Don't Do It, Ladies

Getty Images The California GOP is pinning its hopes for revival on ex-CEOs Carly Fiorina and Meg Whitman. Joe Mathews on why the odds are stacked against them.

To: Meg Whitman and Carly Fiorina
From: Joe Mathews
Re: CEO Candidates Running for High Office in California

I would advise each of you to run for the hills. But the hills are on fire.

The national media have been full of stories about how California Republicans are “pinning their hopes” on the two of you—former CEOs who are running next year for governor (Meg) and U.S. Senate (Carly is exploring a challenge to Barbara Boxer).

Your decisions to run as Republicans in this state, at this time—raises questions about your judgment. The party has just 31 percent of the state’s registered voters, its lowest point ever.

The argument for your candidacies, as recently outlined by the Wall Street Journal, has three components.

1. That there’s something attractive about having seasoned business executives as candidates.
2. That the California Republican Party could be revived by the two of you and
3. That the two of you stand a very good chance of winning.

Wrong on all three counts. Let’s take them one at a time.

1. CEO candidates such as the two of you actually start campaigns at a decided disadvantage. Which is not to say that business experience provides no advantages. Being a good CEO—managing bureaucracies, hiring the right people, handling budgets, making difficult decisions under time pressure, negotiating high-stakes deals--can be terrific preparation for conducting the actual business of government. But to reap those benefits, you have to win office first. In campaigns, being a corporate executive has proven to be a serious handicap.

California has been a graveyard for those seeking to jump from the executive suites into political office. Northwest Airlines co-chairman Al Checchi famously flamed out in the Democratic primary in 1998. In 2002, Republicans nominated a business executive, Bill Simon Jr., who was such a weak candidate he couldn't even knock out Gray Davis, a damaged incumbent who was recalled less than a year after the election.

“I don't believe there is any advantage whatsoever to being a former CEO when running for governor,” says Garry South, a consultant who ran Davis’s campaigns against Checchi and Simon, and is working for San Francisco Mayor Gavin Newsom, a Democratic candidate for governor. “In both '98 and '02, California voters had a chance to vote for wealthy CEOs who promised to run government like a business, and they decided in both cases those two had no business running the government.”

Checchi and Simon came under attack for their business records, but their problems weren?t all personal. In general, Americans have never trusted corporate executives. Since Gallup began measuring public opinion of executives more than 30 years ago, on average only 19 percent of those surveyed have said they had a “high” or “very high” opinion of the honesty and ethics of business executives. In 2008, only 12 percent did. (The number is almost certainly lower now, after an economic collapse that most of the public blames on the executive suites.) The public’s low level of trust in CEOs almost perfectly matches its low level of trust in politicians. Bankers and—gasp!—journalists have more credibility with the public than corporate executives.

In a hotly contested political campaign, you’ll find that your opponents will keep reminding voters about all the things you had to do as CEO that didn’t go so well--each layoff, each poorly considered merger, and any internal scandal, whether it was your fault or not. “The sins of your former employer are visited upon you,” says Darry Sragow, a longtime Democratic strategist here who is now a partner in a law firm in Los Angeles. “You are held accountable for everything that entity did.”

For you Meg, this isn’t so bad. Your company, eBay, is well known and popular (an estimated 12 million Californians have used eBay). And during your tenure, the company grew so fast that you didn’t have to do the downsizing that could be turned into negative ads. You’re also not the first eBay executive to run for California governor; your former colleague Steve Westly made an unsuccessful bid for the Democratic nomination in 2006. (Sragow, who advised him, says: “There certainly were people who have been advisors to Steve Westly who wished that he would have talked about eBay more than he did.”) And Meg, when I interviewed you earlier this summer, you made a strong case for how as governor your experience in the tech world would lead you to focus on three issues—jobs, education, and making government more efficient. “You have to deploy technology to deliver better customer services at a lower cost,” you said. “You have to consolidate purchasing across a vast organization to save money. You have to think about changing policies that allow you to save money. That’s what you have to do in business to stay alive. And it has not been done in Sacramento."

But a quick read of the 2005 Harvard Business School case study of your career and your decision-making at eBay offers plenty of details for opponents to question. You’ll be asked about layoffs at Hasbro Inc.’s preschool division when you were there. Some wing nuts will be angry about your decision to eliminate auctions of guns and ammunition. Democrats will blast you for putting eBay customer support employees in Salt Lake City instead of San Jose. All of these appear to have been solid corporate decisions, but that may not spare you political fallout.