First 100 Days: Prioritize and take a hands-on approach
— Ram Charan is the author several book, including “Leadership in the Era of Economic Uncertainty: The New Rules for Getting the Right Things Done in Difficult Times.” A noted expert on business strategy, Charan has coached CEOs and helped companies like GE, Bank of America, Verizon, KLM, and Thomson shape and implement their strategic direction. The opinions expressed are his own. —
The first 100 days demand that President Barack Obama sort out his priorities and choose the ones that will help solve many others. With many constituencies and direct reports clamoring for his time and attention, he cannot attend to them all. He has to decide which of the many complex and urgent issues that have accumulated must be resolved first.
The new president will inevitably be pushed to spend a huge amount of time on foreign policy. But I suggest that the president’s top priority should be to get the nation out of this economic and psychological funk. He has selected some very capable people who will help sort out the economic mess. He made a brilliant move to have Paul Volcker in the White House.
But ensuring that various parts of the U.S. economy work together and with the rest of the global economy will take a significant amount of President Obama’s personal time and leadership. I have seen in my work with corporations that the best leaders are hands-on when it comes to making sure their top people coordinate their efforts. The new president will have to do the same with the secretary of Treasury, Federal Reserve chair, SEC chair, and other relevant government leaders. Each of these experts sees the situation through the lens of his or her expertise.
The president must ensure that their perspectives are integrated. He must provide the oversight to ensure that they communicate frequently and resolve any conflicts that arise to create cogent, urgent solutions to get the economy going.
The president also needs the common sense perspective of people who spend their lives dealing with the issues of falling demand, global trade, inflation, deflation, and layoffs. He needs a way to gather “ground-level intelligence” from the business side. He should create a small group of perhaps ten active business leaders to periodically meet with him.
This country has many smart, thoughtful people doing their best to keep their companies going. Communicating with them frequently will help the president grasp the depth and scope of the shifting economic problems better—and sooner—than hundred-page documents and statistical reports.
This group can help generate new solutions and provide insights into the practicality of solutions being proposed. They can help anticipate the second- and third-order consequences of proposed actions. The leaders must, of course, be carefully chosen so they don’t promote their self-interest; there is no room for PR grandstanding. I have no doubt that there is an ample supply of business leaders who would donate their time to help get the nation back on track.
The aim should be to find a simple solution to the core problem rather than a comprehensive solution to all the problems created by the domino effect. Solving the problem of toxic assets that have gummed up the flow of money, for example, will have many positive ripple effects.
Here is one possible solution: Announce a program that converts all subprime nonperforming loans as of a particular date (say, February 1) to performing loans by having the Treasury make the mortgage payments for the next five years. As the banks become profitable, they will pay 25 percent of their profits to reimburse the Treasury. External audit firms can provide a check on which loans qualify.
Stemming the tide of foreclosures will turn the psychology of most Americans, who are anxious about their jobs and homes, and open the clogged transactions of CDOs and other derivatives that are based on the original mortgage loans. Thus multiple problems are resolved by targeting the right one. My discussions with bankers indicate that this solution is do-able.
Choosing the right priorities is essential. Addressing them with realism, tempered with optimism, will enhance President Obama’s credibility, and, more importantly, build our future.