Is Trump's Business Acumen Turning Out to Be Fake News?

05/16/2017 12:50 am ET Updated May 16, 2017

Donald Trump and his campaign team positioned him as a great businessman that is going to “Make America Great Again.” After nearly 4 months in office, many that understand business concepts are questioning whether this image is, in fact, accurate. There is considerable evidence that challenges this positioning.

Both sides win

Business success is based on the concept that both sides of a transaction win. Buyers and sellers leave the table feeling that they will be both be better off. If the deal is based on a “zero-sum game” where there is a winner that takes all and a loser that loses everything, an unstable situation is created. Often losers will do everything in their power to thwart winners – including creating a negative viral pyramid that will hurt winners far more than they’ll gain. Many that have done business with Trump have not been paid or were paid far less than agreed. This is especially true of small contractors that do not have the legal resources to fight back.

Making deals

Part of Trump’s image as a great businessman is his ability to make favorable deals. He “wrote” a book called the Art of the Deal, which was actually written by ghostwriter Tony Schwartz. Over his business career, Trump’s record does not support this image. An article in Bloomberg, is headlined, “How Trump Bungled the Deal of a Lifetime.” As President, Trump lost his first big deal on healthcare. While this deal passed on the second attempt, it seems to have little public or Senate support.

Leadership

Effective business managers take responsibility for loses and credit subordinates for wins. Ineffective leaders do the opposite. They take the credit for the positives and throw subordinates under the bus for any negatives. Throughout his business career, Donald Trump has taken credit for wins and blamed others for loses. In his first act as commander in chief, Reuters reported, “Trump approved his first covert counterterrorism operation without sufficient intelligence, ground support, or adequate backup preparations.” As reported in Buzzfeed, he then blamed the military for the mission’s failures.

Managing

According to the Guardian, Donald Trump's former employees say he is a micromanager. Micromanagers believe that they can do just about any job better than their subordinates. As a result, they get involved in too many of the details of the business. This hurts the business in many ways because it is nearly impossible to do the jobs of subordinates properly in addition to your own.

Why? Managers don't have the time to do multiple jobs. More importantly, micromanaging violates at least three important principles of business...

  1. Comparative advantage. Even if micromanagers are better at the jobs of their subordinates, doing those jobs will take time away from the more important and valuable work for which they are responsible.
  2. Opportunity costs. By taking time away from higher-level jobs to do lower level jobs, the micromanager is foregoing opportunities that could help the business more.
  3. Authority goes with responsibility. Micromanagers violate the rule that authority and responsibility must go together. That is, if managers hold subordinates responsible for doing a job, they must also give subordinates the authority to do the job the way they see fit. If managers retain the authority, they must also retain the responsibility. In so many cases, Trump keeps the authority, delegates the responsibility, and blames subordinates when things blow up.

The bottom line

Many voted for the President because they believe he is a great businessman. Based on credible, independent data rather than intuition from scripted reality shows and unchallenged pep rallies, it is not clear that is true. In fact, before he was elected, an article in Newsweek reported Trump says his business career shows that he’s well-qualified to be president, but he’d be far richer today if he’d just sat on the money his extremely wealthy father gave him.” In the New York Times, Jeffrey Pfeffer, professor of organizational behavior at Stanford University, is quoted as saying...

“No good business makes decisions that are based on falsehoods. My sense is that Trump takes no one’s counsel but his own. That’s bad management, period.”

What’s fake or real

According to the polls, those that believe that Trump is a successful businessman and will therefore be a successful President seem to be unwavering at about 39%. If one were to judge the President’s business skills based on credible, independent data rather than personal opinions, it would be hard to say that he has the business acumen to run a successful company where he has to answer to anyone outside of his inner-family circle. It is even harder to draw the conclusion that he will be a successful President for those that elected him.

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