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Tuesday, December 20, 2016

CEOs in the Trump Vortex: 8 Rules of Engagement
by Dale Buss
President-elect Donald Trump has made America’s CEOs sit up and take notice with many of his pre-inauguration moves, ranging from one extreme—job-shaming—to the other, selecting corporate chiefs for some key cabinet posts.

And in the flurry, already an emergent pattern is clear. As president, Trump wants to rely heavily on the kind of accomplished leaders he knows best and is comfortable with: CEOs. And if CEOs aren’t on his team, he’s going to buttonhole them to hold them accountable for things that run counter to his view of the world.

This new era creates both opportunities and challenges for CEOs, who may have gotten used to being relatively neglected during the Obama administration, for better or worse. And surely the playbook is about to change.

In Trump’s most recent actions, including naming ExxonMobil CEO Rex Tillerson as his designate for Secretary of State, inviting Silicon Valley moguls such as Jeff Bezos and Elon Musk to a tech-CEO summit, and tweeting that Lockheed Martin’s fighter jets are too expensive—he is certainly getting CEOs’ attention.

While no game plan exists for how to handle a Trump administration, here are 8 rules for CEOs to navigate the arrival of a new cabinet in Washington which already seems to center around them.

1. Expect the obvious chiefs to get called out. Trump made clear just days after his election that he was going to reach out to CEOs who could address his strong campaign theme of restoring American manufacturing jobs—and prevent them from going to Mexico.

That’s how Gregory Hayes, CEO of Carrier parent United Technologies, and Ford’s top duo of Bill Ford and Mark Fields, ended up being early negotiators with the President-elect over their companies’ plans to send more jobs south of the border.

2. Watch him dig below the surface. Trump already has shown that he’s going to pursue not only obvious targets such as Ford, but also other CEOs who may be lurking at the second and third levels beneath.

Did he perceive Boeing as being too close to Hillary Clinton? Trump decided to make a big deal of the aircraft maker’s $4-billion price tag for a new version of Air Force One, taking CEO Dennis Muilenburg by surprise. Then he went after Lockheed Martin for “out of control” costs of its new F-35 fighter jet, whose price during Hewson’s tenure has doubled from initial estimates to nearly $400 billion.

For SoftBank founder Masayoshi Son, Trump’s play came in the form of getting him to agree to have the firm invest $50 billion in the U.S. to create 50,000 jobs, though some observers noted that SoftBank essentially already had decided to do so. Among Son’s vulnerabilities are the fact that the owner still might like to buy T-Mobile, even as Trump has announced his opposition to the big telecom deal currently on the table—the proposed AT&T/Time Warner merger.

3. Note the absence of dodging. As Trump tallies up more and more CEOs as cabinet picks, he’s unapologetically embracing some people who absolutely make his opposition howl.

Few pundits predicted that Tillerson would be Trump’s pick for Secretary of State, for example, because of complications from his existing relationships with foreign leaders. (And, for that matter, because no one enrages progressives more than oil-company chieftains.) Trump explained that Tillerson, like a good CEO of any global company, knows many of the “players” worldwide and is a great negotiator. Those are two of the things that Trump values more highly than diplomatic experience.

And Trump picked Dow CEO Andrew Liveris to head his Manufacturing Council despite the fact that Dow has moved to eliminate thousands of manufacturing jobs under Liveris, in part because of its merger with DuPont, even as it is boosting white-collar R&D jobs in the United States.

4. Try to beat him to the punch. Some CEOs are attempting to conclude certain business with President Obama before Trump takes office. For example, Volkswagen CEO Matthias Mueller reportedly is trying to get the company’s deal with the U.S. Justice Department for settling Dieselgate wrapped up ASAP, because he may suspect that a President Trump and new Attorney General Jeff Sessions will drive a harder bargain.

Similarly motivated was Alphabet CEO Eric Schmidt, a huge and open backer of Clinton’s presidential bid. His Google unit has hurried to put the finishing touches on a deal with Cuba to place computer servers there to speed the search service. Obama championed construction of a new U.S. relationship with the island dictatorship, while Trump would like to keep Cuba on ice.

And having been nicked by Trump on the Air Force One kerfuffle, Boeing’s Muilenburg tried to beat the president-elect to the punch on something that is sure to displease Trump: Boeing’s $16.6-billion deal to sell planes to Iran. It came as a result of the lifting of economic sanctions on that country because of President Obama’s security deal with the regime. Hoping to beat Trump at his own game, Boeing officially cast the deal with Iran as something that “will support tens of thousands of U.S. jobs” associated with production and delivery of the planes.

5. Don’t keep your head down. Virginia Rometty raised her hand early after Election Day by publishing an open letter to Trump outlining her recommendations on issues from healthcare to infrastructure spending. Trump responded by tapping the IBM CEO to join his Strategic and Policy Forum, one of only two women so invited.

Meanwhile, the other female he picked, General Motors CEO Mary Barra, hadn’t said peep about his election and he asked her to join anyway. And it’s already become apparent that he’s put her in a hot seat with his tough rhetoric about trade with China, where GM is the American automaker most dependent on domestic sales and integration with its design and development needs in the U.S. market.

6. Assume he may try to co-opt you. Trump already has displayed a willingness to summon enemies of his views for an in-person discussion, such as when he called climate-change activist Al Gore to Trump Tower. This week, he planned to meet with leading members of the digital-tech community who largely had cast him as the industry’s ultimate villain during the campaign.

7. Figure he’ll impact you another way. For CEOs who didn’t get picked for his cabinet, invited to a tete-a-tete, targeted for a tweet or otherwise not chosen for a spot on his chess board yet, there’s this: He’s thinking of you anyway.

President-elect Trump already has created hope that his tax-cutting, regulation-stripping, growth-oriented administration will spark 3- to 4-percent annual increases in GDP, a prospect that surely delights thousands of American CEOs.

8. Prepare to tread his path. One obvious implication of Trump’s election for CEOs is that he’s proven that a CEO can become elected president. This historic development could open the door for other CEOs to consider following his path. And while it could just be media hype, rumors are already spreading that Starbucks’ Schultz, stepping down as the firm’s CEO, may consider a 2020 presidential run.

Clearly, the ascendancy of Donald Trump even before he’s inaugurated has created a new world of possibilities for America’s CEOs, some good, some not as much. Either way, it should keep all business chiefs on their toes.
Source: Chief Executive

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