HBS Professor, CEO Co-Author Redouble Call For Systemic Political Change

Q&A WITH MICHAEL PORTER & KATHERINE GEHL

Since we talked last year, a great deal has changed in the U.S. and the world, but a great deal hasn’t changed, as well. Are you encouraged by the reception your message has gotten, or by changes you see in the country?

Katherine Gehl: Obviously we remain deeply distressed about where we currently are at, and we share the distress about Covid, and the other challenges that we’re facing right now, with everybody. I do believe that it causes an increased sense of frustration on the part of so many voters looking for how it this possible that we, as a country, are this bad at managing the situation. Particularly, say with Covid, where we were supposed to be the best-prepared. And yet, it’s turned out that people are uniformly disappointed with how the whole thing’s been handled, no matter what their viewpoint is.

And so, it’s a time, by getting the word out, we can really reinforce this message: It doesn’t have to work this way. We have the power to change the rules of the game so that we incent the creation of a Congress, and then a government, that’s simply more capable and more responsive.

People may be even more receptive to your message now, in an election year, but we are certainly as divided as ever. A lot of what you talk about is political division and how it’s not necessarily an accident. Has that gotten better or worse since 2016?

Katherine: Oh, it’s only gotten worse. As we point out in our book, the parties are incented to compete on division. So, a lot of times we’re sort of focused on the symptom and the drama of something, and the real-life consequence we don’t talk about quite as much as you’d like. We keep talking about, “Oh, we’re so divided, we’re so divided. We’re so divided.” What we need to talk about is, we’re getting nothing done, and the broad outlines of the solutions are known. You know Michael and his colleagues at Harvard Business School developed an eight-point plan on the key things you need to do for the country way back in the year 2012. There is agreement behind closed doors that the system and the incentives we built into the system mean that we’re not going to find that agreement and create the legislation. It’s a devastatingly ill-designed system.

Michael Porter: Well, unfortunately the poor results and the lack of progress that we’ve been talking about every year since the first paper that we wrote are simply getting worse. There’s more and more areas in our social and our environmental and our health agenda, and so forth, that continue to erode. In fact, our latest data on the comparative progress of the nation versus other nations finds almost no other nations in the world that are actually getting worse, where we’re delivering less benefit to society, and we have fewer solutions to issues that we need to solve. So I think there’s continued erosion in the policy performance. We haven’t gotten virtually any significant legislation done that has changed anything that we did. There was the tax bill, but the tax bill, if you look carefully at it, was an entirely partisan bill and it got zero Democratic votes and that’s because it fixed a few things that were useful to fix. But it made a number of things that were broken, worse.

For example, the effect of that tax bill on our budget situation was much higher than it needed to be, but because it was so partisan, it ended up really having gigantic costs. I think more and more people — including the business community, which is, I think, very important in the long run — are starting to understand just how poorly we’re doing and how things that need to be done are not happening. The history was, it was a symbiosis between business and government, and we have an article in the Harvard Business Review that talks a lot about that. But I think today the business community is starting to question their whole thinking about government, and how they should be interacting with government — what they might need to do differently if they want to see a different outcome in terms of the kind of policies and agendas that help the country and help business more.

It’s a very, very turbulent period, but I think the net result is, nobody that I’ve talked to in the last year believes that our government is doing better, that we’re performing the way we need to perform, that we’re really taking on issues that Americans should take on, that in past we had done pretty well.

Historically, I can find very few people that are arguing that, “Oh, look, our political system is getting better.” So, this is a very frustrating moment, because we see things happening in the world that aren’t working very well. Covid is a prime example. Our federal response has been affected in a negative way. If you compare the U.S. approach here to other countries around the world that are our peers, like Japan or others, we’re not doing a good job. So, I think that’s very sad because it has a real effect on our citizens, on human beings. I don’t think there’s a movement that says, “Oh, no, politics isn’t the problem.”

You mentioned the business community. What about the business school community? I can imagine this being a robust discussion in the classroom between you and some MBA students. Has that been the case?

Porter: We’ve been talking to MBA students and students in many schools around America for the last several years about politics. We found a very, very enthusiastic and interested response. I think most younger people feel this, and sort of get this. In terms of MBA students in particular — MBA students are going to be the business leaders of the future. They’re the ones who are noticing that the business communities’ trust in America and the support in our society for business is eroding, and there’s quite a lot of evidence of that. Young business school students want companies to do more — you probably are aware of this movement to move away from pure shareholder value maximization to having a more positive impact on society. More and more companies are adopting what’s called a corporate purpose.

When our business school students who want to be part of this kind of a future see that and hear that, and then they look at what’s actually going on and the ability of our government to function, I think they’re starting to question whether business is playing a role it needs to play. That is covered in the Harvard Business Review article which has just been released. I suspect we will have a very spirited discussion in the business community about this topic, because I think the business community is starting to see the fact that the politics is not a good course for this. It has actually been making things worse for business.

I think more and more, business people are starting to understand that how business is dealing with politics, there’s a whole business playbook. It’s heavy lobbying for stuff that our industry needs. There’s substantial giving to campaigns, to try to influence campaigns to turn out the way that businesses want. A particularly vivid example is what’s called ballot initiatives: in many states the citizens get to put the legislation on the ballot, and then they vote and hopefully what they vote for is what happens. It’s something that was invented way back in the Progressive era, but it’s a way of going around the legislative body. What we’re seeing business do is step to the plate in these citizen efforts and spend vast amounts of money to skew the voting of the citizens in the favor of what business wants.

Again, that is something that is making a lot of people in business uncomfortable, and a lot of young business school students, I think, are saying, “Should we really doing that? Is that really helping us? Is that really making business better? Is that making our company better?” You know, the answer is, not really. So, I think this will be an interesting debate and it’s an important debate. We need to make some significant strategic changes for this system to get better.