How September 11 changed business strategies for influencing government

Citation

Bonnett, T.W. (2002), "How September 11 changed business strategies for influencing government", Strategy & Leadership, Vol. 30 No. 1. https://doi.org/10.1108/sl.2002.26130aae.002

How September 11 changed business strategies for influencing government

Thomas W. Bonnett

Winning the Influence Game: What Every Business Leader Should Know about Government

By Michael Watkins, Mickey Edwards and Usha ThakrarJohn Wiley & SonsNew York, NY2001258 pp.

After the September 11 terrorist attacks on the USA, businesses must rethink the strategies they employ for influencing governments at all levels. Up until the current crisis, businesses focused on lobbying governments for favorable taxation, regulation that wouldn't inhibit marketing, non-adversarial purchasing, self-monitoring of industry standards, and benign enforcement of antitrust laws. It is an axiom that business leaders need to understand how government works in order to obtain strategic advantages – over their direct competitors and for their industry. This is the unadorned theme of this book, and it is well stated.

In post-crisis environment, however, one must go beyond these elementary propositions to observe that capitalism requires secure property rights and the civic infrastructure to preserve them. Hence, to ensure these essential prerequisites of capitalism, governments themselves must maintain sufficient autonomy from business influence. A government that loses its credibility with a cynical public cannot serve the public interest. In times of national crisis, a government's credibility is one of its most crucial assets. As a result, government officials and the public must now judge whether businesses will bolster or undermine that credibility in the process of "winning the influence game."

For example, the recent terrorist attack on America – the September 11 destruction of the World Trade Center in Manhattan and the attack on the Pentagon in Virginia – has provoked an important discussion about the safety of air travel and the federal government's failure to secure it. The Federal Aviation Administration repeatedly fined the airlines for lax security. The pilots and other airline personnel frequently requested securely locked cockpit doors and other measures to improve safety. The General Accounting Office reported to Congress 15 months ago "serious vulnerabilities in our aviation security system exist and must be adequately addressed."

The airlines, nevertheless, successfully thwarted tepid proposals to impose tougher security measures. Our government was responsive to these organized interests, but, sadly, was not responsible to domestic air travelers. Most citizens expect their government to protect an innocent public from avoidable disaster.

Cheap seats vs safety and security

Before the tragedy, the federal government's task of regulating air travel was tilted toward preserving cheap fares. After this horrendous tragedy, it will now shift toward security and safety. The tradeoffs inherent in public policy issues are not included in this book. The phrase "public interest" does not appear in its index. Nor does the word "ethics," or even "democracy." The absence of any discussion of these terms in a book about how to influence government seems particularly odd since one of its authors is a former member of Congress now teaching at the JFK School of Government at Harvard University.

Vice President Al Gore chaired a commission in 1996 that recommended better airport security, but a beleaguered Clinton administration and a distracted media failed to press a complacent Congress hard enough for these reforms. Not coincidentally, the transportation industry, dominated by the airlines, boosted its soft money contributions to the political parties from $1.4 million in 1995 to $5 million in 1999. American Airlines alone gave $469,089 to the two major political parties in 1999.

Immediately following the September 11 tragedy, the airlines were seeking a federal bailout from Congress – as much as $24 billion – and legislation that would limit the liability to the passengers and crew of the four hijacked planes that were crashed. They were threatening the elimination of 100,000 jobs. When the stock market reopened on Monday, September 17, the stock value of the airline companies plunged 24 percent to 65 percent, according to the Wall Street Journal. Extracting the emotional and moral issues embedded in this horrific tragedy leaves a dry question: how could the airline executives have believed for so long that resisting improved airport security was good corporate strategy? Corporate strategists, with some humility, might recall Kierkegaard's admonishment: "Life can only be understood backwards; but it must be lived forwards."

This book rightly maintains every business leader has a right to influence his or her government. Its advice is sound. Business leaders should articulate what they want, develop relationships with public officials, understand the legislative process, and build effective coalitions with others to influence government. Many of the examples of these strategies are good ones.

Credibility is crucial

The strongest chapter, "Framing arguments," explains how maintaining one's credibility is crucial to anyone who seeks to influence a public official. Citing a former Congressman, "There is a proper term for a lobbyist who lies or misleads or distorts, and that proper term is former lobbyist." This is best advice ever given to a business leader. "Framing is not lying or misleading," the readers are cautioned.

Yet a few pages later, the book reproduces a message from Phillip Morris, "A few thoughts regarding cigarettes and adult choices," and cites the company's policy statement on marketing to minors. These were given as examples under the heading of "Inoculate the audience against expected challenges." This disconnect is disturbing.

Elsewhere, the book mentioned the congressional testimony, under oath, by the executives of the major tobacco companies that nicotine was not addictive. A whistle-blower from Brown & Williamson produced documents that proved the industry knew a great deal about tobacco's risks to human health, which led to state and federal lawsuits. The authors use the aftermath of these events to explain the tobacco industry knew it had to shift its goals because the political climate changed. ("They have responded by constantly adjusting their approach to government and the public.") Machiavelli was not a moralist either: "Whosoever desires constant success must change his conduct with the times." Now the political climate has changed, the airlines and their trade groups are supporting the FAA's new, and much tougher, airport security measures.

This book was written because the authors thought that business leaders did not understand how to influence government. The Fortune 100 companies were surveyed, and material from the 30 responses was used throughout the book to enrich the discussion of various strategies. The stories and quotes are good ones, but the basic premise is flawed.

Corporations in this country are skilled at influencing governments. They invest heavily in politicians through political action committees and in political parties with soft money. They hire talented lobbyists. They develop good relationships with government officials. They build coalitions, support trade groups, and launch advocacy campaigns through the media to build public support for their political objectives. Most of them are doing, in short, everything this book advises them to do. And some have been at this for a long time, prompting Will Rodgers to quip, long ago, "Congress is the best money can buy."

The greatest weakness of this book is its tendency to present government as a dependent variable. Most public officials want to do the right thing. Often it is simply not clear what that is. Governance is much more difficult when powerful forces exert pressure on public officials. Elected officials, of course, want to get reelected. That takes money. The roughly 20,000 lobbyists inside the DC beltway need to demonstrate to their clients that they are effective in their advocacy. Trade groups need "hot" issues to sustain dues-playing membership. The result of these crosscurrents is a most contentious environment – a black hole that sucks up enormous resources from all corners of our society. Business, a contrapuntist might argue, wastes too much money trying to influence government. Money, incidentally, that belongs to corporate shareholders.

Conservative economist Milton Friedman, long ago, admonished business leaders to focus on earning money for their shareholders. On the left are corporate critics who maintain that business has social responsibilities as well as fiduciary ones. The authors of this book fall in the mushy middle, pragmatically arguing that manipulating the government to obtain competitive advantage is good business strategy. Sometimes it is.

But is this a good strategy for most businesses? Is it a good use of money, time, and corporate resources? Was Microsoft better served before it opened its Washington office in 1995 than it is now – after spending $3.7 million on lobbying Congress in 1998, its ham-handed effort in 1999 to cut funding for the Antitrust Division of the Justice Department, and giving $2.8 million in the 2000 election cycle? More importantly, is giving business what it wants in the public interest? Is giving business what it wants even in the business interest?

This book is a good primer for newly minted MBAs and is recommended to business leaders who slept through the civics class in the sixth grade. For a sophisticated discussion of the strengths and weaknesses of American government, see Derek Bok's The Trouble with Government (Harvard University Press, 2001). For an explanation of why Congress proposes harmful legislation to extract political contributions, see Fred S. McChestney's Money for Nothing: Politicians, Rent Extraction and Political Extortion (Harvard University Press, 1997). And finally, for those who think enhancing the public reputation of their corporation is the best long-term business strategy, see Peter Schwartz and Blair Gibb's When Good Companies Do Bad Things (John Wiley & Sons, 1999). These books will be more intellectually rewarding than this one for most readers.