Opinion: O'Brien: the difference between business and politics

The leap from business to politics is difficult to make – I speak from experience.

By Larry O'Brien

Climbing the steep learning curve of my own transition, I spent a lot of time dissecting the differences between business and politics. It was hard for me to be specific in describing the differences between the two until a single incident – and a simple “thank you” – provided the touchstone from which to launch a satisfactory explanation.

In 2009, I invited councillor Rick Chiarelli into my office for a cup of coffee to find out why he had helped deceive me during budget deliberations.

We sat at the round table in my office, just under the city road sign that read “Swaggerville” (made for me by the City of Ottawa) and we chatted for a few minutes before addressing the issue. I had developed a deep respect for Mr. Chiarelli's political skills, but I needed to confront him. It had been the ultimate surprise attack and I couldn’t believe that he and his cohorts could have been so treacherous.

Mr. Chiarelli, alongside councillors Peter Hume and Diane Holmes, led a total of fifteen councillors (who had decided that they didn’t want to conduct a line-by-line review of city spending) in an omnibus motion to raise taxes. What was truly disappointing was that at that time, we were finally getting to the root of the city's spending problems. A few more days of hard work would have saved taxpayers tens of millions of dollars. We had already finished cutting $6 million from our annual budget and were ready to get to the real opportunities when the financial coup took place.

The resulting 4.9-per-cent tax increase happened in the blink of an eye, and was dispiriting to me.

I felt that I needed to better understand this event from Mr. Chiarelli’s perspective – that’s why I had asked him to coffee. As we talked, he tried to persuade me that what he and the other councillors was good for my political career. He felt that I could blame council for not achieving my tax target. It was perplexing to hear that argument – as I was busy thinking about city finances, he was thinking about political repercussions.

I had to give my head a shake. I told him that he was the most disingenuous, devious person I had ever met but that I still, for some reason, liked him (Mr. Chiarelli is an impossible person not to like). He smiled back at me with a Cheshire-cat grin, and with pride said those two simple words, laden with meaning: “Thank you.”

I wasn’t sure whether to laugh or cry. Instead, I burst out laughing. Despite his deception he had clearly demonstrated the difference between my world of business and his world of politics, and I clearly saw the cause of my difficulties in transitioning.

The budget coup and Mr. Chiarelli’s response crystallized, for me, the differences between business and politics.

A CEO is paid to prioritize the challenges of future growth, prosperity and survival of the company. The CEO then marshals the resources of the organization to solve these problems in priority.

But to call a CEO a problem-solver would be a simplification, because in modern, complex organizations the CEO (on his or her own) could never have all the skills required to identify the myriad solutions. Rather, the CEO accepts the ultimate responsibility of testing and then choosing from solutions recommended by the senior management team. The buck truly stops with the CEO, however, and there is no committee to hide behind.

I have always used four principles to test the validity of business options presented to me: honesty, value, timing, and prudence. From the school of hard knocks, I learned testing resolutions against a constant framework would enable better and more timely judgement and decision-making. Even more beneficial to having a common evaluation methodology is to ensure that decisions are harmonized with a constant and predictable management theme.

The tests in a business environment are quite simple:

Was the solution presented an honest one? (Not just honest in terms of truthful, but were the facts correct?)

Good data makes for good decisions. This is the first test for any option being reviewed. In politics, the facts are often polling data or public perception and not easy to identify as concrete. Long debates in my time in politics often buried the most critical information in a blizzard of political ideology and activity.

The second benchmark is the test of value, and what that means.

In business, one constantly tries to add value wherever possible. It becomes an important part of the decision-making process. Did the decision add value to the company, the employees and customers? Would all the different parties affected by the selected course of action see it as beneficial?

This drive to add value for all partners is often seen as futile from the perspective of politicians. To a politician, making others look good gives those others an opportunity to steal the limelight, or credit. What may seem natural in business is counterintuitive to politics.

Another key test in validating solutions in  business is the time frame.

Is it a short-term or long-term solution? Often, when you make the right long-term decision in business, the company ends up being identified as progressive, meaning other successful enterprises will want to do business with you. The right long-term solution in politics, however, is often a difficult sell to the public. Large projects like LRT, the Convention Centre and the Lansdowne Partnership Plan might well be beneficial from the long-term perspective, but explaining a project’s long-term virtues can be challenging. Today’s media-driven politics relies on information being manipulated into sound bites, for a public that sometimes doesn’t have the time, or inclination, to fully analyze a project.

But the final and harshest test in business is prudence.

Why are we taking this course of action, in clear financial terms? In business, it's much easier to calculate a return on investment that makes sense to shareholders than to make a comparable argument to taxpayers. Many issues are multi-dimensional and can be difficult to explain. When an explanation in politics becomes overly complicated or lengthy, it becomes easy prey for political opponents. It is often easier for opponents to condemn an idea succinctly, than for the proponent of that idea to explain it in the same manner. Regardless, this four-benchmark, CEO-style approach guided my decision-making as Calian grew from being a one-person consulting company in 1982, to a $215-million business by 2010 (I left in 2006). At Calian, I could always justify business decisions to my peers, and staff, in clear and easy-to-understand terms. Over time, senior management adopted these same values and tests, thus multiplying their effectiveness. These four benchmarks worked in business.

But as I suggest, they are not as effective in politics.

Former Prime Minister Jean Chretien once said that the number-one job in politics is getting elected, and then re-elected. But a CEO’s number-one job is to build a company to last forever.

Mayor Jim Watson reiterated Mr. Chretien's sentiment to me at this year’s Santa Claus parade. It was a cold Saturday night, and Mr. Watson noted that he was underdressed for the weather. He mentioned he 'd been to seven events that day and didn't have time to change into long underwear.

I jokingly said “Jim, the election is over!” to which he replied, “Yes, but the next election is one day closer.”

Indeed, the chasm between business and politics is vast and perhaps my inability to see the world in terms of elections, polling results, and popularity contributed to my recent defeat.

With hindsight, I have identified the different choices I would have had to make to win the 2010 election. But that would have meant turning my back on the principles that made me a success in business, and was something I simply could not do.

I could have neutralized my infamous “zero means zero” tax promise by saying that the books were much worse than I had imagined, once I saw them. It might have been the politically expedient thing to do – as I’ve seen it done before – but not honest. In fact, the City of Ottawa was in pretty good financial shape. But as I soon discovered I could not simply decree the reduction of expenses, and order that my tax goal be met. The broken tax promise turned out to be a powerful weapon used against me.

I could also have reneged on my promise to push the reset button on the north-south LRT. I could have argued that we couldn't afford the $36-million cost to break the contract. But that would have gone against my belief that the break-up fee would be seen as inconsequential fifteen years from now, and getting the system right in the core of the city was key to the long-term economic prosperity of Ottawa.

Choosing the right long-term transit solution was critical for the city, but surprisingly hard to explain to the public – even the ones who voted for me to do just that.

During the transit strike, the politically expedient thing to do would have been to give the Amalgamated Transit Union everything they asked for. But it was wrong to allow anyone to drive a ten-tonne bus through the streets of Ottawa for 22 hours straight. The city had overlooked this problem for more than ten years, and the scheduling problem might have even contributed to a number of bus-related accidents. It had to stop, and the gain in public safety was worth the pain of inconvenience.

But unfortunately, the transit strike was another effective weapon against me in the 2010 municipal campaign.

The new councillors and mayor will have significant challenges in the next four years. Economic development will perhaps be the biggest. The recession of 2009 has changed the very structure of our economy, and the economic growth engines of the future will be much different from those of the past. Workers of the future will be mobile, and will choose to live in a vibrant city that's safe and efficient. We need the current and future leaders of the public and private sectors to want to live in Ottawa. This is the reality of  21st-century economic development.

Projects like the subway, Lansdowne Park revitalization and the new Convention Centre all play a role in securing the future prosperity of Ottawa. These projects create the vibe that contributes to attracting creative talent to live in Ottawa.

I hope that our newly elected politicians will have the wisdom to test their visions of the future against the four values I've described, and to do what is in the best interest of the city – not their political career. It’s a sacrifice, but our great city is worth it.

Good luck to our new council and mayor!

Larry O’Brien is the former mayor of Ottawa and former CEO of Calian Technologies.