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Power Sheet – March 16, 2016

The Democratic nomination is about locked up after yesterday, while the Republican nomination is not. Regardless of who ends up as the nominee – I refuse to make a prediction, having been surprised by pretty much everything that has happened so far – the Republican Party will have to work through a profound identity crisis. That exercise in mass psychiatry will likely take years; heck, it can take years for one person. But in the meantime the party may want to consider a more contained and manageable change it can start on right after election day: avoiding a situation like this one by changing the rules for choosing the nominee.

The result of the current rules is looking disastrous. The likeliest nominee remains Donald Trump, the most disliked candidate in either party and the only one of the current or recent Republican aspirants, including even Marco Rubio and Ben Carson, who loses to Hillary Clinton in a prospective general election match-up, according to polling reported by Real Clear Politics. How could this happen? The answer is simple: He’s the leader only because he happened to face a large number of opponents. Most Republicans oppose him, but his 35% vote share is more than any one of the other candidates can get. By contrast, Clinton happened to face only one credible opponent, Bernie Sanders, who has performed better in Democratic primaries than Trump has in Republican primaries. Yet Sanders is almost certainly doomed. All this because of a random variable, the size of the field.

Different rules might have spared Republicans this forced march to likely defeat in November. A simple and realistic change would be to use a voting system called ranked voting, or choice voting, or the instant run-off. It’s used today for some government elections in the U.K., Australia, New Zealand, India, and, here in the U.S., in Cambridge, Massachusetts, and Minneapolis. When more than two candidates are on the ballot, voters don’t just vote for one; they rank their choices in order of preference. If no candidate gets a majority, then the lowest vote getter is eliminated and his or her votes are distributed to the designated second choice. The process continues until someone gets a majority.

Could that process prevent the most disliked candidate from winning the nomination? Evidence suggests that it could. Besides being the first choice of only a minority, Trump was also the candidate whom the most Republican voters would “never” vote for, the polls say. Since Trump has never won a clear majority in any primary or caucus, it’s plausible to imagine that voters’ second and third choices could have given another candidate a majority through this process. A few such results in early primaries could have dramatically altered candidates’ momentum and the dynamics of the race. The process would also have been transparent and fair – terms unlikely to describe any machinations at the Republican convention should Trump show up with a plurality but not a majority of delegates.

Bloomberg View columnist Ramesh Ponnuru yesterday advocated a ranked voting system for delegates at the convention, a promising idea that’s highly unlikely to be adopted at this late date. But the Republicans need to make procedural changes (and the Democrats should consider the same before they face their own Trump situation). There’s time for the psychiatry after that.

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What We’re Reading Today

Obama picks Merrick Garland for the Supreme Court

The decision reportedly came down to two candidates: Garland and Judge Sri Srinivasan. Both serve on the U.S. Court of Appeals for the District of Columbia Circuit. Garland could be a contentious choice, having been confirmed in 1997 by a 76-23 vote, although seven current Republican Senators supported his bid and he’s considered a consensus builder. Senate Republicans maintain they will not even hold hearings on the nomination, insisting that the next president nominate a successor to the late Antonin Scalia. AP

Chipotle considers dropping recent food changes

Chipotle last month announced food safety initiatives to prevent a repeat of last year’s E. Coli outbreak. Now the chain is considering scaling back some of them by stopping pathogen testing of a few ingredients. The challenge for Steve Ells‘s company is finding the right balance of fresh food and safe food. Sales are finally rebounding, but the outbreak caused the company’s first quarterly loss since going public, which it reported yesterday. WSJ

Bill Ackman promises active role at Valeant

The Pershing Square chief sent shareholders a letter saying he will not sell his stake in the troubled drug company but will take a “much more proactive role” to protect his investment. Ackman has supported Valeant through the backlash against its drug pricing and its troubled partnership with the Philidor pharmacy. But now that CEO J. Michael Pearson has returned from a medical leave, the activist investor seems ready to push a turnaround.  Fortune

Asian members upset at the film academy

After comedians Chris Rock and Sacha Baron Cohen made jokes at the expense of Asians at last month’s Oscars, two dozen Asian members, including actors George Takei and Sandra Oh, yesterday demanded an apology from the motion picture academy. CEO Dawn Hudson already faced racial issues over a paucity of African-American nominees for this year’s Oscars. She apologized for the jokes, but some members described it as “a form letter.” NYT

Building a Better Leader

Slack CEO talks about VC funding drying up

Venture capitalists demand fast growth in a startup. That’s what drives valuations, says Slack chief Stewart Butterfield. Harvard Business Review

Denmark replaces Switzerland as the happiest place on Earth

The U.S. lands at No. 13. Fortune

Health and beauty startup Walker & Company Brands is really…

…a tech firm, says CEO Tristan Walker. That’s why the two-year old company keeps getting funding from traditionally tech-focused VCs. Time

Tuesday’s Primary Decisions

Trump’s victories knock out Rubio

Donald Trump won three of five contests Tuesday (Missouri is still too close to call), trouncing Marco Rubio in his home state of Florida. The loss ended Rubio’s campaign. Ohio Governor John Kasich won in his home state, his first victory, which keeps him in the race. But unless he wins more, this is a two-horse contest between Trump and Ted Cruz. USA Today

Hillary Clinton deals near-final blow to Sanders

Clinton won in Florida, North Carolina, and Illinois (Missouri remains uncertain), and her decisive victory over Bernie Sanders in Ohio is especially significant. Sanders used the same tactics that brought him a surprising victory in Michigan – focusing on jobs – but failed to connect in Ohio. He has vowed to continue, but his path to victory has nearly closed.  Fortune

Trump vs. Clinton — whom do you hate less?

The general election match-up is looking increasingly like Trump vs. Clinton, but polling shows that Americans don’t much like either one. Both tried to resonate with a national audience in their victory speeches last night. But both came off as divisive, which is unusual at this stage in an election, say past campaign advisers.  NYT

Up or Out

E. Gerald Corrigan, a longtime Goldman Sachs executive with no formal title, will retire.  Fortune

Nicolas Maure will become AvtoVAZ CEO.  Financial Times

Fortune Reads and Videos

Deutsche Börse’s $30-billion deal with the London Stock Exchange…

…goes forward. It comes 16 years after the two sides first considered a merger. Fortune

Gmail launches “Smart Reply”

You can save seconds when responding to email by selecting from three prewritten replies. Fortune

Lockheed nears Mach 6

The company may produce a plane that can fly at six times the speed of sound. Fortune

GM’s first self-driving vehicles…

…will still be driven by humans. It plans to use ride sharing services, including Lyft, in which it has invested, to showcase the vehicles to the masses.  Fortune

Quote of the Day

“We worked as hard as we ever could…America’s in the middle of a real political storm, a real tsunami, and we should have seen this coming. People are angry and people are very frustrated about the direction of our country. There’s millions of people in this country that are tired of being looked down upon, tired of being told by these self-proclaimed elitists that they don’t know what they’re talking about and they need to instead listen to the so-called smart people.” — Sen. Marco Rubio in his concession speech, announcing he was suspending his presidential campaign.  USA Today

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@ryanderous
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