Trump: The Business Failure

Dan Piller views the Trump campaign from his perspective as a longtime business and financial reporter. -promoted by desmoinesdem

As of mid-October, Donald Trump stands to lose the election to a candidate whom polls show is disliked or distrusted by two-thirds of the voters. By blowing an advantage like that, Trump should bag his head. Opponents will credit his defeat to Trump’s variously bizarre statements about women, immigrants, foreign policy and trade, not to mention the general creepiness of his rallies.

To be sure, the Trump campaign has stretched the boundaries of political looniness. But there is another reason why Trump, the businessman, will lose. As a candidate, he has been a bad CEO. He has ignored two basic rules that savvy business executives live by, rules I heard repeated by business executives during more than three decades as a business writer.

RULE 1: Never get out of your core business competency.

Ignorance of this rule is why even profitable businesses come to grief. In recent decades United Airlines bought Westin Hotels and Union Pacific bought the Overnite Transportation trucking company. The synergy, as business people like to call it, seemed obvious. Most airline passengers deplane for hotels, and both railroads and trucks haul freight. UP and UAL were leaders in their fields. How hard could that be?

We-l-l-l-l, as it turned out the airline people didn’t know how to run hotels, and the railroad people didn’t know how to run freight on highways. United and UP both sold their money losing diversifications, and graduate business students now study their misadventures in the manner of medical students cutting up cadavers.

Finally Enron, the Mother of All Business Failures, happened when people who for decades had profitably piped natural gas from Texas to keep the Upper Midwest warm in winter suddenly decided to become wheeler-dealers of intricate financial instruments in markets that nobody understood, themselves included. Enron could cover its incompetence with lies only so long before it destroyed itself.

Trump no doubt figured that his core competence in lodging and entertainment somehow would translate into expertise in running a national political campaign. But a national campaign requires different skill sets, as business people call expertise, and Trump doesn’t have it.

RULE 2: If you break Rule 1, for God’s sake get people with competence and experience in the new field, and listen to them.

Trump may have been as surprised as anyone when his campaign took off last spring. But he should have been smart enough to call in experienced people to help with the complex business of running a national campaign. Ronald Reagan understood this. The Gipper never assumed that his experience as an actor, even if it made him the “Great Communicator,” was by itself qualification to run a political campaign. Reagan (or maybe Nancy) took pains to surround himself with political pros such as John Sears, Ed Rollins and Michael Deaver to make sure that every day really was Morning in America on his campaign trail.

Trump, by contrast, turned to a motley crew of would-be’s such as Corey Lewandowski, Paul Manafort and Steven Bannon who, while they may share Trump’s world view, obviously are better at throwing bombs than managing the minutiae of a political campaign. Trump’s campaign manager-of-the-month now is Kellyanne Conway, whose own core competence is polling, not campaign organization. It’s obvious that Trump really runs his campaign out of his own head, where his ego occupies the space that should be filled by strategic planning.

Trump’s most significant advisors appear to be his children, who as political thinkers resemble kids playing with matches. Compare that to John F. Kennedy or George W. Bush, who could call on an entire families of experienced political operatives.

Historians will long marvel at the tactical mistakes the Trump campaign has made. A first year polisci student learns that the majority of voters make their voting choices within two weeks after the nominees’ identities are known. Yet Trump had no advertising campaign in place for the crucial July-August period. His campaign lost the initiative while Hillary flooded the airwaves with soft and warm commercials.

Trump apparently thinks that those raucous rallies will translate into votes. Conversations of less than 20 minutes with the people who ran the campaigns for Walter Mondale or Michael Dukakis would disabuse Trump of that notion.

Trump’s need for a good message manager was evident last week, when he spent a day hogging air time with his insults when he should have stepped back and let the news of the release of the Wikileaks emails put Clinton on the defensive. A Michael Deaver would have said “sir, this is a good day to cancel events and let the news cycle be dominated by this anti-Hillary story.” Trump obviously either doesn’t have a Deaver or he doesn’t listen to him/her.

All of this incompetence has surprised me because I had assumed, even if Trump’s political views seemed to have been delivered to earth by an asteroid, that he would exercise normal prudent business management that any board of directors would demand of their CEO. He would test-market his ideas. He would find good people to give him advice based on experience and, above all, listen to them.

Trump’s sole concession to business orthodoxy has been to spend less money than Clinton. But again, an experienced business operator would tell him that a startup – which is the most generous way to describe the Trump campaign – needs a big dollop of capital.

As things stand now, Trump will get fired. And he’ll be fired, in large measure, because as a candidate he’s been a poor businessman.

Dan Piller was a business and financial reporter for most of his 47 year career in journalism, which ended in 2013 when he retired as agriculture and energy reporter for the Des Moines Register. He also worked for newspapers in Dallas and Fort Worth in Texas covering the banking, transportation oil and gas industries.

  • Never been like that

    When has Trump ever taken sage advice other than from Roy Cohn or from tax lawyers? Cohn advised him to bully his way through all situations. He’s been doing it ever since. Test marketing? Ever? Experts on staff? Show me the history of his experts.

  • the ultimate example

    of Trump failing to hire competent people for his presidential campaign was described by Josh Marshall here:

    Brad Parscale is the Trump campaign’s Digital Director. He appears to be in charge of everything from site design to email lists, digital ad placement, targeting, data mining, the whole bit. He’s running that business through the company he co-owns and co-founded, Giles-Parscale. In July, the campaign paid the company $8.4 million. […]

    The real story is the company itself. Giles-Parscale is a relatively small San Antonio based firm which does web design, i.e., they build websites. They seem to do it pretty well. Through some aggressive networking, Parscale got some business with big New York City real estate firms. He came to Trump’s attention and from there he did various projects for the Trump organization. They ranged from sites for buildings, one of Trump’s real estate operations and even Trump’s winery. He seems to have gone a good job and at more competitive prices than New York firms.The Trump-Parscale relationship began in 2011.

    But here’s the key: Giles-Parscale appears never to have worked in politics and from what I can tell has zero experience in campaign email marketing (hitting you up for cash via email), ad placement and targeting, data-mining etc. Now, smart, ambitious people who know the web can pick things up pretty quickly. But these are pretty technical lines of work, especially in the post-2008 political world. Indeed, according to a local business journal, just two months ago, the company was kicking off a massive hiring spree to get the necessary people on board in time for the fall election. They planned to add up to a 100 new employees to its staff of 60 people. “The new workers will range from data scientists to web designers but also accounting, administration and marketing professionals,” reported The San Antonio Business Journal on June 14th.

    Those hires are likely to staff up in all the areas where the company has no institutional experience or staff. Good idea! But starting in June to hire 100 people to integrate into a 60 person company to be ready to hit the ground running in August is a pretty tall proposition, some would say an almost ridiculous one.

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