Bob MacDonald on Business

Sage Advice for Superior Business Management

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Change Agents Are More Effective When They Are Inside Rather Than Outside

July 20th, 2014 · Business Management

Often those most identified with the status quo have the most power to change it.

You may not have taken much notice of the recent dueling op-eds written by two high-powered Republicans, Gov. Rick Perry of Texas and Sen. Rand Paul of Kentucky, but their squabble is more than just two wannabe presidential candidates trying to score points with the Republican base. It offers an excellent lesson in leadership and being a “change agent,” in both business and politics.

At the core of this Republican intramural struggle is Rand Paul’s effort to be an agent of change and Rick Perry (photo below) staunchly defending the status quo.

RickPerrySince the end of World War II, the mainstay of Republican foreign policy has been uncompromisingly interventionist, a “policeman of the world” mentality. The Republicans have consistently used this aggressive stance to paint the Democrats as “weak on defense” and taking actions (or non-actions) that weaken America and put the country at risk. It is an old song, based on old ways, but the Republicans – especially the far-right – have stuck to it and it has become a litmus test for any would-be Republican leader. During the “Cold War” this strategy did appeal to most Americans – especially to those who viewed themselves as conservative.

But times and attitudes have changed. The threats to American security have morphed from armies composed of masses of asses to cells of rag-tag terrorists. The lessons of Vietnam, Iraq and Afghanistan should have taught us that legions of “boots on the ground” and “shock and awe” are tactics no longer effective in dealing with new millennium threats to American security.

Indeed, most Americans have learned this lesson. A recent Pew Research survey discovered that for the first time in decades the majority of us are opposed to traditional military intervention in foreign disputes. The research revealed that even 52 percent of rank-and-file Republicans now oppose the traditional “boots on the ground” American involvement in regional conflicts.

As much as the “establishment” of the Republican Party recognizes that the majority of Americans now reject the long-held interventionist military policy of the Party, they are constrained to change by the knowledge that the only group of Americans not to have changed are those on the extreme right—precisely those who form the base of the Republican Party (along with most of the big-money special interest groups that fund Republican candidates). The establishment of the Republican Party understands that to have any chance to win the presidency, the Party must change its foreign policy position. But they are faced with the conundrum that any effort to make this change will split the Party, leading to even more election losses.

In steps Sen. Rand Paul. No potential Republican candidate for president has more credibility and gravitas as a right-wing conservative Republican, than does Rand Paul. Initially opposed by the establishment of the Republican Party, he would not be a senator today without the full-bodied support of the Tea Party faction and virtually every other leader on the Republican far-right. No one seriously questions Paul’s RandPauldeep commitment to the beliefs of those on the right and because of this he has the requisite credibility to talk change with the Republican base. The “establishment” of the Republican Party, and certainly those outside the Party, has little hope of causing change on the Republican right. However, if someone of Rand Paul’s stature and history with the Republican right is willing to talk about change, then, at the very least, there are those who will listen, because he is one of them.

If Rand Paul can change the thinking of those on the right or even just mute their knee-jerk opposition to a change in the approach to foreign policy, it will benefit the Republican Party in general and specifically Rand Paul. Instead of being considered just a fringe candidate, Paul could garner the support of all segments of the Republican Party.

The only reason why Rand Paul has this opportunity is because he has always been identified with the status quo that he now seeks to change.

That’s a Lesson to be Learned

The reality is that real change in business and politics has almost always been brought about by those on the inside, rather than those who call for change from the outside. There can be pressure for change coming from the outside, but real change comes best and easiest from the inside. The reason for this is that those who are most connected to the status quo have the credibility to call for and implement a change to the status quo. It does not mean there will not be opposition to change. After all, Rick Perry, Sara Palin and John McCain have all criticized Rand Paul (notice also that no one at the center of the Republican Party has attacked his position), but they have a problem. It is easy to attack President Obama or even the Republican center, but Rand Paul is one of their own; his credibility becomes a shield to ward off these criticisms.

The Bottom Line

When a change is called for and is proposed by an insider, the resistance of those who support the status quo soon becomes irrelevant and ineffective. American history is replete with examples of how change is best effected when those on the inside and most identified with the status quo seek to change it. Probably the best example of this change from within is Richard Nixon’s recognition of Communist China. Nixon built his reputation and entire career on the basis of being an indomitable anti-Communist. No one could ever accuse Nixon of being “soft on Communism.” And yet, it was Nixon – the staunch anti-Communist insider – who was able to see the broader perspective and need for change who opened the door to China. We may look back now, 40 years later, and see the recognition of China as simple realism, but the reality is that only the credibility of Nixon’s anti-Communism gave him the power to implement what appeared at the time to be such a radical change in American policy.

Franklin Roosevelt, Lyndon Johnson and Ronald Reagan could also be cited as “agents of change” because they used their credibility with the status quo to change it. Roosevelt came from a wealthy upper-class family who changed the perceived role of government from one of protectors of business and wealth to the protector of the weak and poor. Lyndon Johnson was a died-in-the-wool Southerner who supported segregation and yet used the credibility of this background to push through civil rights legislation that changed America for the good forever. Ronald “we begin bombing Russia in 5 minutes” Reagan, the icon of Republican conservatism, used his credibility as a hard-nosed militarist to strike disarmament deals with Russia that only he could accomplish.

Using That Lesson in Your Business and Personal Life

Personal experience taught me the lessons of change from within. From the time I entered the life insurance industry in 1965 until I became president of ITT Life in 1980, I had been a true believer in the products and status quo of the insurance industry. However, when scanning the landscape of the insurance industry seeking a path to growth for what had been an also-run company, it became obvious that what I had always believed had been good, had become outdated. The truth was that the industry had grown lazy resting on its past success and had been insensitive to changing consumer needs.

There were those outside the industry calling for change, but they had little credibility within the industry and could be brushed off. It was obvious to me that ITT Life was not going to grow by doing what other companies were doing. My response was to publicly acknowledge that the products I had believed in and sold for almost 20 years and become obsolete and needed to be changed.

To say the least, the “establishment” of the insurance industry was not happy with me. Defensive attacks against me and my position came from all corners of the industry. But because my calls for change came from within the industry by one who had the credibility of being part of the status quo, it was impossible for the call for change to be ignored. And the industry did reluctantly change, not because of me, but in good part because of the debate that I – an insider – triggered. Of course, I benefited as well. The upheaval in the industry stimulated growth at ITT Life and ultimately gave me opportunity to start LifeUSA based on the changes that had been called for; the rest is history.

And the Moral of the Story …

The point to be learned here is that to be an effective leader and change agent, one must be willing to question and challenge even their most fundamental beliefs and experiences. It is difficult – if not hypocritical – to ask others to change their beliefs, if we are not willing to change our own beliefs.

It is when one has been clearly identified with the status quo that they have the power to change the status quo. Change may be uncomfortable and unwanted by many, but when it is proposed by those who have the credibility of an emotional connection with what needs to be changed, it makes it easier for others to accept and move forward. It may be the only way to effect real change.


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Have These Politicians No Shame Using Thousands of Innocent Children as Pawns in Their Exploitation of Immigration as an Election Issue?

July 13th, 2014 · Improving Your Business Leadership, Politics and Politicians Gone Awry

Understanding the despicable actions of political leaders who use children to fan the flames of fear and ignorant bigotry to win an election.

As Americans, it has to be embarrassing to witness our so-called leaders – Republicans and Democrats – stooping to use eight-, nine- and 10-year old children as political pawns to score points in an election campaign. Illegal immigration is a serious challenge for this country, but it is not an insoluble problem. The only reason the conundrum of illegal immigration has not been resolved is because neither the Republican nor Democratic leaders want to solve it. Both parties see illegal immigration as a cheap, yet valuable political issue that can be used to stimulate and appeal to their “base” and win elections.


Photo by James S. Wood for

The Republicans are sacrificing tens of thousands of young children who have illegally immigrated to the U.S. on the altar of political expediency because they are rapidly losing out on the issues that have motivated their “base” in past elections. The Republican base of support is mostly comprised of Tea Party-type individuals who tend to be white, poorly educated, intolerant of change and bigoted toward anyone not like them. These predispositions make them susceptible to immigration fear-mongering tactics that the Republicans are happy to exploit each election cycle.

The Way Things Were

In the past, Republicans could rely on traditional issues such as the “call to war,” the “war on drugs,” the immorality of the “right to choose” and the “sanctity of marriage” to mobilize and motivate their base of voters. These were surefire issues to touch the hearts and minds of their constituents.

But now even the Tea Party-types are tiring of war, legalized marijuana is spreading through the states faster than it can be grown, the battle over abortion is on the back burner and the right to same-sex marriage is virtually universal. In short, the value of these issues as a partisan rallying call has nearly evaporated. Is it any wonder, then, that the Republicans are so fixated on the illegal immigration problem—not to solve the issue, but to have something to rail against?

In fairness, there are a large number of Republican leaders who are uncomfortable – even embarrassed – by their party’s hypocrisy over the illegal immigration issue; especially making young children the focal point of the debate. However, every time someone such as House Speaker John Boehner or Sen. Marco Rubio – both hardcore conservative Republicans – even hints at proposing a rational solution to the immigration problem, they are accosted by self-serving idiots such as Sara Palin and Sen. Ted Cruz and others, who see prolonging the illegal immigrant debate as their ticket to more media coverage and votes.

The Democrats are just as duplicitous as the Republicans. Rather than proposing immigration reform that is sufficiently balanced to win bipartisan support, they propose solutions that are sure to be rejected. Then they use this “irresponsible rejection” to appeal to their base in elections.

And no wonder. That Democratic Party base tends to be a compilation of ethnic minorities, socially liberal younger people and those who generally believe the government is the solution, not the problem. To appeal to their base, the Democrats attempt to “box-in” the Republicans by making them appear to be insensitive and uncaring when it comes to the humanitarian side of any social issue, such as thousands of young illegal immigrants penned up in cages.

There are some who see the intent of the actions taken by Democrats as a deceitful effort to actually exacerbate the immigration issue, so that it can be used as an appeal to their base in elections. During the 2012 presidential election, President Obama took executive action by declaring the Deferred Action for Childhood Arrivals (DACA). This declaration basically granted children under the age of 15 (about 1.7 million) who were illegally brought to America by their parents (also illegal) to remain in the country. The actual impact of the Obama announcement was minor. It certainly did not solve the problem, but it was clearly intended to appeal to the base of the Democratic Party during the election. The Republicans are now claiming, with some justification, that the DACA policy has been misused to encourage parents to send unaccompanied children to America and this is creating the current crisis. Despite the reality and narrow application of DACA, the Republicans contend that it is seen as a form of “immunity” offered to any child who can brave perilous freight cars, blazing hot deserts, and polluted rivers to reach our borders.

Send “em Back where They Belong?

The Republicans are clamoring for Obama to begin the immediate deportation – despite current law that requires certain process and procedure for deportation – of these innocent children back to an uncertain and possibly dangerous existence. Such an outcome is of little concern to the Republican base – indeed they may favor it – but for others, it makes the Republican Party seem cold, insensitive and uncaring; just what the Democrats want.

As further evidence of the “games” being played, when Obama came to Congress requesting the funds necessary to expedite the deportation of the children, the Republicans opposed the request. Of course, Obama structured the request for funds in such a way that he knew it would guarantee that the Republicans would respond as they did.

And Speaking of Deportation . . .

Just how confusing can the positions taken by Republicans and Democrats on deportation be? Well, the Obama administration deported more illegal immigrants in 2013 – 360,000 –than the George Bush administration did in eight years. And yet the Republicans are widely viewed as the “throw them out” party and the Democrats are the “let them stay” party. (One reason the Republicans are less aggressive in deportation is because they recognize the negative impact the deportation of undocumented immigrant workers would have on the economy and business profits. These illegals are a source of cheap labor and profits for corporations.)

A Lousy Management Philosophy

The Republicans use fear of the impact of illegal immigrants as a tool to garner votes from their base. But fear is the weapon of last resort used by weak, unimaginative leaders. Using fear as a leadership technique is a debasement of leadership itself. Fear confuses an issue; it does not clarify. Fear narrows the vision of those affected and that inhibits solutions based on broader approaches. Wordsworth wrote, “What is fear but voices empty? Whispering harm where harm is not. And deluding the unwary, till the fatal bolt is shot!” But it is what the Republicans see as a winning strategy and they are going to stick to it. After all, this type of approach has worked in the past.

Also with a certain amount of justification, the Republicans charge that if the Democrats really wanted to solve the illegal immigration problem, they would make more of an effort to seal off the border to prevent the continued influx of immigrants. Republicans suggest that once the border is sealed, they would be willing to discuss a reasonable solution for those undocumented immigrants already in the country.

But don’t bet on it. The issue is just too valuable a connection with the Republican base. And as long as the Democrats feel that they can use immigration to mobilize their base of support, they will also keep the issue alive.

As a result, a problem that could be easily solved is allowed to fester and grow worse because both the Republicans and Democrats believe it is to their political advantage to do so. Even if innocent children suffer as a result. But who cares? The kids can’t vote and that’s all that counts.

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Breaking the Back of Bureaucracy at the VA

July 6th, 2014 · Business Management, Effective Leadership, Politics and Politicians Gone Awry

The real story behind the appointment of Bob McDonald to lead the VA

When word broke that President Obama had appointed “Bob McDonald” to take charge of the Department of Veterans Affairs (VA) my e-mail account and voice mail went crazy. Most of those who made contact wanted to either congratulate me or to inquire why I was dumb enough to take such an impossibly thankless job.

After all, attempting the cure the bureaucratic ills of the VA is not only an unenviable job; it is also an impossible job, especially in today’s polluted political climate. One would have a better chance of solving the Israeli-Palestinian AND the Shiite-Sunni conflicts than in breaking the back of the bureaucracy at the VA.

Of course, the truth is that I may be dumb, but not so dumb as to take the job heading up the VA. But it was a close call: here is a behind-the-scenes look at how things actually transpired.

First of all, the truth is that President Obama did call me and did his utmost to talk me into taking the job as head of the VA. Unfortunately, in a desire not to offend the President, I equivocated in my response and told him that “I would think about it.” The president must have McDonald_3 copymistaken that ambiguity as a “yes” and instructed his people make preparations for my appointment. Well, when I finally got back to “Barack” and respectfully rejected the offer, everything regarding my appointment had been set in motion, the press releases, the acceptance speech, the guest shot on Sixty Minutes. Naturally, the White House didn’t want to embarrass itself with yet another “oops, we made another mistake,” so they kept looking until they found another Bob McDonald who was willing to take the job. And that’s the rest of the story . . ..

Nevertheless, even though fixing the VA is not my job, the least I can do is offer my namesake some suggestions as to how he might slog his way through the VA’s formidable bureaucracy. Since that Bob McDonald is a lifelong Republican, the best place to start might be to explore outsourcing the problems at the VA to a large corporation in the private sector. After all, since the Republicans staunchly proclaim that the “private sector” is so much better at fighting bureaucracy, it seems logical to outsource the VA problems to a private company. The corporation that comes to mind might be General Motors. And lest we forget, the wars in Iraq and Afghanistan that are the reason for the current strain on VA resources were pretty much outsourced to Dick Cheney’s Halliburton and Blackwater Security.

Any chance for McDonald to be successful at the VA also calls for a heroic suspension of reality; stakeholders must come to believe that he will have the time, political support, power and, most important, the cooperation of those working at the VA. But that fantasy is as likely to happen as ordering a heart/lung transplant at a VA drive-thru. McDonald will not have any of those necessary tools or power to break the bureaucracy. Once a bureaucratic culture has become entrenched in either a large government or corporate organization, nothing short of an act of God will stamp it out; and even that may not be enough.

But— if we could suspend reality, here are a few steps that could be taken to thwart and even eradicate bureaucracy at the VA. Even though this is never going to happen at the VA, these concepts can be used by a leader to prevent bureaucracy from creeping in and crippling their organization.

  • Unambiguously define, communicate and reinforce a clear, concise vision and specific objectives of the organization in a way that everyone involved can understand and be held accountable for at least striving to achieve.
  • Push authority and decision making down through the organization, rather than vesting that power in a few at the top of the organization.
  • Eliminate the rules of performance that tell people how to do the job and institute rules of engagement that define what needs to be done and allows the people to decide how it should be done.
  • Always drive a sense of urgency within the organization. Encourage making a decision by defining failure as not making a decision.
  • Provide incentive and reward for success and accountability for failure.

Even a cursory overview would show that none of these bureaucracy-fighting concepts exists in the Department of Veterans Affairs. The “mission” of the VA is so all-encompassing and suitably nebulous – get this, it’s “responsible for providing vital services to America’s veterans” – it is impossible to focus activity and establish clear benchmarks of performance.

Combine this with exceedingly top-heavy management authority – it is estimated that out of more than 250,000 VA employees only about 200 managers have authority to make even limited decisions – and the confused lack of effective action is as understandable as it is predictable. Such a top-down management approach in any a large organization causes the creation of rules and regulations that document corporate process and procedure in such excruciating detail that it prevents any type of flexible response in dealing with individual needs.

The result? Those who deal directly with the “customer” (the veterans) are forced to spend more time straining to comply with rules than solving problems or meeting needs. With no clear-cut benchmarks or standards of performance – other than conforming to the rigid rules – waitlistthere is no sense of urgency to meet the needs of the veteran. (That is why some veterans can be forced to wait 9 months or more for a simple appointment.) In the VA failure is defined as “not following the rules,” not failing to provide needed services to veterans. As a result, there is little incentive to provide timely service and no reward for doing so; and accountability becomes virtually nonexistent. Despite what is acknowledged as a widespread “mess” at the VA, out of 250,000 employees, only three individuals have lost their jobs. But that is not surprising, because true accountability can only be enforced when authority has been bestowed and few if any have real authority at the VA. Considering all this, it is a wonder that the VA functions as well as it does!

But not all is lost. Any leader who seeks to resist the encroachment of stultifying bureaucracy in their organization can study the model of the VA for what should and should not be done.

The Bottom Line

Any organization must have a clear, consistent vision that is constantly communicated and is unambiguous enough to be converted into identifiable actions necessary to achieve the vision. Those within the organization – not just those at the top – must be empowered to identify the actions necessary and vested with the authority to complete them. Leaders may define “what” is to be done, but “rules of engagement” rather than “rules of procedure” must be in place in order to allow others to decide “how” it is to be done. When specific benchmarks and measures of performance are established a “sense of urgency” to complete the task is created. And without a continuing sense of urgency, ultimately nothing is accomplished. Reward for doing the right thing the right way is more important than accountability for failure, but you can’t have one without the other. Put all these together and you have the makings of a successful – bureaucracy-free – organization. Ignore these concepts and you have the makings of another VA.

Good luck Mr. McDonald! Better you than me!

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