Good managerial leadership often leads to a successful business. But what leads to good managerial leadership? What is the most effective way a CEO could execute the power of their office? Some insight might be gleaned from Richard Neustadt's study of how several U.S. Presidents exercised their executive power, Presidential Power.

Read Example 14.1 "The Source of Presidential Power," pages 462 - 463 in the text. Perform further research. Then come to your own informed opinion.

What lessons can the CEO learn from reading Neustadt clearly?

Illustrate specifically how a CEO could implement Neustadt's principles to help the firm fulfill its strategy.

Refrence: Dranove, D., Besanko, D., Shanley, M., & Schaefer, M. (2015). Economics of Strategy (7th Edition). Wiley Global Education US. https://bookshelf.vitalsource.com/books/9781119174776

462 . Chapter 14 . Environment, Power, and Culture EXAMPLE 14.1 The Sources of Presidential Power One of the most famous studies of the bases of loses control of a majority in Congress, he can- power was Presidential Power, Richard Neus- not guarantee that his programs will be enacted tadt's 1960 examination of how Franklin Roos- and will lose power as a result. A third source of evelt, Harry Truman, and Dwight Eisenhower presidential power is his prestige among the dealt with power and influence during their public, specifically how the political commu- administrations. The book was widely read at nity assesses his support among different con- the beginning of the Kennedy administration stituencies and the consequences that failure to and has remained important to sitting presi- support the president will have for politicians. dents, their staffs, and policy analysts. Although the political situations facing the The important issue for Neustadt is the president of the United States are different from conflict between the image of the president as those facing the CEOs of large firms, Neustadt's powerful and the reality of the presidency as three sources are consistent with those discussed institutionally weak. Presidential power does earlier. The formal powers of the job, whether not consist of the president taking direct action stemming from the Constitution, laws, or cus- on some front, such as Truman's recall of Gen- toms, along with the institutional routines that eral Douglas MacArthur or his seizure of the have grown up around it, provide a basis for steel mills in 1952, or Eisenhower's decision to incumbent power, a basis that can be used well send troops to Little Rock, Arkansas, in 1957 to or poorly. Professional reputation in a firm assist in desegregation. These command deci- refers to how observers expect the powerholder sions were more exceptions than typical uses of to act in a given situation, based on their accu- power. Nor did any of them solve the presi- mulated experience with the powerholder. dent's policy problems. Instead, they used up Finally, prestige for politicians is analogous to scarce presidential power and, at best, allowed control over critical resources. For the president the president and others involved in the situa- and professional politicians, that resource is tion more time to search for a lasting solution. public sentiment, which translates into votes. Neustadt suggests that decisions made by com- Looking back to 1990, in light of the six mand or fiat are more likely to be evidence of a presidents who had served since Presidential lack of power than of its effective use. In a Power was first published, Neustadt saw little given situation, however, there may have been reason to change his fundamental conclusions. no other choice than to command. For exam- For example, the experience of Nixon and ple, whatever problems Truman encountered Watergate, on the one hand, and Johnson and in recalling MacArthur, the cost of not recall- Vietnam, on the other, showed the importance of ing him and thus allowing civilian authority to credibility and perceived legitimacy for both be flouted would probably have been higher. public prestige and professional reputation. Sim-Presidential power is the ability to influ- ilarly, although Neustadt still emphasizes the ence the people who make and implement importance of political skills for the president, government policies. It has three sources. The the experiences of Johnson and Nixon also first is the bargaining advantage that comes emphasize the relevance of individual tempera- with the office that enables the president to ment for success in office. The president needs persuade others to work in his interest-the to be patient enough to tolerate a complex formal powers and authority of the president. political system that rarely allows him to success- The second source is professional reputation, fully implement major policy initiatives immedia which comprises the expectations of profes- ately. Neustadt still sees political skills and sional politicians, bureaucrats, and others in experience as crucial for success in office. (The the political community regarding the presi- presidency is no place for amateurs.) Political dent's power and his willingness to use it. This skills and experience, however, though necessary is related to the ability to control the votes of to success in the presidency, are not sufficient. Congress on key issues. Once the president Both Nixon and Johnson were highly experiencedPower . 463 in elective office and possessed formidable politi- essay on the book's influence for the Chronicle cal skills, yet their sense of power led both of of Higher Education, Michael Nelson notes that them to support policies that ultimately dissipat- the crises plaguing American presidents since ed their power and impaired their effectiveness. 1990, including the wars in Iraq and Afghani- In 2010, Neustadt's book was 50 years old stan, along with the financial crisis of 2008 and and outlived its author, who died in 2003. Nev- the recession that followed it, have shown how ertheless, it remained the sixth most assigned the decision-making issues raised in Presidential book in college courses on the U.S. presidency Power are still appropriate today and are likely in American colleges and universities. In an to remain so for the foreseeable future