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How the Trump bubble might burst

2016 U.S. Presidential Candidate Donald Trump Headquarters And Interview2016 U.S. Presidential Candidate Donald Trump Headquarters And Interview
Donald TrumpPhotograph by Michael Nagle — Bloomberg via Getty Images

At breakfast, Steve Westly, employee No. 22 at eBay, former California state controller, and a candidate for governor in the 2018 race, explained that his political campaign was like growing a startup from scratch to $30 million in about 18 months, with all the scaling up and operational issues such growth entailed. The challenge would be many orders of magnitude larger in a national presidential campaign.

Campaign organizations matter because they affect election outcomes. A scientific study published in Public Opinion Quarterly examined why President Obama’s 2008 presidential campaign was successful. The conclusion: the enormous financial resources available to the campaign organization permitted it to establish more than 700 field offices. Examining the county-level vote in 11 battleground states, the study concluded that the counties where there was a field office saw a disproportionate increase in the Democratic vote. “This field office-induced vote increase was large enough to flip three battleground states from Republican to Democratic.” The bottom line: to wage a successful campaign, you must be able to micro-target voters and get your supporters to the polls—or to caucuses, in the case of states like Iowa.

This raises the following question: can the Trump campaign build the organization necessary to be successful? Maybe not. Trump is a consummate marketer, brand builder, dealmaker, and a master at public relations. Organization building and operations call for a different set of skills.

Trump’s campaign organization, even at this early stage, is suffering from internal conflict. “It turns out that, inside a campaign that’s been built on attacking seemingly anyone and everyone, the staff has now turned to attacking each other,” reported New York magazine. There’s been turnover. Roger Stone, the campaign’s primary political strategist, quit (or was fired, according to Trump) after Trump’s verbal attack on Fox News’ Megyn Kelly.

 

Trump’s casinos, some of which went into bankruptcy, faced operational and guest service issues. When Caesar’s former CEO and current chairman Gary Loveman was still a Harvard Business School professor providing advice to Harrah’s, the company he would enter in 1998 as COO, he stayed at a Trump facility in Atlantic City. As he described to my class, while he waited some 45 minutes in line to check in, he was panhandled by a homeless person who was “working” the check-in line. As Loveman contemplated the opportunity to gain a competitive advantage in the casino industry by providing a better service experience, he reflected, “This wasn’t the Four Seasons. It shouldn’t be too hard to do better than this.”

Trump’s situation as an entrepreneur who is better at creating and marketing something than operating it isn’t all that unusual. After all, many founders are thrown out of their startups because of their inability to scale operations, delegate, and turn a product vision into a sustainable, successful business. In an article in Inc, Noam Wasserman, a Harvard Business School professor who studies founder succession, noted, “the percentage of founders that stay on with the company for extended periods of time as the CEO are very low.” An article from Entrepreneur noted that in addition to Steve Jobs, other founders pushed out of their companies included Noah Glass of Twitter, Jerry Yang of Yahoo, Martin Eberhard of Tesla, Eduardo Saverin, the Facebook co-founder, and the two founders of Research in Motion, the company behind the BlackBerry. Some VCs will privately admit that about 80% of founders will be gone from their companies within the first few rounds of fundraising, and those that remain for years are the exception rather than the rule.

In VC-backed companies, and certainly in publicly traded ones, there is at least some pressure to build a bench of strong operating executives and an infrastructure that can support growth and operations. And some founders get the message.

 

Consider the case of Steve Jobs. As Ed Catmull, co-founder of Pixar and a co-leader of Disney’s animation division since Pixar was acquired, noted in an interview with Fortune, there is a public perception of “bad boy Steve,” a person noted for being hard on others. Catmull commented, “About 15 years ago he [Jobs] figured out things and we saw the change in the person. He became very empathic and changed the way he worked with people. And after that point everybody that was with Steve stayed with him for the rest of his life. It was the changed Steve that made Apple great, not that guy.” Jobs brought in then-Yale business school dean Joel Podolny to build Apple University to develop the Apple culture and way of managing, and he hired Tim Cook to be his partner in running operations and eventually to take over the company.

Few organizations that succeed over long periods of time and surmount the challenges of scaling infrastructure and talent are one-person shows. Mark Zuckerberg of Facebook brought in Sheryl Sandberg, and Larry Ellison, after forcing out talented executives such as Ray Lane, now has Mark Hurd and Safra Catz overseeing the day-to-day business. The Obama campaign had a wealth of organizational and analytical talent, which is one reason, beyond the candidate, that Obama won the election.

I cannot predict when the organizational deficiencies of Trump’s one-person show and difficult personality will catch up with his campaign. But considering the requirements of mounting a successful presidential effort, I am sure, unless Trump changes a lot, issues of personnel and campaign operations will eventually do him in.

Jeffrey Pfeffer is the Thomas D. Dee II Professor of Organizational Behavior at the Graduate School of Business, Stanford University. His latest book, Leadership B.S.: Fixing Workplaces and Careers One Truth at a Time will be published in September 2015 by HarperCollins.