CEOs as government saviors: Boom or bust?
For decades, the nation has debated the role that experienced private sector executives have to play in Washington.
In the 1950s, President Eisenhower's defense secretary, the former GM chief Charlie Wilson, was famously misquoted as saying, "What's good for General Motors is good for the country." The quote took on a life of its own as a warning against the conflicts of interest between government and business.
In 2012, the American public opted against putting a former CEO in the White House -- even though, a poll out this week shows, most people believe the country would be better governed by people with business and management experience.
President Obama faced a great deal of conservative criticism at the start of his first term for the lack of private sector leaders in his cabinet, though he did seek out their counsel on the White House Economic Recovery Advisory Board. In his second term, Mr. Obama has turned to private sector leaders to fill some high-pressure roles, including the top spot at the Veterans Affairs Department.
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Mr. Obama has nominated Bob McDonald, the former chief executive of Procter & Gamble and a graduate of the U.S. Military Academy at West Point, to serve as the VA's next secretary. The decision to nominate a longtime businessman -- rather than a decorated general, doctor, or politician like other recent VA secretaries -- came as a surprise to some. McDonald will appear before the Senate Veterans Affairs Committee on Tuesday, where senators are sure to ask him how his private sector experience can help him in the Herculean task of righting the ship at the troubled agency.
"The Department of Veterans Affairs needs a leader that will be able to address the deeply rooted, systemic issues in the organization, while also working with Congress to implement legislative solutions and provide oversight," Sen. Richard Burr, R-N.C., the top Republican on the committee, said in a statement. "I look forward to working with Mr. McDonald as he goes through the confirmation process and hearing what he has in mind for repairing and reforming the VA."
Recent history has shown that bringing private sector into the public sphere can bring mixed results, but it's clear that one of the biggest hurdles facing McDonald will be high expectations -- the expectations set by himself, the public and Congress.
"I think the challenge is all about expectations and an understanding of what is possible and what is viable," Carlos Gutierrez, who was chairman and CEO of the Kellogg Company before serving as President George W. Bush's commerce secretary, told CBS News. "A lot of private sector executives, the mistake they make is they think they are going to change Washington because they are from the private sector and know better."
President Bush's first Treasury Secretary, Paul O'Neill, was a successful businessman, but he lasted less than two years before he was fired for butting heads with the administration over tax policy.
In McDonald's case, the most pressure may come from other Washington groups with influence over the VA, such as Congress and veteran service organizations. The expectations for CEOs can be "unrealistic, in my opinion, when it comes to running complex organizations that are highly political," James Thurber, director for the Center for Congressional and Presidential Studies at American University, told CBS News.
The goals of a government agency are very different than a private firm's goal of maximizing profit, he noted. Furthermore, he said, "I think CEOs oftentimes don't know the subtleties of governing a public sector organization that has many constituencies -- not only on the Hill but [also including] advocacy groups."
Thurber added, "He'll be under a lot of heat immediately."
Indeed, in a statement reacting to McDonald's nomination, House Speaker John Boehner, R-Ohio, praised his record as a private sector leader and a veteran, suggesting that McDonald is "the kind of person who is capable of implementing the kind of dramatic systemic change that is badly needed and long overdue at the VA."
Veterans advocates are cautiously optimistic about the nomination but warn that McDonald has his work cut out for him.
"He does have a background with branding... that's going to come in handy," Paul Rieckhoff, the CEO and founder of the Iraq and Afghanistan Veterans of America (IAVA), told CBS News after McDonald's nomination was announced last month.
"The VA has become a punchline in America," Rieckhoff said, and restoring its reputation among veterans is "going to be a lot more challenging than [winning over] the consumers of Tide."
Gutierrez said that his suggestion for McDonald is to be a "team player."
"My strategy was don't compete -- which is what I did for 30 years in the private sector," the former commerce secretary said. "Don't compete with who has access to the president, don't get stressed about it. Make a lot of friends, don't worry about your enemies -- they'll find you."
Gutierrez said that the former Procter & Gamble chief brings to the table the sort of management experience sorely needed at the VA.
"He may have trouble dealing with Congress, he may have trouble negotiating substantial changes to the budget with certain committees, but I don't think he will have a problem instilling certain management practices into the VA," he said. "I do think that management is an undervalued art and science in Washington."
He pointed to the disastrous HealthCare.gov rollout as an example.
"I don't read a lot of stories in the newspaper about, 'here's a new management process in place,' or 'how ACA is being managed' -- you only hear about how it wasn't managed when it blows up," he said. "How to manage something -- who's accountable for what -- that's something we bring to the table that doesn't create a lot of noise and doesn't generate a lot of press, but it helps the government be a better managed entity."
Mr. Obama did, in fact, find a private sector leader -- former Microsoft executive Kurt DelBene -- to help overhaul the dysfunctional Obamacare website.
After its successful recovery, the administration is permanently adjusting its management strategies for the Affordable Care Act. The administration announced this week that it will create a new "marketplace CEO" position to run the federal health care marketplace, as well as a "marketplace CTO" position.
