The week started in Glasgow and ended in Beirut. It is difficult to imagine a greater contrast.
There is not much talk of COP26 in Lebanon. When a nation-state cannot fulfill its primary duties, starting with guaranteeing the security of its citizens, climate-related issues are distant, if not foreign. Change will only come from those who can afford it.
The situation of a country and its domestic economy is often likened to that of a corporate. With its annual gross domestic product of $30 billion, Lebanon must fix its governance issues, rely on a competent chief executive to achieve financial stability, and work on a recovery plan to regain the confidence of its stakeholders. The business narrative is compelling.
More generally, the idea that governments should be run like a business is familiar and instinctively appealing. Public services, insulated from competition, are less efficient and effective than most private for-profit organizations. So why not implement winning business principles when running an administration? Pursuing that logic, many executives have succeeded in convincing voters that their vast business expertise was what their country needed. In fact, Lebanon’s prime minister is a billionaire businessman.
And yet, I have come to appreciate why a government cannot be run like a business. The idea that successful executives can seamlessly export their management skills to the public service sector is a fallacy.
The primary reason is that ‘not everything that is profitable is of social value, and not everything of social value is profitable.’ Therefore, value maximization takes a distinct meaning, whether expressed in the context of a government or a firm. Each one of them calls for a different leadership tropism.
In addition, while elected by a majority, a government must answer to all its constituencies, i.e., serve all its existing ‘customers.’ Under these circumstances, power and influence tend to be highly diffuse. The spectrum of variables to consider when making decisions is almost infinite. Only an imperfect political compromise can pave the way for action.
Governing a nation thus represents an extreme version of stakeholderism, a far cry from the shareholderism leadership teams have learned to master (see ‘Fighting the Fatigue’). In fact, in ‘Good to Great and the Social Sectors’ (2005), Jim Collins, the renowned serial writer about leadership, argues that governments’ diffuse power structures trip up business executives when joining an administration.
The dogged attempt by private sector idolators to impose business principles and values onto public administrations may well have contributed to the mismanagement of government and its agencies since WWII. To improve the quality of their processes and output, Jim Collins calls for governments to build some ‘legislative leadership,’ a form of leadership that relies ‘upon persuasion, political currency, and shared interests to create the conditions for the right decisions to happen.’
As firms are increasingly required to meet a flurry of non-financial expectations in conjunction with sustainability objectives, perhaps, in this day and age, executive teams can incorporate a greater dose of legislative leadership too.