If Vermont Were A Business, Montpelier Would Be Fired

To: The Montpelier Management Team
From: Jack Harding
re:  Get going or get gone

Less than a year ago at the end of the 2007 legislative session the Tiger featured a posting entitled Getting It Wrong. It was my hope then the Vermont Legislature would heed my efforts - and those of others - to express the total frustration of the Vermont citizenry with the Legislature’s and the Governor’s failed attempts to accomplish anything…anything… that matters to this state.  Now, half way through the 2008 session, we are tracking, lamentably, toward a repeat performance (or lack thereof) punctuated by incompetence and apparent indifference to anything that might improve the lives of those of us who employ and compensate our “elected employees”. 

These are not the terms we normally use when talking about government.  We don’t think of the Governor and our Legislators as “employees.”   In the strictest sense, they are not.  But let’s, for a minute, think of them that way.  We need clarity when we talk about Vermont and its problems/challenges.  (If you want a clear statement of what they are, read Art Woolf’s ‘Off the Rails’ which you can link to in an adjacent column.)

I am burdened with having to have to work for a living and be held accountable. I cannot afford euphemisms, evasions or excuses. Accountability is essential if my company is to survive and make a profit.  Bad word, I know, in some Vermont circles; but ask Green Mountain Roasters why it just raised its prices and you will get an honest answer.  The company raised prices to remain profitable.  Simple.

The state of Vermont is not a profit-making enterprise.  That’s a fact. But that doesn’t mean that we do not want a healthy economy or leadership based upon accountability.  Similarly, should not the Governor and the Legislators be held accountable by the voters just as I am by my board of directors, which reasonably demands that I

1) Work on the important things,
2)  Make a plan that serves my stakeholders, and
3) Be held accountable for the result of that plan.

So I prioritize the important issues, apply my scarce resources to those issues and continuously make tradeoffs.  That means I avoid unimportant things, and I subordinate my own irrelevant personal agenda to the goals of the company.  Most importantly, I run the business within a budget.

Sound familiar? Every household does this every day as do the small and medium sized employers in VT.  (Vermont has only one large employer, IBM.) So let’s apply a business template to our “employees”, the Governor and the Legislature.  We, the electorate, or in this case the “Board of Directors” of Vermont, have declared in every imaginable way that we would like safe roads and bridges, reasonable health care , an affordable school system and a tax structure  that neither scares away future tax paying businesses nor punishes the folks who create jobs.  We have tasked our CEO, Jim Douglas, with managing our business, Vermont, and achieving the results outlined above.  He has failed.

Despite Douglas’s promises to implement our goals, we have a company, Vermont, tracking towards bankruptcy .  He told his Board (us) he would trim the budget by eliminating 400 jobs.  He has found two so far.  He told us he understood our need to attract clean, interesting businesses to the state.  He proposes, instead, to eliminate the favorable capital gains tax and, thus, discourage investment.  We told him we want prosperity.  He lowered the bar for himself and offered “affordability”. 

Sorry, Jim, your Board has higher aspirations.  We voted and you are now on a Performance Improvement Plan that, if not achieved, will result in your termination in November.  Maybe you tried your best but, unfortunately, this Company needs “A” players and, frankly, a “B” performance won’t allow you to keep your job, your car, your driver or any other perqs you have come to enjoy.  We know, you reported to us on many occasions that you simply can’t do your job as you promised because your management team, the Legislature, won’t cooperate and it’s not fair.  No doubt this is true but, sorry - fairness is a religious concept. We demand results. As CEO your job has been to lead, propose, prevail, or step aside.  It looks like you are moving quickly towards the latter.

Since we may not have time to wait for the new CEO, we, the Board, have a few helpful thoughts for our Management Team as well.

Chief Operating Officer Shumlin, the Board has determined that your lacking performance stems not from incompetence but from total disregard for the Company.  Why would you look to effectively eliminate the Company’s low cost energy source? Why have you impeded the performance of the CEO to benefit your own political standing in the Company with no thought for the Board’s direction?  We repeatedly tell you what is important to us and, with total disregard for our needs and authority, you insist on pursuing your own agenda, thwarting any progress, literally.  You are fired for gross malfeasance.

Chief Marketing Officer Symington, you have rendered yourself irrelevant.  Last year, you were for a bill aimed at slowing down the growth in education spending.  This year, your "leadership" led to the repeal of that very same bill. You’re fired.  (BTW, what level of arrogance does a Speaker in Vermont need to muster to believe her endorsement of a presidential candidate matters for anything? Don’t buy your inaugural ball gown quite yet.)

As for the remaining management team members, there is a hope for you to remain employed. Job One: Get something done that helps the Company.  Solve problems.  Cooperate among yourselves for the good of the Company. Fix our roads.  Ignore the teachers’ union’s one-sided agenda.  Lower taxes.  Ignore feel good legislation, like campaign finance reform, that the taxpayers will pay to defend, unsuccessfully, against court challenges.  Get rid of the useless, unaccountable (buddy system) organizations that spend money we don’t have. Challenge yourself to operate to the standard of “Do The Right Thing”.  You have your jobs because you all, no doubt, promised to do just that. You haven’t.

Legislators, all is not lost for this session.  Republican or Democrat - it is time to serve this state.  There is little doubt the vast majority of you are good people.  You want to support your state, your fellow citizens, and do your sworn duty.  Instead, you accomplish nothing, fear criticizing your own party’s leadership and then hide behind some feeble notion that by playing this losing game you are preserving options to achieve some progress in the future.  But, at some point, you must recognize you are simply doing nothing and no amount of future potential can justify watching Vermont go down the drain today.  Do you not see this?

Unfortunately, this Board can’t realistically terminate the Management of Vermont like we would for a real company. Not yet. That said, the goals and moral imperative for this state are identical to a well run company and many, many of you deserve to be fired, morally.

You, the Management, and we, the Board, are plagued with ineffective, or worse, selfish leadership that does nothing to secure Vermont’s future.  Your citizens are begging you to take action, fix problems and “Do The Right Thing”.  So . . . do it.

(ed. note: Jack Harding, Chairman of Vermont Tiger’s Board of Directors and Advisors, has deep roots in Vermont.  He was raised in Burlington and maintains a home here, though his work is in California’s Silicon Valley where he is CEO of eSilicon, the company which he founded.  Prior to co-founding eSilicon, he served as president and CEO of Cadence Design Systems; during his tenure, Cadence was the world's largest supplier of electronics design software. Previously, Harding was president and CEO of Cooper & Chyan Technology, which was acquired by Cadence in 1997. Harding also served as Executive Vice President of Zycad Corporation.
He is a Senior Fellow at the Institute for Development Strategies, a member -- and former Steering Committee member -- of the Council on Competitiveness, a Washington, D.C. based organization dedicated to the global competitiveness of the U.S.; and a former National Academies' Committee member for Software, Growth and the Future of the U.S. Economy. He is a frequent lecturer on innovation and entrepreneurship, and has served on many boards of public and private companies. His most recent appointment was to the 2007 board of directors for the Fabless Semiconductor Association (FSA).

We appreciate Jack's many contributions to the Tiger and, playing off that old line, "when he talks, we listen."  We would be fools not to.  The same might be said for the state of Vermont.)

(ed. note #2:  This is a slightly revised version of the original posting of this essay.  We earlier draft was posted in error for which we apologize.)

Comments

[Lazarus Long]

That is a pretty gentle reprimand. It also contains clues for performance improvement.

Unfortunately, many of the Board of Directors approve of the performance of many of the players inspite of the eventual outcome for the overall enterprise.

[Gordon Smith]

yes, it's always the legislator from the OTHER district that is the problem, our guy/gal is just peachy.

[Dennis Lukas]

Those of us in business agree with you 100 percent. However those in Montpeier are elected by people who live in a dream world.
When will Vermont change for the better? I will watch for the change from another state.

[Edward Charles Ponzi Jr]

If the US were run like a business -- we would have a fire.

[Edward Charles Ponzi Jr]

"He proposes, instead, to eliminate the favorable capital gains tax and, thus, discourage investment"

Worth noting:

As inflation rises -- cap gains taxes become just a tax on phantom gains.

[David Bumgardner]

OUR problem, Jack, is we look on business models as a solution for State Govt. I alluded to this a few days ago referring to town meeting govt, non-participation of voters, the Vermont way and school budgets in this column. Pogo still reigns supreme. We have to accept that Govt's are different than Corporations.Both try to do what is best for the citizens or stockholders.In Corporate we try harder and can make harder decisions because if we fail, we go under. We also some times have strong executive leadership that can have two votes but that does not excuse real time thinking of the balance of the Board. In State Govts ineffectual results are directly the fault of inefectual leadership. And seemingly bad decisions are resolved by taking out the basin, washing their hands, and saying that "you voted for us we did the best we could." This being true, sic Pogo "The problem is us."

I feel empathy for the good people who have tried in Montpelier but frankly the leaders and those attached have proven to be the greatest Sisyphean advocates I have ever seen. As you alluded to, Jack, the shame lies with ALL the leadership and we the voters are the ones that bear the responsibility. I hope this November will be a thoughtful election rather than a backlash.

[G. Cross]

"Douglas also told Speaker of the House Gaye Symington and Senate President Pro Tem Peter Shumlin that he would not, as they have been requesting for weeks, sit down and work out a joint budget together."

The above quote from the referenced Porter article says it all. Unfortunately, Douglas is not a team player. He is, however, a political player. One who up to this time has been very good at that game. He senses that it is in his best interest to talk a good story, veto bills and blame the legislature. We will all have to wait for November to find out if this strategy is getting old.

[SPS]

I tend to agree with David. I run an early stage company that is about to get its first investment, so I definitely get the bottom line mentality. I also have a lot of experience in the non-profit sector and work closely with the federal bureaucracy, so I've got some exposure on the other side of the coin.

Most people in business, especially at an executive level, fail to appreciate how diffuse authority actually is in government. Douglas, Symington and Shumlin are, indeed, all hacks, but even if they weren't they could not move the bureaucracy the way a CEO does because they don't have control as there are many other elected officials who can throw a spanner in the works. Moreover, many government agencies have a high degree of autonomy and, within limits, can and regularly do scuttle a new policy direction. Plus, if civil servants fail to perform, you cannot fire them (at least not without very high transaction costs).

An effective government leader has to use a lot of moralsuasion, carrots and sticks to cajole the apparatus to move in the direction he/she wants the government to go. Its a much messier and more laborious process than the private sector.

I was in Singapore over the weekend and if you want a corporate-style government, it is a great example. Sure, it works well , but you always know who is running your life there.

[Jon Harrison]

One of the most remarkable human traits is our capacity for avoidance. Rather than make small changes to avert looming problems, we allow problems to fester until they assume disastrous proportions. Look at the mortgage meltdown/credit crisis. This problem was easily forseeable years ago. Yet nothing was done. Of course, in this particular case, a dose of government regulation was called for, in the absence of simple prudence on the part of both lenders and many home buyers.

So too with Vermont. Nothing is going to get done until we are in or on the verge of bankruptcy. The governor is far too cautious, because he wants to keep getting elected. After 35 years in public life, he might show a little more fortitude. Instead, he prefers to do what's politically expedient. The result, eventually, will be insolvency and drastic cuts that will hurt many Vermonters. Radical surgery will be required -- surgery that could have been avoided if we'd just taken a few doses of cod liver oil eight or ten years ago.