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Power Sheet – February 1, 2015

Much of the world will be obsessed with the Iowa caucus results tonight, and rightly so. We’re talking about choosing someone for the world’s most powerful and important leadership job. My plea is that, after months of media hype, we all be informed consumers of the news, aware of what the results tell us and don’t tell us. Most people have no idea what a weird, squirrelly, convoluted process tonight’s 3,362 caucuses really are; in fact, most people don’t know the meaning of the numbers that are reported. As you settle down in front of the TV or computer, keep a few key realities in mind:

-The numbers don’t mean what you think. At the Democratic caucuses, attendees don’t vote. They indicate the candidate they support by going to different corners of the room. If a candidate attracts fewer than 15% of the attendees, that candidate’s supporters must move to one of the larger groups. Then, as the Associated Press explains, “Once the groups are determined, the number of ‘votes’ is determined by running the number who support each candidate through a formula that determines final votes based on a county-by-county analysis of Democratic performance in the last governor and presidential elections.” Got that? The number of “final votes,” which is the number reported to the media, is actually the number of delegates who will represent each candidate at a district or county convention.

This year, since Martin O’Malley probably won’t make the 15% threshold in most precincts, and with Hillary Clinton and Bernie Sanders drawing almost equal support, how the O’Malley supporters break for the other two will be crucial. But that’s a number we’ll never know.

Attendees at the Republican caucuses do vote, usually by paper ballot, and those results are reported. But in past years it has sometimes taken days or weeks for the numbers to be gathered. In 2012, for example, the TV networks reported on caucus night that Mitt Romney had won. Turned out two weeks later that Rick Santorum had won. For this year the Republicans collaborated with Microsoft to create an app (available to both parties) that enables caucus organizers to send results to party headquarters instantly. Whether they’ll use it remains to be seen. There have been years in which some precincts never reported results at all.

-The participants aren’t average people. Voting in a regular primary election is pretty easy; it usually takes a matter of minutes, and polls are open for 12 to 15 hours. But Iowa caucus-goers must show up at a specified time (usually 7 p.m.) and be willing to spend the evening. By the way, much of Iowa faces a 100% chance of snow tonight, 5-8” in Des Moines, for example. Caucus-goers, an atypically committed bunch in general, will have to be super-committed this year. A great deal of a candidate’s success reflects his or her ability to organize cars and buses for bringing attendees to caucus sites and back.

-The results tell us a little but not a lot. As noted, Santorum won in 2012 but came nowhere near winning the nomination. Mike Huckabee won Iowa in 2008 but soon flamed out; John McCain, that year’s eventual nominee, skipped the Iowa caucuses entirely. Bill Clinton skipped Iowa in 1992 and became president.

Watching election results is America’s favorite spectator sport, so let’s all have fun tonight. But Iowa isn’t a typical state, and its voting procedures are nothing like what voters do elsewhere. In interpreting this year’s great leadership story, let’s keep the Iowa outcome, whatever it may be, in perspective.

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What We’re Reading Today

Iowa caucuses, at last

Tonight’s results will begin the winnowing of the Republican field. Among those with the most support, Sen. Marco Rubio said he could expand the GOP unlike other candidates, Sen. Ted Cruz argued he was the only one with true conservative credentials, and frontrunner Donald Trump repeated his theme of making “America great again.” Among Democrats, Hillary Clinton and Sen. Bernie Sanders seem to be in a dead heat.  WSJ

Porsche has no plans to go autonomous

Sharply differentiating the company from other car makers, CEO Oliver Blume says Porsche drivers want to remain in complete control of their car. “An iPhone belongs in your pocket, not on the road,” he says. Virtually all other luxury car manufacturers are at least forming partnerships to begin testing self-driving vehicles. Reuters

Barclays, Credit Suisse fined for ‘dark pools’

New York Attorney General Eric Schneiderman and the SEC concluded that the two companies misled investors by allowing large blocks to trade on a platform that kept prices secret. Jes Staley‘s Barclays will pay a $70-million fine, while Tidjane Thiam‘s Credit Suisse will pay $84 million. Both CEOs took the helm of their respective companies after the ‘dark pools’ were discovered. BBC

GM to use robots for 24/7 factory…

…by connecting the machines to a “mother brain.” A Michigan manufacturing plant will then use cloud computing so the robots can communicate with managers when something goes wrong. Mary Barra‘s company is testing the technology to run the factory around the clock. The robots can inform managers when they’re about to break down or if there’s too much humidity for paint to dry.  Fortune

Building a Better Leader

U.S. ranks 10th on a new measure of unemployment 

It trailed Spain, France, Canada, and others based on employed 25-to-54-year-olds as a percent of the population. CNN Money

Don’t hire based solely on resumes

Instead know what skills you lack and find employees that have them.  Fortune

In order to improve your managerial skills…

…work practice into your routine.  Harvard Business Review

Worth Considering

China cracks down on $7.6-billion Ponzi scheme

Authorities arrested 21 linked to Ezubo, an online financing platform that failed last year. Ezubo’s downfall led to protests and rallies across China. Beijing officials say that 95% of Ezubo’s peer-to-peer loan listings were fake. WSJ

Microsoft tests underwater data centers

One of the most expensive bills technology companies pay is for air conditioning to keep servers running at warp speed. One solution? Satya Nadella‘s company wants to send data centers into the deep sea. It finished a 105-day trial of an 8-foot diameter steel capsule suspended 30 feet under water. The results, which showed no hardware failures or leaks, have encouraged Microsoft to design a prototype three times as large. NYT

New players enter NYC luxury shopping 

Before Nordstrom opens its first store in New York City, it’s already planning to open a second location. Co-president Pete Nordstrom says the company will open a second location in the Columbus Circle area after opening a seven-level flagship store in 2018. It joins Neiman Marcus in entering the city in 2018. Saks Fifth Avenue and Barneys are each opening a second full-scale store in NYC.  Fortune

Up or Out

CarMax CEO Tom Folliard will retire by the end of the year. President Bill Nash will succeed him. MarketWatch

Fortune Reads and Videos

Large GOP donors have split into two major groups 

Some back Marco Rubio while others support Ted Cruz. The split mostly benefits Donald Trump. Fortune

Legal marijuana sales set to hit $6.7 billion this year… 

…rising to $22 billion by 2020. Fortune

No bonuses this year at HSBC

It’s freezing pay and hiring in an effort to boost profits.  Fortune

A student team at MIT wins hyperloop design competition…

…to build the passenger pods for the transportation project inspired by Elon Musk. Fortune

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Produced by Ryan Derousseau
@ryanderous
powersheet@newsletters.fortune.com