The Business of Politics

Mike Bloomberg is breaking down walls at City Hall. Literally. With no walls to separate the rows of desks lining the room, the atmosphere resembles a frenetic, high-energy trading floor more than a government office. Bloomberg’s desk—the command center for the operation—sits directly in the middle of the room, right in the heart of the action.

Bloomberg lifted the concept of the “bullpen environment” directly from his company, Bloomberg L.P. During his twenty years at the helm, Bloomberg built the company into a multi-billion dollar global conglomerate, increasing his personal worth to $4 billion. But in 2002, after 35 years of private-sector experience and with no political credentials, Bloomberg embarked on a dramatically different career in the public sector, as Mayor of New York City.

Before Bloomberg’s election, New Yorkers tended to elect charismatic, combative mayors—individuals with considerable political or legal experience. Ed Koch and Rudy Giuliani epitomized this characterization with their bold, argumentative styles and extensive political experience—Giuliani was a U.S. Attorney in New York for several years, and Koch was a Democratic Congressman. The election of businessman Michael Bloomberg to the highest office in New York City connotes a major shift in the leadership preferences of New Yorkers, and over the past nine months, he certainly has not disappointed those who expected an innovative management style.

Bloomberg ran a tight ship at Bloomberg L.P., deliberately eliminating most of the trappings of corporate protocol, such as offices or titles. The concept behind the bullpen atmosphere “is that if people are going to work together, they have to be together,” according to Matt Winkler, co-author of Bloomberg’s autobiography, Bloomberg by Bloomberg. “The more people are sitting side by side, almost as if they’re in a boat pulling an oar together, the better, because then it’s obvious what needs to be done. Everybody’s going to work for the same goal.”

While the lack of walls probably engenders greater openness and cooperation, it also creates a frenzied high-pressure atmosphere that not all employees appreciate. A former newsroom employee described the environment as “really weird…a cross between a Wall Street trading floor and a newsroom.”

“Loyalty was a big thing,” he said, describing the qualities Bloomberg valued in his employees. “Absolute dedication. You had to be reachable at all times. [Bloomberg] ran the company like a family business. It was considered personal betrayal if you were to leave for any job, particularly for one in the field. There are lots of famous statements about him not shaking the hands of people who had left.”

Winkler paints Bloomberg in a much more forgiving light. He points out that Bloomberg encourages “self-sufficiency, teamwork, cooperation, and enthusiasm” among his employees, not just steadfast allegiance.

So far, many of Bloomberg’s management strategies have greatly benefited city government. At City Hall, as with most government offices, titles still exist, but the bullpen seating arrangement has created an atmosphere of greater accessibility and receptivity.

“I worked in his campaign and now I work in City Hall in the bullpen,” William Cunningham, Communications Director for Mayor Bloomberg explained. “The whole idea with the open floor plan is that people see each other and communicate better with each other.”

Even Bloomberg’s personal habits demonstrate adherence to his policy of accessibility. Instead of dealing with traffic jams and police escorts, Bloomberg prefers to ride the subway to work daily. He checks his own voicemail and email. Bloomberg even responded to an email I sent him personally, just five minutes after I sent it, casually signing it “Mike” as if we were old friends.

Private versus Public

The private and public sectors are notably different worlds, and Bloomberg’s management style at City Hall reveals a careful balancing of the two spheres. One of the most significant differences between the public and private sectors is the way in which decisions are made.

“The decision-making process in the private sector is much more hierarchical…a decision that’s handed down by the chief executive in the private sector is followed rather crisply,” said William J. Stern, a contributing editor at City Journal for the Manhattan Institute. “In the public sector, decision-making is rather nuanced…what you have is a much slower decision-to-action process.” Explaining that the private sector is “far more efficient,” Stern concluded, “The public sector has a whole series of sometimes worthwhile checks and balances and sometimes just the ability to delay.”

In his handling of the New York City school system, Bloomberg has applied the best resources of both sectors. After only six months in office, Bloomberg wrested control of the 1.1 million-student public school system away from the powerful seven-member Board of Education, replacing the Board with a greatly weakened 13-member advisory panel. He negotiated increased teaching time in exchange for large raises for public school teachers, and he earned the right to hire and fire the Schools Chancellor. He appointed Joel Klein—most recently the chairman and CEO of Bertelsmann, Inc. and before that an assistant attorney general in charge of the Department of Justice’s Antitrust Division—as chancellor.

Klein recently selected Caroline Kennedy, at a salary, like Bloomberg, of $1 per year, to serve as chief fundraiser for the school system, demonstrating the overlap in the Bloomberg administration between the private and public spheres. Klein hopes that Kennedy will increase the amount of private donations to New York City schools from the current level of about $100 million each year. The week before Kennedy’s appointment, Klein announced that a group of business leaders had agreed to provide $600,000 in bonuses for superintendents whose districts show significant improvements. Klein has been a good fit in the Bloomberg administration, where private sector solutions—such as this notion of incentives—are valued highly.

The speed with which Bloomberg restructured the school system reflects his experience in the private sector, where expedience is a premium. “Bloomberg picked the issue that no one else has been able to get done, and not only did he get it done, but he got it done very quickly. It took him not eight years, not even a year,” observed William Eimicke, director of the Picker Center for Executive Education at Columbia University’s School of International and Public Affairs.

In addition to applying the efficiency of the private sector to the public sector, Bloomberg has brought useful skills from the business world to the mayor’s office. “My guess is that in the private sector he was an extremely gifted salesman,” Stern speculated. “And he transferred that into being an extremely gifted salesman in the public sector.”

Indeed, the success of Bloomberg L.P. is a good measure of Bloomberg’s salesmanship. “He started with less than half a dozen colleagues in 1981, and in 21 years created a company with $3 billion of annual sales and a total staff of about 8,500, operating in more than 100 countries,” Winkler, his co-author, remarked. In Winkler’s opinion, it makes perfect sense that Bloomberg “[took] that experience and extend[ed] it to what he’s doing now as Mayor of New York.”

Countering Criticism

But despite displaying skills traditionally associated with private sector people, Bloomberg is not a typical businessman. “Normally you would expect the typical businessman to be very authoritative. To have a command and control atmosphere with a person used to doing what they’re told to do, to be much more impatient,” Stern said.

Instead, Bloomberg is a talented negotiator and compromiser. In his dealings last June with the United Federation of Teachers, Bloomberg successfully avoided a teachers’ strike, negotiating 16- to 22-percent raises over the next two and a half years for all 80,000 teachers in the school system. In return for the raises, Bloomberg obtained a 20-minute per day increase in teaching time and the right to fire teachers more easily.

Bloomberg’s ability to build consensus and reach compromise is a personality characteristic more frequently attributed to politicians than to businessmen. Recent New York City mayors have not been good negotiators. Ironically, despite being the first businessman in the mayor’s office in recent history, Bloomberg exhibits more of the traits of a typical politician than his predecessors do.

“This man seems to be more skilled as a professional politician than a Dinkins or a Koch,” Stern said. “[He’s] less insistent on moral authoritative leadership. That’s the surprise. He’s out-polling the pols.”

Bloomberg has distinguished himself from recent New York Mayors by deliberately avoiding conflicts. “He ignores criticism when it should be ignored,” Stern explained. “When he does respond, he responds in a rather gentle, compassionate way. He doesn’t get into fights with people.”

In the past nine months, Bloomberg has repeatedly employed stock tactics for deflecting criticism. Sometimes, he will launch into a lengthy, number-filled rumination in response to a critical question. Or he may react with nothing more than a faint smile. In a September press conference announcing the release of the Mayor’s Management Report, a detailed study outlining statistics about city neighborhoods, Bloomberg deftly dodged questions about the potentially damning statistics by emphasizing the accessibility of the report and the value of information dissemination.

Unlike Bloomberg, other New York Mayors have often preferred to pick fights rather than avoid them. Koch, for instance, found himself entrenched in battles on several fronts. He fought with the New York State legislature over the severe budget deficits, he encountered resistance from the unions, and opponents accused him of being the cause of worsening racial tensions.

Before being lionized by his handling of the events of September 11, Rudy Giuliani took the cake for conflict mongering. He managed to create—or at least exacerbate—conflicts with his political enemies, the media, public museums, and even his own political appointees. The vehement public battles between Giuliani and his wife, Donna Hanover, certainly did not rehabilitate his reputation as a loose cannon.

“[Bloomberg] is a lot different than Mayor Giuliani, who tended to be very combative,” Eimicke said. “There’s a stark contrast between the two of them in terms of how they handle the press and in terms of how they handle inquiries from people who disagree with them.”

Arguably, though, Giuliani’s forceful personality may have been the driving force behind his significant accomplishments. He did manage, after all, to eliminate crime by two thirds, move 691,000 people off of the welfare rolls, and guide a grieving city through the aftermath of September 11, all difficult tasks that may have necessitated a strong hand and a loud voice. It remains to be seen whether Bloomberg’s conciliatory style will prove more effective than the contentious approach Giuliani and Koch used.

No Strings Attached

One inestimable advantage Bloomberg holds over his predecessors is a direct result of his immense wealth: he spent $69 million of his own fortune—approximately $92 per vote—on his campaign, leaving him free from obligations to generous campaign donors. There is no danger that Bloomberg will have to use the city’s budget or other policy initiatives to foster financial support from various groups for his re-election campaign.

“That he was able to basically finance his own campaign has enabled him not to be even semi-trapped by special interests,” Eimicke, of the picker center commented. “There is a benefit of having a person like Bloomberg as Mayor—he’s not beholden to anyone.”

By financing his own campaign, Bloomberg played the role that supporters of campaign finance reform hope the government will eventually perform.

The Bottom Line

New York City faces a budget shortfall of $5 billion, which is, incidentally, not much more than Bloomberg’s net worth. In June, he successfully negotiated a budget accord with the City Council that managed to close the deficit—the city is required by law to have a balanced budget—but many fiscal experts have warned that the accord merely postpones the problem. Even with cuts and new taxes, analysts project a deficit of at least $5 billion for the next fiscal year that begins next July.

The question is whether Bloomberg’s capabilities as a businessman will furnish a solution for the city’s economic malaise. “I hope that his skills as a businessman [will] help in the budget crunch,” Eimicke said. “A lot of people in the public sector have not had a strong feel for the market economy in New York.”

Bloomberg’s handling of the budget crisis presents another opportunity for comparison with Koch. Throughout the 1980s, Koch faced similar budget crunches, with deficits ranging from $1.4 billion to $2 billion.

Perhaps as a result of his long experience in the financial world, Bloomberg seems completely unflustered by the dire economic situation. “Again, you don’t really have the sense that there’s a looming fiscal crisis,” Eimicke explained. “He’s handled it in a much more quiet way. No sense of panic, or crisis, and I think that’s quite useful. Koch used another tactic, which is to say, ‘It’s really bad.’ Koch used it as a kind of rallying cry. Bloomberg has tried to do the opposite: ‘I’ve dealt with fiscal problems in the private sector and we’re going to deal with it now.’ Most people don’t have a sense of how severe the problem is, and I think that’s good.”

Bloomberg has a businessman’s sense of the bottom line. This summer, he temporarily halted the recycling of glass and plastic to save the city $40 million. Rather than fight with opponents of the recycling suspension, Bloomberg simply responded, “The problem with recycling is everybody wants to do what’s right for the environment, but there is no market for plastic and for glass.”

Cuts alone, however, will not suffice. “There’s only about $14 billion of discretionary money in the Mayor’s budget,” Cunningham stressed. “More than a third of the Mayor’s discretionary budget would fill the gap. That’s a huge, huge chunk of what you have control over. And that’s the problem.”

The Bloomberg administration indicated recently that higher taxes might be the only solution. Officials have discussed reinstating the commuter tax, increasing the property tax, or adding a personal income tax surcharge.

Threatening higher taxes and the cutting recycling are risky and unpopular moves. Bloomberg’s pragmatism—rather than any ideology—comes through in his willingness to implement both of these measures. Bloomberg is a Republican, but he switched parties just before the 2002 mayoral election after being a Democrat for his entire life. His decisions on essentially every issue—from the school system to the housing situation—demonstrate his interest in finding a solution to the problem, rather than espousing any particular political agenda.

“He’s certainly not any partisan,” Stern observed. “He just doesn’t see the world that way. It’s not productive, interesting, or meaningful.”

Breaking Down Barriers

Although Bloomberg has made significant progress in the two areas that will define his mayoralty—improving the school system and closing the budget gap—his greatest challenges still lie ahead.

“On the budget, it’s too soon to tell,” Eimicke said. “Bloomberg is now embarking on what is going to be a difficult journey.”

Similarly, Bloomberg’s restructuring of the school system is only the first step. “Now that he’s taken over the schools, he’s going to have to improve the schools,” Stern remarked. “We’ll see what he does to clean up the school system. His political skills were exceptional in getting the legislature to let him take over-now will he improve them?”

Considering that Bloomberg has held office for less than a year, he has achieved some impressive results. Despite his lack of public sector experience, Bloomberg has proven himself a formidable politician. His private sector skills—brilliant salesmanship and efficient decision-making—have translated well in the public arena, as has his conciliatory, receptive personality.

Bloomberg brings a fresh approach to municipal government. His ability to apply innovative private sector strategies may be just the remedy for a city facing ongoing, seemingly impenetrable problems—such as improving the school system—and new, daunting ones—such as rebuilding Lower Manhattan. Bloomberg isn’t just tearing down walls at City Hall, he’s tearing down walls between business and politics.