of good companies that want to be great companies.”

* Get buy-in. You can’t dictate the purpose to staffers. They have to believe it. Get employees involved by gauging their moral ideas and what’s important to them.

* Locate your niche. You don’t have to operate in a world-saving field to develop a purpose that people can embrace. Link the work — no matter how simple it seems — to improving lives of customers or employees, says Rob Galford, managing partner at the Center for Leading Organizations, a Boston-based consulting firm. Even Procter & Gamble can say its toilet paper has a larger purpose. “Soft toilet paper makes people’s lives literally more comfortable,” Galford said.

* Put it in action. Whole Foods Market aims to find the best natural and organic foods, support sustainable farming and pave the way to nurture the body, community and planet. An analyst recently asked Chief Executive John Mackey if the company would cut the quality of some products to reduce prices during the economy’s slump. “We are a mission-driven company and we think our business model is very successful,” Mackey said. “I don’t think we’re going to lower our quality.”

* Find the right talent. You have to get everyone on board. Some people aren’t a good fit for a mission and should go. “I have never done this exercise without seeing some people feel they’re not in the right place,” Mourkogiannis said.

* Personalize it. Put up pictures of people using your products. “That gives people a linkage to purpose,” Galford said. “It’s critically important, in times of crisis, to have something deeply embedded as a value so you know it’s about the customer.”

* Show the impact. Demonstrate that 7,000 people use the product each day, and the value of what employees do hits home.

“It’s not just Mrs. Jones ripping open the package,” Galford said. “It’s tying together the qualitative and the quantitative.”

* Don’t stray. Many lenders slammed by the current financial crisis lost their way. Banks went beyond making standard loans to lending to those who couldn’t afford to borrow. “That’s a loss of purpose in a most dramatic way,” Mourkogiannis said. “At the moment the banks couldn’t make money, there was a complete loss of trust.”

: INVESTMENT BANKS: LOSS OF PURPOSE
“Some US Bankers stuck to Strategies consistent with their Purpose; they were just not living in New York”

Within the week that started on September 14 Lehman Brothers imploded, Merrill Lynch sought refuge with Bank of America and Goldman Sachs and Morgan Stanley relinquished their exalted status as the only stand alone Investment Banks. They petitioned the Fed to henceforth treat them as commoners: they would accept a lot more regulations in exchange for government insurance, as all commercial Banks do.
These are not the largest of the Banks. Unlike City and others in that cohort, Goldman and Morgan were not carrying the heroic Purpose of making Main Street work or operating under pressure to innovate constantly to attract clients. Nor were they supposed to be just servants to their clients as the Credit Unions. Instead, clients were supposed to flock to them; they were the temples of Banking, pursuing excellence and thus setting the standards for the rest of the industry and often for Washington. These were not mere businesses expected to manage themselves well; they were Industry Leaders with the clout and responsibility to also tell others what was to be done and why. And within a week they were no more.

Some called this the death of Investment Banking, which excelled in the US after it built both whole Industries and Countries in Old Europe. In reality it was just the burial of Purpose previously pursued by these venerable institutions. They were the ones who lost the high ground of operating at the interface of competitiveness and morality, of doing well while doing good. They did not fail as managers. Goldman has not missed a single quarter of profitability. They did not perform as Leaders. The question is why?
In 1999, Morgan Stanley really ceased to be a standalone Investment Bank when it merged with Dean Witter, a finance company. Two years later Goldman ceased to be a partnership and went public. The Partners cashed out handsomely and the shareholders did even better- as the new Goldman aggressively expanded its trading and principal investing activities. Within years, investment banking accounted for only 15% of the profits of the financial conglomerate that Goldman had transformed itself into.
Many noticed the transformation but not Goldman itself or the regulator. Goldman continued to be allowed to extend credit up to 30 times its capital while commercial Banks, like The Bank of America, had to manage with leveraging their capital 11 times- as they were subject to a stricter regulatory regime.
In 2003, it seemed that the time of looking at Investment Banking had come. As some might remember, long before we experienced the credit bubble we experienced the dotcom bubble. Investment Banks had pushed the very good idea of connecting through the internet too far, as the idea of securitizing mortgages was to be pushed later. They marketed and then they sold for the worst possible reason: because they could collect upfront fees or could use leverage afforded to them by their privileged regulatory position
President George W. Bush threatened to end their days of “shading the truth”, but nothing happened. As a matter of fact, nobody enjoyed the long party of easy credit launched by Dr. Greenspan more than the Investment Banks.
So these particular Investment Banks that we all knew as the keepers of standards of “Haute Finance” have long gone. I will not write about greed as the cause of their demise. Writing about greed is always an attribution, unless one has evidence relating to actions of individuals. Instead, I will focus on questions of strategy and organization and leadership not exercised.

For some time now there has been disconnect of Purpose and Strategies pursued. Neither growth nor innovation for their own shake was strategic objectives that fitted with the pursuit of excellence.
Looking at it from the organizational perspective, it turned out that the standards of Excellence that Partnerships could pursue were too lofty for these companies, once they became publicly traded and operated under the pressure of having to show quarterly results. Even worse, pursuing what was good for the shareholders and at the same time what was good for clients and their shareholders created more complexity than their leaders wanted to deal with. Freddie and Fannie had a similar – and in their case mortal problem- dealing with complexity when they deviated from their Purpose. Except one would expect better from the two Banks that were seen in a position to advise what is right and what is wrong in the world of Finance.
However, for years now these banks have abandoned Excellence as their Purpose without confronting the consequences. Change or abandonment of Purpose amounts to Transformation. And leading a conscious Transformation is not an easy business. Suffice it to say Transformation will not be achieved overnight now, just because the Fed agreed that Goldman Sachs and Morgan Stanley are no longer Investment Banks. To paraphrase Walter Bagehot: “Honor sunk, but the Commercial Bank has not surfaced as yet.”
As for Investment Banking, it is alive and well. In recent years there has been a convergence of financial services involving Private Equity Firms, Hedge Funds, Asset Management Firms and Investment Banks. What happened last week will just give other institutions the opportunity of moving even more aggressively into Investment Banking.
Morgan Stanley and Goldman Sachs will need some time to readjust, perhaps transform themselves for good by discovering a new Purpose and sticking to it. Their respective tie ups with Mitsubishi and Warren Buffet is a first good step and sets a good example for other Banks to seek to raise capital in the private markets instead of waiting for the Government bailout.
As for Merrill Lynch it has already managed to gain a seat in the future by making a virtue out of necessity. Its acquisition produced the “You Tube” moment of the month by showing that some US Bankers stuck to Strategies consistent with their Purpose. They were just not living in New York.