The Republican candidate is hard-wired for private equity work -- and that's hurting his bid for president in more ways than you think.
The talk about Mitt Romney's Bain Capital years has largely turned into a simple, binary political debate. Either they prove his business credentials and make him the man best equipped to lead America out of high unemployment and sluggish economic growth -- or his role in putting profits before people, outsourcing jobs and dismantling companies disqualifies him from the presidency.
But there's a less obvious way Romney's Bain Capital experience is impacting this election: Regardless of what voters think of his credentials, his oft-disputed management consultant triumphs have provided him with a structured template for thinking and analysis. It's a way of approaching the world that has tripped him up several times in recent weeks. Call it a case of Bain Brain.
Candidate Romney has spent decades constructing and reviewing PowerPoint presentations about possible private equity investments in an orderly and emotionless fashion. Can this company be turned around? Is it stuck because it's targeting the wrong market? Is it wasting its resources on futile R&D? Would a smaller and more focused business ultimately succeed in the marketplace and be more profitable?
That was precisely the species of unflinching analysis on display in his now famous remarks about the 47 percent, revealed by secretly recorded video. That was the Bain Brain at work -- a classic example of segmentation and market analysis, now applied to a political setting.
Romney could just as well have been saying: "We're not going to make a success out of Acme Widgets by going after the 47 percent of the market that's been buying Consolidated Widget's products for years. Their customers are happy. Consolidated gives them big discounts which yields fat margins. And Consolidated sends their consultants to work at client organizations, so their clients have become lazy and dependent on them. So we need to target those who aren't reliant on Consolidated for all their widget needs."
But the problem was that he was talking about human beings. The clear-eyed way he was speaking of his own candidacy showed a steely ability to abstract, making him look devastatingly aloof. It was as if the battle-proven investor's calculus -- a mix of game theory and scenario-building used to plot out transactions -- had become a hard-wired processing system in the Romney cranium.
Romney's not-for-public-consumption remarks have been compared to Obama's parallel "clinging to their guns and religion" comment. But as many observers have pointed out, Obama followed up by saying that it is important to keep communicating with that group, that "our challenge is to get people persuaded that we can make progress when there's not evidence of that in their daily lives." His voice was that of the naïvely hopeful community organizer -- as opposed to the cut-your-losses and double-down on the "addressable market" voice of private equity.
The idea that everyone can be convinced -- indeed, that none are unpersuadable -- is central to who Obama is (as well as to what some say is a creepily messianic view of his own gifts). But what of Romney? What's particularly fascinating about his abject lack of confidence in his powers of persuasion in the political arena is how different that capitulation is from the proselytizing core of Mormonism, which holds boundless faith in the human potential for profound conversions and sends young men, like the young Romney, out on missions to convert strangers.
The test of a great politician is the ability to get people to like you and vote for you, even when they disagree on a check-the-box scorecard. Successful politicians enable voters to transcend issue differences because there's something in the candidate to which they are ineluctably drawn. Reagan had it. Clinton had it. Obama had it -- and still does, though it has been diminished. Romney doesn't just lack this gift. His comments made it clear that he thought it a frivolous waste of time to try to expand his market by persuading those who not already in agreement with him.
Some call this "disdain," but that's a misreading. Romney was simply executing on his "voters = widgets" strategy. He wasn't writing off people -- he was just engaging in a private display of rational analysis. That's the kind of thinking that can make you a millionaire.
The Romney campaign also has been sabotaged by the private equity view of marketing and advertising. Anyone who's ever worked at or worked for a company that's been acquired by a private equity shop knows that slashing marketing expenses and driving costs out of the system is one of the first things they do. I've seen it myself. Private equity guys view "branding" as a money pit, they are suspicious of advertising that speaks with and to emotion, and they view creative work as a commodity.
You can see the Bainification of Romney's marketing in a recent New York Times story that talked about the conservative spending strategy the campaign is using. The Times noted that Romney's "presence is oddly lacking ... in the television ad wars":
Despite what appears to be a plump bank account... Mr. Romney's campaign has been tightfisted with its advertising budget.
With polls showing President Obama widening his lead in some of these states and the race a dead heat in others, Mr. Romney's lack of a full-throttle media campaign is risky, especially as he struggles to get his message out over the din of news about his campaign's recent setbacks.
Even more telling than the spending strategy, though, is the Romney campaign approach to advertising. The Times describes "an in-house production studio that cranks out multiple commercials a day."
This is a very much a private-equity approach to creating advertising. Treat commercials like widgets and grind them out to pre-existing specifications determined by polls and big data. What's missing is any creativity and imagination in the messaging -- and, critically, any over-arching narrative. The result: Romney's commercials are dreary, and even the positive ones are uninspiring.
There is no storyline to the campaign. There is no myth-making. The campaign is fragmenting itself to death. Compare any of Romney's ads to the famous "Morning in America" commercial that helped elect Ronald Reagan to his second term, generally regarded as a masterpiece of political advertising for the deep emotions it triggered, the hopefulness and nostalgia it evoked, and its commanding marriage of words and pictures.
If it is far from morning for the Romney campaign, his private equity background is the reason. Not because of the debate around the economic value of private equity, or his investment strategies and treatment of those companies. But because it left him with a bad case of Bain Brain.