America’s pivot

Donald Trump’s tariff-centered push to remake who we are as a nation reminded me of something I’d seen before: a pivot.

What is a pivot?

In the world of startups, a pivot is radical decision to shift the strategic direction of a company, usually because the original strategy is just not resonating. You see this, for example, when startups shift from a B2B orientation to a focus on consumer customers (or vice versa). The company that became Twitter started as a tool to find podcasts. PayPal’s original market was Palm Pilot users (!). Shopify started as an online store for snowboarding equipment.

Pivoting a small company is far easier than shifting the direction of a large one. But many companies shifted direction over years or decades and are now very different from when they started. Netflix started shipping DVDs by mail. IBM started making tabulating equipment, shifted to computers, and then sold most of its computer lines to Lenovo to concentrate on services. GE, originally General Electric, of course started making electrical equipment, then diversified into financial services, aircraft engines, health care machines, and environmental equipment like wind turbines. (Anything a consumer buys now that’s branded GE, from lighting to appliances, is manufactured and sold by some other company with a license on the GE brand.)

The U.S. has pivoted, too. FDR ramped up federal spending to lift the nation out of The Depression, presided over the creation of Social Security, and put the nation on the path to the creation of NATO. LBJ’s embrace of civil rights started a transformation of how the nation viewed race relations. Richard Nixon opened up relations with China, a decision that has entangled the two nations as trade partners and arguably led to prosperity for both. Ronald Reagan and George H. W. Bush led the country further down the path of free trade with NAFTA. And George W. Bush responded to the 9-11 attacks with a massive focus on surveillance and wars in the Middle East.

Will Trump’s pivot succeed?

Donald Trump’s huge tariff increases are an attempt to remake the US once again, as a more self-sufficient, inward-focused manufacturing power. Will it work? Let’s look at past pivots and see what evidence we can find.

Pivots arise for two reasons: either because of a crisis, or as an attempt to boost prosperity.

All the startup pivots I described happened because the company’s original model was failing and there was little choice but to change. And some national pivots were also crisis-driven. FDR was responding to The Depression, LBJ to civil unrest in the south, and George W. Bush to the 9-11 attacks.

But the large corporate pivots I mentioned were opportunistic. Companies found they could make more profits from some elements of their business and sold off the less profitable portions. Nixon’s China pivot and NAFTA were opportunistic — they were intended to create wealth and connect nations in both economic and political ways.

Regardless of whether the pivots were crisis-driven or opportunistic, the leaders who promoted them used strategies to rally the body politic and the nation behind them. They made speeches, conducted outreach, and revealed the dimensions of their strategy. They reached out to politicians of their own parties and across the aisle to lobby for their vision of the future. They used both threats and bargaining to bring the nation around. In many cases, they reached out to international allies or adversaries to create momentum for the change. And, except for the shock of 9-11, they took time to create a case for change.

In the case of Trump’s massive tariff increases, he has acted unilaterally. There was no outreach to allies. As Derek Thomson perceptively writes in The Atlantic (gift link) there are three separate sets of mutually contradictory justifications for the tariffs: revenue, bullying, and the remaking of the American economy. Trump’s surrogates offered even more mutually contradictory justifications in interviews on news shows. Trump has clearly not rallied Wall Street to his side; markets are in free fall and he has few prominent corporate defenders. Republicans are wavering; Democrats are salivating; and millions of people took to the streets all over the nation.

Pivots are always painful. Leadership consists of making the case that change is necessary with a clear description of how that change will ultimately benefit the people affected. Like preparations for a war or any other major undertaking, they require careful planning, coherent messaging, clarity, and perseverance.

You can’t change the course of a large company — or a nation — without these things. You can’t force change on a nation or an economy without vision and strategic discipline.

Pivoting is an existential decision, because failed pivots are virtually impossible to recover from.

The pivots of the past changed the nation forever. You may or may not like the nation that FDR, LBJ, Nixon, and George W. Bush led us to become, but you cannot argue that they led the nation in new directions.

Where are we going now? And will we ever get there?

I have no idea, because our leaders aren’t leading. This pivot will fail. What comes after that, I fear to even imagine.