What Labor and the Coalition could borrow from American boardrooms

I consider myself very fortunate to have spent two years living in Philadelphia studying business and public policy at one of America’s top universities.

Corporate strategy was a big part of the curriculum: how firms make clear choices in competitive markets. Sitting in the classrooms, I was struck by the humility of major American firms in learning the lessons of the past, and by the resources they devoted to identifying where rivals might pose an existential risk. It occurred to me that political parties can become complacent in the same way, and that competition can drive a party out of existence if it isn’t taken seriously.

Fast forward almost ten years and Australian politics is once again debating whether the major parties can hold. US corporate history, properly adapted across countries and across sectors, offers insights for how to navigate this moment.

Harley-Davidson dismissed Honda’s little 50cc Super Cub as a toy in 1959. By 1966 Honda held 60 per cent of the American motorcycle market. US Steel and Bethlehem Steel ceded the low-margin rebar segment to Nucor’s mini-mills in the 1960s. Bethlehem filed for bankruptcy in 2001 and Nucor is now the largest steelmaker in North America. Kodak invented the digital camera in 1975 and shelved it to protect film sales. Blockbuster laughed Netflix out of the room in 2000 when it could have bought the company for $50 million. In every case, the incumbents saw the entrants and chose not to take them seriously until it was too late.

The Greens, the Teals and One Nation are doing something structurally similar to Labor and the Coalition. Here are five things either major party could put in place:

1. Stand up a disruptor watch. The steel industry spent two decades worrying about foreign imports while Nucor ate it from within. American boards now run dedicated functions that study small competitors. A research analyst and a regular briefing to party leadership would be a meaningful start.
2. Ask what you are doing that voters resent. Blockbuster’s $800 million in annual late fees was both its most profitable revenue stream and the practice its customers most resented. What internal practices serve the existing power structure but actively annoy the voter segments each party is losing?
3. Stop investing in procedural protection. Detroit lobbied for the 1981 Voluntary Export Restraint Agreement with Japan. It delayed the disruption and then accelerated it, because Toyota responded by building plants on US soil and creating Lexus. Preference deal-making, attacks on minor party legitimacy and engineered redistributions follow the same logic, and will likely end the same way.
4. Treat voter segmentation as a hypothesis. Sears’ model said you could not make money in Bentonville, Arkansas. Walmart proved otherwise and became the largest retailer in the world. The Teals’ 2022 wins all came in seats the Liberal model said were uncontested. Set aside a small share of national campaign resources for off-model campaigning and treat it as live testing.
5. Give internal reformers structural cover. Kodak invented the digital camera and suppressed it because it threatened the film business. Most major-party backbenchers whose positions align with insurgent territory get stamped out before they develop a profile. The innovation is usually inside the building. The question is whether the building lets it out.

Corporate America in the 2010s was not smarter than previous generations. It had simply watched enough incumbents fall to take the risk seriously, and to accept that the threat is always closer than it looks.