10 Reasons Why Obama Should Appoint Romney as Secretary of Business

In a surprising move, President Obama has appointed Governor Romney as Secretary of Business, in charge of new business creation and with the mandate to drastically simplify the regulations for small businesses.

Fantasy, you say? Yes, for now, but this would be a brilliant move. Here’s why.

Obama needs to demonstrate what he means by change. Obama’s second term is, among many things, about fixing Washington’s gridlock, putting America back to work, and delivering on the American people’s wish for change. A defeated Republican Presidential candidate as a key Cabinet member would definitely be a good way to state that Obama is serious about fixing the gridlock.

Business is Romney’s specialty. Business is also arguably the area where Obama’s first term achieved the weakest results. This was Romney’s claim, but the American people likely agree for the most part. In fact, there is a widespread belief that if the 2012 Presidential election had indeed been simply a verdict on the economy, Obama would have lost.

Fixing the gridlock in Washington demands grand gestures. Both Obama and Romney have talked about the importance of reaching across the aisle. True bipartisanship must be concrete. You must have something to show for. It also demands great symbolic acts of faith. Romney as Secretary of Business would definitely be an act of faith.

Obama has succeeded with surprising appointments before. When Obama defeated Hillary, he realized two things: he needed to heal the divisions in the party and he needed support from the Clinton camp. What did he do? He appointed Hillary Clinton as Secretary of State. This was a surprising, smart move which rapidly healed the wounds the defeat had made, at least in the eyes of the public.

Obama would rub in Romney’s flip flopping nature. President Obama would in one move show the contradictions of Mitt Romney (during his campaign, Romney said there was no point in having both a Secretary of Commerce and a Secretary of Business)

Obama would show there is opportunity for all. Paradoxically, by putting Romney on the job, Obama would also demonstrate that he is prepared to put the best people in the top jobs in his second term, regardless of background. This would be change. This would be the new, emerging America, one where all ethnicities and social demographics should be electable for office—even rich white men with track record from Wall Street and Bain Capital. There were times during the recession and during the campaign where it seemed Obama disliked the “fat cats” so much he was unable to listen to any of their advice.

Romney would reach across the aisle. Being the Secretary of Business is likely a real vantage point from which it would be possible to demonstrate real leadership that matters to jobless, entrepreneurial, hardworking Americans. These were issues he campaigned on. Spending 800 million dollars on a campaign would then have been a worthwhile investment. His legacy, almost regardless of whether he himself would generate true improvements, would be that of a pragmatic business person with real intention to make politics work for business. Paradoxically, with Romney, the Secretary of Business might actually become important. Without him, the role might be unclear at best. It would get lost among other Cabinet roles and would add little value.

Republicans would get an ideal platform to renew the GOP. Republicans would get a chance to make contributions to their favorite agenda: favoring business. They would get a chance to show that this also means helping small business. Romney would need to make his ideas concrete: he would help bring about tax reform, regulatory simplification etc. If Romney succeeded, Republicans would have a real card to show for the 2016 Presidential elections: their bipartisan efforts enabled tax reform, made entrepreneurship and business creation the competitive advantage of America again. The alternative; four more years of gridlock, would certainly not help the GOP.

Obama would get credit for trying to fix his relationship to business. He would have put the person near half of America’s electorate believes is the best for the top job in charge of one of the key priorities of the nation: helping business to ensure economic recovery across the board. Obama would also take a step closer to Wall Street again, after a few missteps and mistrust.

Obama and Romney working together would be leadership from below. Appointing Romney as Secretary of Business, both Obama and Romney would embody true leadership from below. They would demonstrate a willingness to contribute wherever their skills are needed, regardless of prior formal position. Leadership from below is a question of attitude, not position.

In reality, of course, Americans wish that Washington would realize that America—its demographics, ambitions, methods, even its identity—has already changed. What America has changed into, is going to be the central question of Obama’s second term. It will demand even more of Obama than appointing Mitt Romney as Secretary of Business, but it is a start.

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7 Reasons Why the Credit Crisis calls for Leadership From Below

So, a few Wall Street investment banks such as Lehman Brothers, the world’s largest insurer and 18th biggest company in the world, AIG, Alan Greenspan, Northern Rock, the largest mortgage and private savings provider in the UK, HBOS, and the country of Iceland are history. By history, I of course mean that they are gone. Well, not literally. By gone I mean that they do not exist in our minds, in financial districts, and pockets like they did before. However, they are all still physically there, so all is not lost. But we have all gone from subprime mortgage crisis to credit crunch to credit crisis to full meltdown. How did this happen? What now for leadership? Surely, we should not look for it among our leaders?

1. From the blame game to the trust game.

Predictably, the blame game has already started. U.S Congress, SEC, national oversight bodies across the globe, they all want to find the guilty party. Surely, somebody is responsible? Well, really? Isn’t this the point. Nobody were responsible because we didn’t let them. While many individual investment decisions as well as collective phenomena like the globalization of risk contributed to the credit crisis, one could argue that a credit crisis is essentially a leadership crisis. Credit is only given when there is trust. Trust is an intangible bond between actors in a market. While all market actors contribute to the overall trust of the market itself, leaders have traditionally been thought of as responsible if havoc occurs. Thus, we have seen calls for executives to resign and for Heads of State to act. Trust, unfortunately is a game, too. Trust is a gamble, a calculated risk. You cannot always know. So, while blame might be a necessary exercise, it will not solve the trust issue. Trusting less will not solve it either. Neither will risking less. But the understanding of what trust is, will.

2. From trust in the market to trust in people

In reality, the credit crisis happened because we – the market – consumers – financial actors – everyone – put our trust in the idea that there was something abstract, rational, even holy called the market, an invisible hand that pushed everything forward. We woke up to discover it was only us. We were desacralized, so to speak, left naked. According to a New York Times article yesterday even Alan Greenspan has conceded to the House Committee on Oversight and Government Reform that he has misunderstood the way markets work. In reality, markets are always built by people. In The Architecture of Markets, brilliant UC Berkeley sociologist Neil Fliegstein made that point already in 2001:

markets are social constructions that require extensive institutional support.

People create trust. Products are the results of that trust, but they cannot themselves be trusted. You can only trust a product from people you trust. The credit crisis happened because too many trusted the products, trends, graphs, institutions, and technologies that were sustaining the growth cycle. Nobody stopped to ask: who is behind this, can I trust him or her? Needless to say, we should have questioned institutions in the same way that we question people. But for simplicity’s sake let’s stick to people for now.

3. From power to responsibility

The credit crisis is a crisis of power. We can no longer trust the powers we did before. We read stories of people who walk down to their bank and scream at their personal banker for being incompetent. They vent long pent up anger at the system that made them feel powerless, weak, insignificant and incompetent. Instead, we want responsibility. We want corporate bonuses to be cut in banks who have received rescue packages. Not because we envy bankers per se. We do, but that is another question. No, the bonus is paid out within a rationale of power as opposed to a rationale of responsibility. With power comes great responsibility, the adage goes. Now we can say with resonance, sanctioned by the State, which represents us all: with responsibility comes power.

4. From top-down to bottom-up power

The traditional top-down leadership model is based on the Weberian notion of legal-rational authority, power vested in people who possess positions of power – irrespective of that person’s personal qualities. Weber also wrote about two other types of power, the charismatic and the traditional, where the quick examples would be Hitler and the Pope. Charismatic power is sustained by a convincing, overwhelmingly vibrant personality Leaving aside coercion, which Weber snuffed at, since it had no legitimacy in his eyes, what Weber from his 18th century perspective was unable to conceive of is a fourth source of power, which I in my eponymous management book from 2008 call “leadership from below”. Where does its legitimacy come from? From the very relationships that sustain it.

5. From networking to Zen

Rather than network power in the sense of “who you know in a powerful position” or who can recommend you or your actions, leadership from below is not manipulative. It actually emanates from the social bond that is created between individuals who work together. Japanese philosophy, more specifically the scholar Kitaro Nishida, speaks of this force as Ba, an indigenous word for “shared social space”. Simply put, without going into significant detail, Ba can only happen between people who trust each other. Now, it seems obvious that the contemporary market actor also seems to trust things, techniques, and trends. The problem with this kind of extension is that it introduces an element of unpredictability. Yes, technologies have effects of their own, but mostly the effects that people want it to have. Technologies have built-in designs that act like compulsory manuscripts. You cannot avoid them if you want to use them. The popular term for spiritual balance among alternatively minded westerners is Zen. There is nothing wrong with the term, but Zen depends on Ba, and Ba has less complex connotations. Unfortunately, it is less in fashion, but that is another issue. Anyway, you can never manipulate networks to create Zen. Balance fosters balance. There is give and take.

6. From clubs to the piazza

The fact that governments now have significant ownership in banks, and financial markets are in turmoil can actually be fruitful. It will serve to re-focus people’s attention on what a market is, and how trust can, should and should not be created. Large, unhampered markets cannot continue to allow the exchange of complex club goods. If they do, they fail. Leadership From Below is the perspective that, no matter where you come from, what you bring to the table must always be judged by the people present. The situation is what counts. Past and future is not relevant to the leadership that is being carried out in the present. Whatever problem presents itself must have a solution there and then. The power of now is stronger than the power of later. But the now must be accessible to all. We cannot bury important financial decisions in financial lingo. At least not when politicians make the decisions. Simplicity is king. Time to resurrect the Italian piazza where things are openly discussed. As Neil Fliegstein writes about markets and firms, shareholders are not the only stakeholders.

7. From positions to attitude

While not necessarily implying that powerful leaders cannot practice bottom-up leadership, Leadership From Below introduces a certain modesty. You can never be sure to be the leader. The group will always make up their own mind about that. You may go into the situation thinking you have a good chance of influencing others. But if you don’t, you cannot blame your weak negotiating position. Positions are created, and need to be sustained every time. This is radical social construction. And quite true. It’s all in the attitude. Spin that!

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