Building a Better Pyramid Scheme

The business press has been abuzz for the last week with news about Steve Jobs’ hormones.

I suspect the last time anyone was so interested in the topic was sometime in junior high.

As much as he deserves privacy when it comes to his health, it’s not altogether surprising that everyone from Mac lovers to stockbrokers has an eye on his medical status. After all, Apple’s share price seems to be directly tied to Jobs’ disposition.

Numerous industry pundits have warned of the day, looming somewhere on Apple’s horizon, when Steve Jobs is no longer directly involved with the business. Having already played the role of the white knight for the once-ailing company, Jobs’ role remains so critical to Apple’s continued health that many analysts rely on an assessment of Jobs’ operations as well as the company’s operations when making stock picks.

As much as Jobs’ personal brilliance contributes to Apple’s businesses, it also detracts from his organization’s ability to stand on its own. Jobs excels at identifying opportunities. But his company doesn’t. Instead, he has created a machine that’s primed for response – taking Jobs’ ideas and turning them into reality. That’s OK for a one-man show. But it’s unsustainable for a Fortune 500 firm.

On the other end of the spectrum is P&G. Long known for its systematic, analytical approach to marketing and new product development, P&G draws on ideas and talent from throughout its ranks to identify and pursue growth opportunities. CEO A.G. Lafley is certainly instrumental in setting vision and strategy. But Lafley’s organization is tuned for growth, not for looking to Lafley to dictate its every move.

The same dynamic is now at play in the political domain. After President Bush’s 2004 reelection, former Senator Bill Bradley noted that the underlying structure of the Democratic and Republican parties may have contributed to the victory. Bradley likens the Republican Party to a pyramid:

Big individual donors and large foundations…form the base of the pyramid. They finance conservative research centers…that make up the second level of the pyramid.

The ideas these organizations develop are then pushed up to the third level of the pyramid - the political level. There, strategists…take these new ideas and…convert them into language that will appeal to the broadest electorate. And then there's the fourth level of the pyramid: the partisan news media…

At the very top of the pyramid you'll find the president. Because the pyramid is stable, all you have to do is put a different top on it and it works fine.

The Democratic Party, on the other hand, functions as an “inverted pyramid”:

Imagine a pyramid balancing precariously on its point, which is the presidential candidate.

Democrats who run for president have to build their own pyramids all by themselves. There is no coherent, larger structure that they can rely on. Unlike Republicans, they don't simply have to assemble a campaign apparatus - they have to formulate ideas and a vision, too. Many Democratic fundraisers join a campaign only after assessing how well it has done in assembling its pyramid of political, media and idea people.

In other words, the Republican Party operates like P&G. The Democratic Party operates like Apple.

The implications of these two organizational structures are significant. Bradley credits the pyramid vs. inverted pyramid with the difference between victory and defeat in 2004. Just as importantly, these organizational structures may strongly influence the success or failure of the President’s political agenda.

That may be particularly true for President-Elect Obama. His charisma and personal appeal have inspired millions. But these same characteristics may have cornered him into being as crucial to the national policy agenda as Jobs is to every detail of Apple product development. Once Obama is out of office, distracted by foreign policy issues, or otherwise absent, these same supporters may find themselves rudderless – just as Apple was in the nineties after Jobs’ exit.

Obama’s task, then, is twofold. First, he must create the base of his pyramid – the donors, research centers, policy, and wonks that will define his administration. Second, and perhaps more importantly, Obama must flip the Democratic pyramid so that these functions lie on bottom, stabilizing, securing, and systematizing his vision. Just as Hillary Clinton had to remind her disappointed supporters that her bid for the presidency was about her ideas, not just about her personally, Obama will need to find a way to translate the enthusiasm for him into enthusiasm for something that transcends any single person.

This'll take time. After all, Giza wasn't built in a day...