President Donald Trump's actions are sending shock waves through the business community, but will CEOs have the courage to challenge him?
Publicly, most CEOs are declaring how pleased they are with the President's attention, which has been greater in the past three months from President Trump than it was in eight years under President Obama. Trump is promising them lower corporate taxes, fewer regulations on financial services, health care and energy, and improved infrastructure, while acknowledging business as the driver of economic growth. Every week the President is meeting with CEOs from major industries. Last week it was retailers; before that, airlines and automobiles.
Beneath these rosy promises, Trump's policies are setting off alarm bells in C-suites. Even before his inauguration, he shook business leaders with a series of tweets attacking such great American stalwarts as Ford, General Motors, Boeing, Lockheed Martin, and United Technologies, criticizing their global manufacturing plans, while threatening them with large tariffs for imported products.
Ford and United Technologies' Carrier division immediately offered compromises to avoid Trump's wrath. Concerned their companies might be the next recipient of a Trump tweet, the CEOs of Amazon, Fiat/Chrysler, and Sprint rushed to Trump Tower with offers to employ more Americans. In reality, they were just re-announcing previously published expansion plans. CEO Brian Krzanich told the President that Intel was restarting a $7 billion facility in Arizona, which was originally launched in 2011 under President Obama, and then postponed in 2014 due to lack of demand.
In a recent interview with Harvard Business Review, former U.S. treasury secretary Larry Summers called on business leaders to stand up to the Trump administration, asking, "If CEOs who employ hundreds of thousands of people are not in a position to speak truth to power, who is going to do so?" Rather than trying to curry favor with President Trump, business leaders need to advocate for their long-term needs, and challenge him when his actions will harm their long-term futures.
Since his January 20th inauguration, President Trump has signed more than 20 executive actions on issues including jobs, trade, immigration, national security, health care, and financial regulations. Most controversial to date was the 120-day travel ban, a move the State of Washington challenged as unconstitutional. The Washington court temporarily lifted the ban, which the Trump administration challenged in the Court of Appeals.
This represented a seminal challenge to technology companies that rely heavily on immigrants. With more than 5.5 million jobs going unfilled for lack of qualified applicants, they cannot afford to hire only American-born citizens. Thus, 97 technology companies including Apple, Google, Facebook, Microsoft, eBay, and Intel, stepped up by taking the unprecedented step of filing a joint amicus brief challenging the order, claiming it "threatens companies' ability to attract talent, business, and investment to the United States." They were joined by Coca-Cola, General Electric, Goldman Sachs, JPMorgan, Starbucks – more than 140 companies in all – marking the first time CEOs had actively challenged Trump. On February 8, the President had his most significant defeat when the Court of Appeals refused to reinstate the travel ban.
In addition to the travel ban, Trump's actions are shaking up leaders in other sectors. His proposed border adjustment tax on imports would adversely impact major apparel and electronics retailers like Walmart, Target, Best Buy, Nike, and Under Armour that rely on overseas production. A 20 percent border tax would lead to a 20 percent price increase for consumers, creating more strain on their wallets and threatening the jobs of 15 million retail employees. Trump's egregious tweet against Nordstrom accused the company of treating his daughter Ivanka unfairly for discontinuing her branded products.
Nordstrom defended its decision, citing declining sales of Ivanka's products.
Under Armour CEO Kevin Plank tried to curry Trump's favor, calling him "a great asset to America." He was forced to recant when Steph Curry, his firm's top sponsored athlete, responded he would agree if Plank removed the letters "et" from his praise. Plank acknowledged the border tax would hurt his firm's sales since "there are no apparel makers or textile companies left in America."
Trump's numerous executive orders are easy to issue but often vague or unclear about details, making their implementation complex and confusing. As Trump tries to repeal Obamacare, he is learning how hard it is to design a reasonable replacement. The same is true for reducing financial regulations by gutting the 2010 Dodd-Frank bill, since no one wants to risk a 2008-style collapse.
Given the chaos in Washington, how should business executives lead in the Trump era? Will they have the courage to step up to these new challenges? My advice is to stay focused on their business, while not letting the president's machinations throw them off course and speaking out whenever required.
Here are five recommendations for business leaders:
- Focus on True North. Stay focused on realizing your mission despite the uncertainty. Do not deviate from the core principles that define your company for fear of retaliation from the Trump administration. Staying on track will deepen the loyalty of customers and employees – the people who matter most.
- Build on your strengths. Develop a clear vision of how your company will win by strengthening unique differentiators setting you apart from competitors, and leveraging these strengths to gain competitive advantage.
- Adapt your tactics, not your strategy. Continue with strategies established before Trump took office, but rapidly adapt tactics to this era of extreme volatility. Encourage employees to stay agile and think creatively about different ways of achieving their goals, despite roadblocks they face. You may be forced to make tactical adjustments, but pursue your strategy with laser-like focus.
- Don't abandon globalization. Globalization is a reality that will continue despite the administration's recent efforts to halt it. An "America First" mentality limits your growth potential, so continue to build your global business without backing away from expanding overseas. Embrace globalization by targeting new foreign markets, hiring diverse employees, and building overseas operations. At Medtronic we hired three Americans for every job created overseas as the company expanded from 4,000 employees in 1989 to 85,000 today.
- Prepare for the jobs of the future. Speak out publicly to encourage Trump to address the real jobs issue: the skills gap created by the lack of lifelong training and education. Prepare your workforce for jobs of the future instead of protecting antiquated jobs as Carrier agreed to do. Take a cue from Amazon, General Electric, and SAS, whose programs enable employees to develop skills required for tomorrow's world.
Business leaders have a responsibility to step up to the challenges presented by Trump's administration and lend their voices to shape a better country. By building their businesses for the long-term, they will strengthen the economy and the nation.
Commentary by Bill George, a senior fellow at Harvard Business, former Chairman & CEO of Medtronic, and the author of "Discover Your True North." Follow him on Twitter @Bill_George.