How a real CEO president would turn Iraq around.

Commentary about business and finance.
Feb. 5 2007 6:20 PM

If the Iraq War Were a Corporation …

How a real CEO president would turn it around.

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Iraq. Click image to expand.
The aftermath of a suicide bombing in Iraq

President Bush and his Republicans allies have long argued that government should be run more like a business. (At times, as this troubling article in the New York Times about outsourcing notes, it seems as if the MBA president wants business to run the whole government.) And when it comes to the government initiative on which Bush has staked his presidency and legacy—the Iraq war—the similarities between public policy and a publicly held corporation are more than superficial. The Iraq war resembles nothing so much as a Fortune 500 firm. But not an outperforming, market-beating one like Google. No, if the Iraq war were a corporation, it would be Ford Motor Co.

Consider: Each enterprise is run by an upbeat, underperforming, Ivy League-educated, baby-boomer dynast. Each is failing in the marketplace. Ford's sales fell 19 percent from January 2006 to January 2007. According to Gallup, approval of the way things are going in Iraq has fallen 18 percentage points in the past year.

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Both have found themselves under investigation for apparently improper disclosure of information vital to stakeholders—Ford by the Securities and Exchange Commission and the Bush administration by special prosecutor Patrick Fitzgerald.

Both are in the midst of a restructuring effort that involves a new executive team. Since the fall, Bush has fired his defense secretary, the war's chief operating officer, and replaced him with a respected executive, Robert Gates. Last fall, William Clay Ford Jr. fired himself as CEO and hired Boeing executive Alan Mulally as his replacement. At both companies, the change at the top didn't really replace the executive on whom ultimate responsibility lies, since Ford is still chairman and Bush is still president. In fact, the entity's own bylaws prevent the real boss from being fired. In Ford's case, the family controls stock entitling it to 40 percent of the votes. In Bush's case, the Constitution provides that the executive's term will run through the end of 2008.

Both are using the same lame phrase to rebrand their latest turnaround strategy. Ford unveiled its Way Forward for the car company's North American business in January 2006. A year later, President Bush unveiled the New Way Forward in Iraq. And as they seek new strategies, both have been undermined by cheap competition from the East—Ford by Japanese and Korean automakers and Bush by Iraqi insurgents and Iran.

Both found their credibility dashed when their own predictions and benchmarks were not met. Throughout 2005, as its market position deteriorated, Ford had to back away from its earnings guidance, first in April and then again in June. And for nearly four years, virtually everybody who has offered specific numerical guidance on any aspect of the war has been made to look a fool, whether the guidance was related to the cost, the number of troops needed, or the duration of the insurgency. Remember Dick Cheney's 2005 "last throes" bit? Or President Bush's 2006 State of the Union, in which he predicted: "As we make progress on the ground, and Iraqi forces increasingly take the lead, we should be able to further decrease our troop levels."

At Ford, the hereditary CEO learned a pretty tough lesson: Don't offer guidance when you can't control the results. As part of its Way Forward, Ford announced in January 2006 that it would no longer provide specific figures on expected earnings. Talking about 2007, for example, Ford will only say that it expects North American operations to post a loss. As part of his New Way Forward, President Bush has similarly abjured dates and dismissed the very notion of a timetable. Discussing 2007, he would only say, "The year ahead will demand more patience, sacrifice, and resolve."

There's a final similarity. When the main business strategy has faltered in the short term, executives at both entities have tried to keep investors focused on the long term. At year-end, Ford urged shareholders to look beyond what was sure to be a tough 2007 to a bright 2008. In January, President Bush toldUSA Today that Iraq will be an issue for the next president to deal with. The budget he presented todaycontains Iraq funding for fiscal 2008 and 2009—and nothing beyond that.

Then again, that kick-it-forward strategy is not exactly working for him, either. Imagine a CEO announcing that the problems in the firm's most important business unit will ultimately be a matter for the next CEO. The shareholders wouldn't wait two years before voting in a new boss.

Bush might also do well to heed some of the positive examples being set by Ford. As it seeks to right the ship, the company is scaling back its global ambitions—Ford is no longer pursuing market share at the expense of profits—and taking pains to wean itself from imported petroleum. And it has proved willing to sit down with long-standing adversaries (the United Auto Workers) to iron out a deal that could allow both sides to move forward. If only CEO Bush were so creative about his problems!

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