How not to start a career as CEO

Although he didn't have a lot of experience, Brian Owens was selected to be the new CEO of an expansion NFL franchise. The good news was that the team owners had plenty of money and Owens could hire almost any head coach he wanted. Owens' favorite team in his youth was the Detroit Lions, a team which despite occasionally having good talent was almost never able to hire a coach which could turn that talent into a playoff contender. Still, Owens approached the current coach of the Lions and hired him for the new team, despite the Lions having at that time the worst record in the NFL, not having won a game more than halfway through the season and despite that coach not having done anything memorable in football prior to his job with the Lions. Football experts just scratched their heads at the decision, predicting the new team would have a losing record for several years to come if the decision-making at the top were to remain that bad.

While Bernie O'Brien had a law degree, he had very little business experience. Still, his charisma was seen to be a valuable tool for the company which was in need of a turnaround specialist, so they hired O'Brien at interim CEO despite his thin resume. The company seemed to have the necessary pieces to be a success, but it hadn't been successful for a few years. The owner of the company had very deep pockets (it was thought that the money might have come from many years of white collar crime, but that was never proven), and O'Brien was told that he could put together a Board of Directors of his choosing. Over recent years, O'Brien had become friends with Joan Grandy, who had become President of O'Brien's kids' favorite toy company. It was a company which had a long history of making great toys but which had fallen on hard times for many years, for a few decades even, because their dated toys came to have limited appeal for modern tastes and because the company was never able to lower their costs, making the toys more expensive than many of the alternatives. Grandy, unfortunately, was so concerned with making sure the employees loved her that she never made any hard decisions and simply let the company continue to do what it was doing, causing the grand old toy brand to now be on the verge of bankruptcy after a century of history. Maybe Grandy's failure shouldn't have been a surprise since she had no prior business experience. So, it was seen as somewhat odd by stock analysts when O'Brien chose Grandy to be one of the members of the company's new Board of Directors. After all, they wondered, how could someone who has never demonstrated an ability to improve the financial situation she was in charge of be expected to do so for a much bigger company just because a friend asked her to?

And so it is with the remarkable inclusion of Michigan Governor Jennifer Granholm in the economic advisory team for President-Elect Barack Obama.

Michigan is an economic basket case. The state has been in recession for far longer than the rest of the country, with unemployment persistently higher than the national average during Granholm's tenure. According to the Detroit News, "Metro Detroit now stands as the only major metropolitan area in the country where average home prices have fallen below their 2000 levels." Of course, tax-and-spend Granholm almost always sees the answer in higher taxes (HERE, HERE, HERE) , even though it should be clear to a blind and deaf person that Michigan's already high taxes are a main cause of the problem.

Jennifer Granholm has presided over, and continues to preside over, one of the great failures of an American state and American industry. So what is she doing on Obama's economic advisory team? Representing labor unions is my guess, as well as generally receiving payback from Obama for her support during his campaign. If this is the sort of "hope and change" we can expect from Obama (and I believe it is), he will soon prove right those of us who said that he should not be allowed to run a small company, much less the nation. Truly, I can not imagine a worse economic advisor than a failed governor with no experience in the business world. But then what do you expect from a President-Elect with no experience in the business world?

What's worse, I would not be surprised to see Granholm offered a cabinet position or maybe an appointment to the federal bench as a judge. After all, they're birds of a feather: They are both graduates of liberal colleges (Columbia for Obama, Berkeley for Granholm) and Harvard Law School, they both love unions, taxes, and government spending, and they both have exceptionally limited understanding of economics...and the little they do know they learned on the job while making terrible economic decisions.

  • Mike DePinto
    Comment from: Mike DePinto
    11/10/08 @ 09:25:39 am

    I don't know if I agree with your premise Ross. By the time Granholm becomes a member of Team Obama, we will have already nationalized the banks, the insurance industry, and the car companies. She may be a perfect fit.

  • Keith
    Comment from: Keith
    11/10/08 @ 11:24:59 am

    Ross,

    This is great news that Granholm will be leaving Michigan for D.C. Why might you ask? My parents are trying to sell their home in that abysmal state (not so much the land itself, it is beautiful, but the politics and economy are horrid) and there may be hope they can get someone in there to turn it around. Of course, the big issue is the fact that the state goverment has done an excellent job of destroying the economy over the years due to their cowtowing to the unions.

    My father has watched as the unions have forced bigger benefits in good times, forced strikes in bad times to maintain those benefits, and decreased the overall efficiency of the workforce by ruling through committee. The auto industry is so specialized that a sensible person has to ask themselves why foreign car makers continue to choose non-union areas of the country and train these specialists instead of locating to a highly specialized area such as Michigan?

    The inflexible nature of the auto unions basically meant that the big 2-1/2 were making cars for over 20 years, not for the consumer, but for the union jobs. Their only solace was the fact that both SUV's and trucks made them money to keep the lights on. However, the chickens have come home to roost, and we are now seeing what 20+ years of inefficiency can do to a company and it can't happen sooner in my opinion. The big 2-1/2 may not be the same after bankrupcy, but I believe that is a good thing.

    Keith

  • Jess
    Comment from: Jess
    11/10/08 @ 11:57:48 am

    I'm from MI originally and still follow politics there and this was my exact reaction to the selection.

    MI is a total mess and Granholm has proven again and again to be completely incompetent. When the government has to shut down entirely because it can't come up with a budget or money to run and the govenor does nothing but propose new taxes to run more businesses and people out of state that is just insane. The unions and dems have destroyed MI.

    I expected no less from Obama honestly.

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