Politicians, Gangsters, and CEOs

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In today’s Money Morning…maybe the two are related…a lesson from the mafia…the right CEO for the time…and more…

Recently I’ve been thinking about what this year could look like and the big events to look forward to. This naturally got me thinking about bushfires, Hawaiian holidays, and the mafia.

There’s a lesson to be taken out of this mishmash of topics. I’ll get to that lesson in a minute.

Firstly, I have to apologise because I’m about to talk about politics. I won’t spend too long on the subject, but it’s an important topic this year.

We’ve got a federal election coming soon. It needs to be held by 21 May at the latest.

If poll results are anything to go by, then the Coalition are in trouble. They’ve just 44.2% of the two-party preference versus Labor’s 55.8%.

That’s a wide margin. The trend in recent poll results is pretty clear as well. Just check out the following chart:

Fat Tail Investment Research

Source: TheAustralian.com.au

[Click to open in a new window]

While poll results are interesting and give us something to talk about, I wouldn’t bet on the election outcome based on them. Polls just before the last election had Labor in front, yet they lost the ‘unlosable election’.

Still, I like to think that every time a poll is released, somewhere a politician has a moment of healthy self-doubt.

Scott Morrison might be feeling that self-doubt right now. The following chart indicates that voters are not too happy with his leadership:

Net Satisfaction

Source: PollBludger.net

[Click to open in a new window]

It seems to me that Morrison has received the most anger and frustration from the Australian public since John Howard. He’s also looking to be the first leader to serve a full term between two elections since Howard.

Maybe the two are related.

Given how quickly we oust prime ministers in Australia, if you don’t want Morrison as our leader next year, you should probably vote for him.

One of the most frequent criticisms of his leadership is…well, that it doesn’t exist. We seem to be scarily without anyone at the helm in the most critical of moments. The last thing that will inspire confidence in a leader is to hear them say ‘that’s not my job’.

Especially while the country is on fire. Or closed for a pandemic.

Any talk of politics naturally leads to organised crime.

A lesson from the mafia

One of the best movies of all time is undoubtedly The Godfather. It’s about an Italian-American mafia family in New York and their war with a rival family.

Shortly after Michael Corleone is given leadership of the family by his father, he starts to make changes. He demotes Tom Hagen from consigliere — the most trusted advisor — and puts his father in the role instead.

Michael explains the change simply:

You’re not a wartime consigliere, Tom.

It’s not that Tom’s made mistakes. He’s just not the man for the moment.

I can’t help but think Scott Morrison could have been a satisfactory prime minister at any other time in our recent history. Unfortunately, he has been faced with crisis after crisis.

Bushfires, floods, and pandemics.

Scott Morrison is the status quo accountant type. He’s conservative and respectable. He’s good at reading from a script.

I don’t blame Morrison for failing to inspire faith in his leadership. A tiger can’t change his stripes. Tom Hagen isn’t a wartime consigliere, and Scott Morrison isn’t a crises-era prime minister.

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Our political parties pick their leaders based on who they think is best placed to win the next election. Hopefully they also think about who is good for the country, but perhaps that’s a luxury they can’t always afford.

The right CEO for the time

Well-led companies make similar strategic leadership decisions.

Although, hopefully, they’re choosing CEOs and board members who are right for that stage of a company’s lifecycle.

During start-up and early-growth phases, companies need risk-takers and entrepreneurs. After all, that’s when they’re trying to break the norm, to bend the rules and throw out the old tried-and-tested ways.

You want a maverick leading the growth — an Elon Musk or a Steve Jobs.

It’s when businesses mature and plateau in growth and their opportunity that you want the respectable accountant to step in and dot the i’s and cross the t’s.

You want them cutting costs, running a tight ship, and saying all the right things that keep regulators and big investors happy. You want the ESG poster child.

A company’s leadership is one of the hardest things to quantify when making an investment decision. But it’s definitely one of the most important factors.

It’s an area I’ve become more focused on as an investor over time. Great leaders can achieve big results in hard situations.

And they can do it again and again. But they still need to be the right leader for that moment.

Poor leaders, or the wrong person for that moment, can take a brilliant opportunity and squander it.

Until next week,

Izaac Ronay Signature

Izaac Ronay,
Editor, Money Morning

PS: Izaac is also the editor at Exponential Stock Investor, a stock tipping newsletter that hunts for promising small-cap stocks. For information on how to subscribe and see what Izaac’s telling subscribers right now, please click here.

About Izaac Ronay

Izaac Ronay is an Editor at Money Morning.

He has traded equity index and interest rate futures since 2012 across various exchanges and products. His trading focuses on the relationship between markets and how to maximise return while controlling risk.

Izaac studied Management and International Business and has worked in…

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