COMMENT | Blogger Hafidz Baharom rightly asks, who are they (Pakatan Harapan) trying to convince when Harapan loyalists question analysis pointing to a possible BN victory. Especially important is the PAS problem – the one-time bete noire turned ally turned bete noire (again) of DAP. PAS Vice-President Mohd Amar Nik Abdullah is floating the “unimaginable” idea that PAS could lead the country, and while everyone else laughs at them, they are playing the long game.
No doubt, UMNO is weak but being in a vulnerable position does not mean that victory is impossible for them especially when the system is rigged in favour of the establishment. Add to this, the opposition is fragmented, spending as much time fighting amongst themselves as they do dealing with issues of race and religion because they do not have a unified message on both.
The problem is that the opposition does not have a clear message for the average citizen – “Bersatu central committee member Tariq Ismail Mustafa (photo below) said that rural folks needed to be convinced that ‘change’ can happen, but what exactly does change mean? What are they changing to? Whenever I talk to PSM people, I know exactly what message they are sending to people. A grassroots message that involves how the system oppresses the average citizen, which is linked to the local affairs of the community they are contesting in.”
This, of course, is purely anecdotal but nearly every PAS supporter whom I have spoken to who despises the close friendship between PAS president Abdul Hadi Awang and the Umno regime, will still hold their noses and support the agenda of the PAS leadership, because at this moment in time, it is party over personality. The feeling is the same as those in the GOP (Grand Old Party) who despise Donald Trump and his candidates but who vote for both because of the party Trump claims to represent – the Republicans.
Dato Ti Lian Ker says DAP is welcoming extreme Malay-centric leaders into Harapan.
Dismissing PAS as inconsequential is a mistake. In fact, I know that PKR understands this more than any other party in Harapan. Unfortunately for the opposition, Hafidz’s opinion on the dialectic within the Malay community is correct, which brings us to MCA leader Dato’ Ti Lian Ker’s worry that the DAP is welcoming extreme Malay-centric leaders into Harapan.
Can we just call them bigots and racists? While MCA is in no position to question this move – merely because UMNO has become more extreme in its Malay-centric perspective – the reality is that DAP is in no position to do anything about extreme Malay right-wing elements within Harapan.
By embracing former prime minister Dr Mahathir Mohamad, his newly-formed party and the desideratum of Bersatu, DAP has forfeited the moral high ground. Malay power structures in the opposition are desperate to bolster their credibility in the Malay demographic. Meanwhile, non-Malay power structures are desperate to secure the Malay vote by any means necessary.
The late Lee Kuan Yew called Dr. Mahathir Mohamad–A Malay Ultra, but today the founder of UMNO Baru is the epitome of a liberal and non-racist reformer politician. Is that possible?
I worry about this – “Here is the thing, though. There is nothing anyone can say that would change people’s mind. I worry about the day when a smart UMNO political operative would debate an oppositional political operative and it would be revealed that beyond the 1MDB issue there is not much difference between the opposition and the establishment when it comes to policy and ideology, especially now that Bersatu is in the mix.”
Ti makes a very good point when he asks, “Is DAP going to be responsible for empowering Perkasa later, the way they have empowered PAS before?” The only reason why PAS is mainstream is because of the pragmatism of the late Tok Guru Nik Aziz Nik Mat (photo) and the equilibrium that the DAP managed to create within the disparate alliance.
However, the signs were always present that the extreme elements within PAS were waiting patiently to make their move. There can be no denying that DAP, as the sole mainstream oppositional voice of non-Malays, enabled PAS.
In hindsight, even though the opposition went through their messy break-up, the alliance with PAS demonstrated to Malaysians that it was possible to form and succeed in alternative coalitions, if politicians were willing to work together. It was what Malaysians desperately needed and the so-called marriage of convenience hinted at a possible way beyond Barisan National.
At this point, nobody in the opposition would bat an eyelid if members of the red shirts decided to join the Harapan because they had lost faith in how UMNO defended “Malay” rights. I doubt DAP or any other non-Malay political operatives would draw a red line in the sand, and news of these racists and bigots joining Harapan would be met in the same way as how PAS members hold their noses and vote for their party even though they despise the company their leadership keeps.
The real tragedy, of course, is that this may actually work. The “tragedy” will happen after a possible Harapan electoral win, but this is something which in typical Harapan fashion would be dealt with after the Najib regime is vanquished.
While Hafidz’s contention that UMNO scored points with the Jerusalem fiasco, the headscarves brouhaha and PAS in their RU355 dance, this idea that Harapan is open to extreme right-wing Malay elements is also a draw for many within the Malay community who view the Mahathir years as the epitome of Malay power.
More importantly, while the youth vote is floundering for various reasons, the older Malay demographic that is a reliable vote bank for UMNO could be turned in favour of the wiliest Malay political operative this country has had – Mahathir Mohamad.
Securing new votes is important but equally important is securing votes in play.
The Guy used to love UMNO’s Grand Poobah, not anymore
We have to keep in mind that all Mahathir has to do to win is to destabilise UMNO to the point that the powerbrokers in UMNO see no profit in supporting the current UMNO Grand Poohbah. Then all manner of unimaginable ways through reconciliations and reformation could herald the birth of a new Malay power structure favouring the old methods of UMNO.
In the land of endless possibilities, unimaginable ways can come to fruition.
One afternoon in late September, Secretary of State Rex Tillerson called a meeting of the six countries that came together in 2015 to limit Iran’s nuclear-weapons program. They gathered on the main floor of the United Nations headquarters, in Manhattan, in the “consultations room,” a private chamber where diplomats can speak confidentially before stepping onto the floor of the Security Council. Tillerson, who was the head of ExxonMobil before becoming President Trump’s top diplomat, had not previously met Iran’s Foreign Minister, Javad Zarif, who negotiated the agreement with the Obama Administration. Tillerson’s career had been spent making deals for oil, and his views on such topics as Iran’s nuclear weapons were little known. Even more obscure were his skills as a diplomat.
Sitting at a U-shaped table, Tillerson let the other diplomats—representatives of Germany, France, Russia, China, the United Kingdom, the European Union, and Iran—speak first. When Zarif’s turn came, he read a list of complaints about the Trump Administration and its European partners. The nuclear deal had called for the removal of economic sanctions against Iranian banks, but, he said, the United States had not yet lifted them. “We still cannot open a bank account in the U.K.,” he said.
Iran’s erudite Foreign Minister
Gatherings of diplomats are usually dull affairs, with the participants restricting themselves to bromides in order to avoid open disagreements. Tillerson, peering down over his reading glasses, spoke in a deep Texas drawl that evoked a frontier sheriff about to lose his patience. “No one can credibly claim that Iran has positively contributed to regional peace and security,” he said.
Tillerson is an imposing man; he is stocky, and has a head of swept-back gray hair and a wide mouth that often droops in a scowl. Turning to Zarif, he went on to say that Iran had funded groups like Hezbollah, the Lebanese Islamist militia; it had backed Bashar al-Assad, the murderous Syrian dictator; and it had sent its Navy into the Persian Gulf to harass American ships. The fault for all this, Tillerson said, lay in the nuclear deal, known as the Joint Comprehensive Plan of Action, which curtailed Iran’s nuclear-weapons program but not its aggressive actions in the region. For Tillerson, it was an emblem of the previous Administration’s overly lenient foreign policy, which sought to promote America’s priorities through consensus, rather than through the frank display of power. “Lifting the sanctions as required under the terms of the J.C.P.O.A. has enabled Iran’s unacceptable behavior,” he said.
The room went silent, until Zarif took the microphone. In the West, Zarif is an enigma; he was educated in the United States and speaks nearly perfect English, but he remains loyal to the revolutionary regime in Iran. In the course of the negotiations over the J.C.P.O.A., the Obama Administration came to regard Zarif as a moderate among hard-liners, trying to make a deal to avert a war.
Zarif began by telling Tillerson that, in reaching the nuclear deal, Iran and the U.S. had agreed to set aside other points of contention. In a professorial tone, he noted that for Iranians this meant relinquishing a long list of historical grievances. “The U.S.A. is used to punishing Iran, and Iran is used to resisting,” Zarif said. He accused the Trump Administration of violating the terms of the nuclear deal, by, among other things, holding up export licenses that Boeing and Airbus required in order to do business in Iran. “We’re not going to argue over this,” he snapped. “Had I wanted to look for excuses to violate this agreement, we would have had plenty.”
Sergey Lavrov ( pic above with Tillerson) , the Russian Foreign Minister, objected. “This is not a negotiation,” he said. Tillerson took the microphone and began again, his voice unwavering. The real problem, he said, was that Iran had been attacking Americans since 1979, when Iranian students seized the U.S. Embassy in Tehran and held fifty-two diplomats for more than a year. “The modern-day U.S.-Iran relationship is now almost forty years old,” he went on, still looking at Zarif. “It was born out of a revolution, with our Embassy under siege—and we were very badly treated.” He enumerated Iranian-sponsored attacks in Lebanon in the nineteen-eighties and in Iraq more recently, which together killed hundreds of American citizens. “The relationship has been defined by violence—against us,” he said.
Tillerson wondered aloud whether the entire effort to improve relations with Iran wasn’t doomed by history. “We have more pounds, and our hair is gray,” he said. “Maybe we don’t have it in our capacity to change the nature of this relationship, because we are bound by it—maybe we leave it to the next generation to try.” He thought for a moment. “I don’t know. I’m not a diplomat.”
As Lavrov, muttering loudly in Russian, stood and led his assistants out of the room, the meeting broke up, with the officials talking in hushed tones about what had happened. For proponents of the nuclear deal, it was an unacceptably risky bit of brinkmanship. For the Trump Administration, it was an ideal expression of a bellicose new foreign policy, based on the campaign promise of America First. An aide to Tillerson later told me, “It was one of the finest moments in American diplomacy in the last fifty years.”
When I met Tillerson recently, in his seventh-floor office at the State Department, he was wearing a dark-blue suit and a bright-red tie, but he carried himself like a hard-charging Texas oilman. Tillerson, who is sixty-five, was born in Wichita Falls, Texas, near the Oklahoma border, and grew up in a lower-middle-class family that roamed across the two states. He was named for two Hollywood actors famous for playing cowboys: Rex Allen and John Wayne (his middle name is Wayne). “I grew up pretty modest,” he told me. “My dad came back from World War Two and drove a truck selling bread at grocery stores. My mom had three kids—you know, the nineteen-fifties.”
His formative experience was in the Boy Scouts. When he was young, his father took a job helping to set up local chapters, and Tillerson eventually became an Eagle Scout, one of an élite class of “servant-leaders” distinguished by obsessive, nerdish attainment. When he was fourteen, and living with his family in Stillwater, Oklahoma, he got a job washing dishes in the kitchen of the student union at Oklahoma State University, for seventy-five cents an hour. On weekends, he picked cotton: “You just show up Saturday morning at 6 A.M., climb into the back of a panel truck with a bunch of other guys, and you drive out to one of the farms and drag a big cotton sack behind you, picking cotton all day long, for a dollar an hour.”
When Tillerson was sixteen, he started sweeping floors at the university’s engineering school, and began thinking about engineering as a career. He got there by an unusual route. Tillerson, who had played drums in his high-school marching band, won a band scholarship to the University of Texas, where he studied civil engineering. Upon graduation, in 1975, he got a job at Exxon as a production engineer.
Exxon has historically been dominated by engineers, who pride themselves on their precise, quantifiable judgments. “Rex is what you would expect to get when you cross a Boy Scout with an engineer—straight and meticulous,” Alex Cranberg, an oil executive who went to college with Tillerson, said. Others described a more pragmatic sensibility, noting that Tillerson’s favorite book is “Atlas Shrugged,” the Ayn Rand novel extolling the virtues of capitalism and individualism. “The thing about Rex is, he’s got this big Texas aw-shucks thing going on,” a Russia expert who knows Tillerson told me. You think he’s not the smartest guy in the room. He’s not the dominant male. But, after a while, he owns all your assets.”
Partnership at Breaking Point
It was through a Boy Scouts connection that he was chosen to be Secretary of State. From 2010 to 2012, Tillerson was the national president of the Boy Scouts of America, where he sat on the board with Robert M. Gates, the former Defense Secretary for George W. Bush and for Barack Obama. After quarterly meetings, Gates told me, he and Tillerson got together. “We would share a whiskey and talk about the world,” he said. (Exxon also engaged a consulting firm owned by Gates and another prominent Republican, Condoleezza Rice.)
After the election, Michael Flynn, a Trump adviser, asked Gates to meet the President-elect in New York. The introduction was tense—Gates had written that Trump was unfit to be President—but Trump grew comfortable enough to ask Gates to suggest a nominee for Secretary of State. “I wanted to recommend someone who would be good—and who Trump would accept,” Gates told me. At the time, the leading contenders were John Bolton, a neoconservative ideologue and a former Ambassador to the U.N., and Newt Gingrich, the former Speaker of the House. Gates suggested Tillerson, and not long afterward Condoleezza Rice spoke with Vice-President-elect Mike Pence to add her support for Tillerson. “This President doesn’t trust the foreign-policy establishment,” Rice told me. “A businessman who has made big oil deals—we thought that would be something that Trump would be comfortable with.”
When Tillerson got a call from Pence, asking him to come to New York, he told friends that the President-elect likely wanted advice about foreign affairs. But Steve Bannon, Trump’s former adviser, told me, “They got along right away. Trump offered him the job on the spot.” It was not immediately clear that Tillerson wanted it. At the time, he was four months from retiring, set to receive a retirement package worth about a hundred and eighty million dollars, which would augment a personal fortune of at least three hundred million. He owned two horse and cattle ranches in Texas, where he liked to hunt and ride. (His wife, Renda Tillerson, raises cutting horses, bred to push through herds of cattle.) “He had a great life ahead, right? Ranch. Tons of money. Relax. Laurels to rest on,” a former government official told me. “And all of a sudden this happens. He couldn’t really say no.” In an interview with a conservative Web site, Tillerson alluded to his ambivalence. “I didn’t want this job,” he said. “My wife told me I’m supposed to do this.”
Tillerson’s reservations turned out to be well founded. His tenure, like that of other members of Trump’s Cabinet, has been marked by strife and confusion. As Tillerson has struggled with diplomatic crises in North Korea, Iran, Qatar, and elsewhere, Trump has contradicted and even embarrassed him, usually by emphasizing America’s willingness to use force instead of diplomacy. In a further slight, he has given Jared Kushner, his son-in-law, a broad portfolio of international responsibilities typically reserved for the Secretary of State. Tillerson, for his part, shows little evidence of holding his Commander-in-Chief in high regard. Last July, following Trump’s strangely political and inappropriate speech at the annual Boy Scout Jamboree, Tillerson, according to NBC, was so offended that he was going to resign, until Vice-President Pence, Defense Secretary James Mattis, and the incoming chief of staff, John Kelly, persuaded him to stay. That same month, Mattis reportedly attended a meeting of national-security officials at which Tillerson referred to Trump as a “fucking moron.” Those reports have renewed rumors in Washington that Tillerson will soon resign or be fired. Both sides quickly responded with ritual assurances of fealty. Yet few believe that the relationship between Trump and Tillerson is warm or coöperative, or that it will last long.
Before taking office, Tillerson ran a corporation whose reach and success have few rivals in American history. In government, he has been uncomfortably subordinate to an unpredictable man. “I think running a Fortune 500 company is a whole lot easier than working as a Cabinet official, running foreign policy for the United State government,” a senior Trump Administration official told me. “It’s two different worlds. You cannot be God. The big, dirty secret about Washington is that no one has a lot of power in this town, O.K.? Even the wannabe Machiavellis don’t do well in this town.”
In February, a few weeks after Tillerson was confirmed by the Senate, he visited the Oval Office to introduce the President to a potential deputy, but Trump had something else on his mind. He began fulminating about federal laws that prohibit American businesses from bribing officials overseas; the businesses, he said, were being unfairly penalized.
Tillerson disagreed. When he was an executive with Exxon, he told Trump, he once met with senior officials in Yemen to discuss a deal. At the meeting, Yemen’s oil minister handed him his business card. On the back was written an account number at a Swiss bank. “Five million dollars,” the Minister told him.
“I don’t do that,” Tillerson said. “Exxon doesn’t do that.” If the Yemenis wanted Exxon on the deal, he said, they’d have to play straight. A month later, the Yemenis assented. “Tillerson told Trump that America didn’t need to pay bribes—that we could bring the world up to our own standards,” a source with knowledge of the exchange told me.
At Exxon, Tillerson often dealt with foreign governments, but ethics were typically not the primary concern. When he was named C.E.O., in 2006, the company had eighty thousand employees doing business in almost two hundred countries, and annual revenues that approached four hundred billion dollars, making it richer than many nations. Its political power is similarly far-reaching; heads of state often defer to Exxon in order to secure its coöperation. In the U.S., it spends millions each year on lobbying Congress and the White House, and, through a political-action committee, contributes heavily to candidates, the overwhelming majority of them Republicans.
Tillerson’s predecessor at Exxon was Lee Raymond, who ran the company for thirteen years. Raymond was larger than life: brilliant, relentless, and unsparing toward those he regarded as unworthy. In a business in which it is not uncommon to spend a billion dollars exploring an oil field, only to find that it is not worth the effort, Exxon produced consistent profits. In 1998, Raymond led a merger with Mobil, at that time the largest in history. The company developed a unique culture: spread across the globe, but insular and often resistant to outsiders. “A lot of Exxon’s people come from Texas,” a former employee told me. “And, frankly, they’d be happy to stay in Texas their whole lives.”
Exxon maintained exacting standards for its employees, who tended to be highly paid and highly loyal. “Tillerson was a typical Exxon baby—worked there his whole life,” the former employee told me. “The first rule at Exxon is, your reputation and your company’s reputation—they are one.” During Tillerson’s early career, that reputation was mixed. Raymond publicly derided scientists who posited a link between fossil fuels and climate change, and he spent millions of dollars attempting to discredit them. Exxon was also one of the last major U.S. corporations to ban discrimination against gay and lesbian employees.
When Tillerson took over as C.E.O., he was charged with maintaining Exxon’s profits while improving its public image. To change a company the size of Exxon is no easy task, and Tillerson lacked his predecessor’s charisma. “Raymond was the kind of guy who would visit an oil field and remember the name of a rig worker he’d met there twenty years before,” the former Exxon employee told me. “Tillerson is made of different material. He’s much less folksy.”
An Exxon employee told me, “When he first became C.E.O., people could still stop by his office—‘Hey, Rex, what about this?’ ” Over time, Tillerson grew increasingly isolated, retreating to a cloistered area that employees called the “God pod,” eating lunch in a private dining room, and relying on a few handpicked executives. The employee described Tillerson’s domineering style in briefings: “The management committee would be the handful of guys who run the company with him. But not one of them ever said a word or asked a question. Only Tillerson. The implication was ‘This is my show.’ ”
An Exxon employee told me, “When he first became C.E.O., people could still stop by his office—‘Hey, Rex, what about this?’ ” Over time, Tillerson grew increasingly isolated, retreating to a cloistered area that employees called the “God pod,” eating lunch in a private dining room, and relying on a few handpicked executives. The employee described Tillerson’s domineering style in briefings: “The management committee would be the handful of guys who run the company with him. But not one of them ever said a word or asked a question. Only Tillerson. The implication was ‘This is my show.’ ”
In the oil business, the greatest imperative is discovering new reserves; any company that can’t meet demand risks terminal decline. In search of a competitive advantage, Exxon has established oil platforms in the Arctic Ocean, natural-gas fields in the jungles of Indonesia, and drilling platforms in Iraq’s Euphrates Valley. For a decade before Tillerson assumed the top job, he was in charge of overseas operations, securing new reserves to replace those refined and sold. When he was C.E.O., Exxon’s prospects for large oil discoveries increasingly migrated overseas, often to difficult places. That required negotiating multibillion-dollar deals with sometimes erratic and brutal foreign leaders. “You can’t navigate this world by being some Stetson-wearing simpleton,” the former Exxon employee, who worked in Russia, told me. Tillerson sometimes played the naïve provincial for effect, but he and his company were ruthlessly focussed on achieving their aim.
Last year, before being named Secretary of State, Tillerson made an appearance at the University of Texas, where he was asked about the interplay of Exxon’s global influence and American foreign policy. He suggested that business and politics existed in separate realms. “I’m not here to represent the United States government’s interest,” he told the audience. “I’m not here to defend it, nor am I here to criticize it. That’s not what I do. I’m a businessman.”
In 2002, a year after Congress passed the Patriot Act, a group of Senate investigators wanted to determine whether American banks were complying with the law’s restrictions against money laundering. One of them was Riggs Bank, in Washington, D.C. When the investigators began looking into Riggs’s books, they discovered several accounts, containing hundreds of millions of dollars, linked to Teodoro Obiang Nguema, the dictator of Equatorial Guinea, a tiny African nation with enormous gas and oil reserves. Some of the accounts were receiving deposits from ExxonMobil, which maintained large operations in the country. At the time, Tillerson was Exxon’s Senior Vice-President.
Since the 1990’s, when oil and gas were discovered in Equatorial Guinea, it has been one of the world’s most corrupt and undemocratic nations, where dissidents are routinely jailed and tortured. Obiang, who came to power in 1979, oversaw the awarding of all the country’s oil contracts. He is estimated to have a fortune of at least six hundred million dollars, while most of his citizens live on less than two dollars a day. His son is notorious for flagrant displays of wealth; he owned a thirty-million-dollar mansion in Malibu (later confiscated by American officials) and more than a million dollars’ worth of Michael Jackson memorabilia.
In some cases, the Senate investigators found, Exxon wired money directly to offshore bank accounts that Obiang controlled. In others, money was carried to the bank in suitcases containing millions of dollars in shrink-wrapped bundles. Exxon also contributed to a fund, controlled by Obiang, to send the children of high-ranking government officials to study in the United States.
Exxon officials told the investigators that the payments were made not to acquire oil concessions but to pay for a variety of services, such as security and catering, that Exxon needed in order to operate in Equatorial Guinea. The company had no choice, they said, since Obiang’s family had monopolies on these services. Elise Bean, a former Senate investigator who worked on the case, told me, “It was a wonderful example of paying someone off without paying them off.”
The discoveries helped prompt senators to draw up legislation requiring American resource companies to disclose any payments to foreign governments. According to the bill’s sponsors, the United States had an interest in promoting good governance abroad. “Corruption is a real problem for American foreign policy,” a former Senate aide who drafted the bill told me. Under the legislation, companies would also be required to disclose domestic payments, including taxes paid to the U.S. government, something Exxon has never done.
For years, as Exxon and others in the industry conducted a concerted lobbying effort against the legislation, Congress delayed acting on it. Then, in 2010, following the financial crisis, language calling for a new disclosure regulation, Rule 1504, was included in the Dodd-Frank legislation, which imposed reforms on banks and other financial institutions. Tillerson, as the C.E.O. of Exxon, went to Capitol Hill to argue against the rule, and met with one of the senators who supported it. According to a source with knowledge of the meeting, Tillerson said that if Exxon had to disclose payments to foreign governments it would make many of those governments unhappy—especially that of Russia, where Exxon was involved in multibillion-dollar projects. The senator refused to drop the rule, and Tillerson became visibly agitated. (Tillerson denies this.) “He got red-faced angry,” the source recalled. “He lifted out of his chair in anger. My impression was that he was not used to people with different views.”
After years of wrangling, Rule 1504 was approved, and scheduled to go into effect on January 1, 2017. Following Trump’s election, however, the Republican-controlled Congress singled out a number of regulations for repeal, Rule 1504 among them. But Congress waited until after Tillerson’s confirmation hearing to include the rule in repeal legislation; Tillerson was not asked about it at the hearing. On February 1st, with Exxon lobbyists on the Hill to push Congress, the House voted to rescind Rule 1504, and the Senate quickly did the same. Almost exactly an hour later, Tillerson was confirmed as Secretary of State.
In November, 2013, Tillerson travelled to Washington, D.C., to meet with Nuri al-Maliki, the Prime Minister of Iraq. Maliki was hoping to persuade Tillerson to change his mind about a sensitive political matter. Exxon was then negotiating a multibillion-dollar deal with the government of Iraqi Kurdistan, a semi-autonomous region in the northern part of the country, which has long sought independence. Under the deal, Exxon would explore for oil in some eight hundred and forty thousand acres, potentially providing the Kurds with a steady stream of revenue that was independent of the government in Baghdad. In Maliki’s view, giving the Kurds their own revenue would hasten a breakup of the country.
Maliki was not alone in objecting; President Obama opposed the deal, and his aides had prevailed upon Exxon executives to drop the Kurdish project. “We were concerned that this would further embolden the Kurds to strike out on their own,” Tony Blinken, Obama’s deputy national-security adviser at the time, told me.
The meeting, held at the Willard Hotel, ended in acrimony. Exxon had previously made an agreement with Maliki to undertake two drilling projects in southern Iraq, and Maliki, a former dissident and guerrilla fighter, threatened to cancel them if Exxon pursued the Kurdish deal. Tillerson refused. Maliki argued bluntly, “You’re dividing the country. You’re undermining our constitution!” But Tillerson held firm. “It was one of the worst meetings of my career,” a senior Iraqi official who was in attendance said. In the end, Exxon made the Kurdish deal.
Determined to find new reserves, Tillerson demonstrated on several occasions that he was willing to engage in deals that were contrary to the foreign policy of the United States. The most intense conflicts arose when Exxon tried to do business in countries where the U.S. had imposed economic sanctions. According to senators and aides, and to documents filed with Congress, Exxon lobbied the U.S. government extensively to relax sanctions on Iran, which were designed to curtail its nuclear-weapons program. Exxon was also a member of USA Engage, a group that lobbied against the sanctions.
Asked about the sanctions at his confirmation hearing, Tillerson said that he did not “personally” lobby against the legislation, and, “to my knowledge,” neither did Exxon. The senators—Democrats and even some Republicans—were incredulous. “I have four different lobbying reports totalling millions of dollars, as required by the Lobbying Disclosure Act, that list ExxonMobil’s lobbying activities on four specific pieces of legislation authorizing sanctions,” Robert Menendez, a Democrat from New Jersey, said. “Now, I know you’re new to this, but it’s pretty clear.”
The senators also inquired about a company called Infinitum, a European subsidiary of Exxon operated jointly with Royal Dutch Shell, which, from 2003 to 2005, sold fifty-five million dollars’ worth of oil additives to Iran, Syria, and Sudan, all of which were under American sanctions. (At the time, sales by foreign subsidiaries were permitted.) Although Tillerson was then in charge of Exxon’s overseas operations, he told the senators, “I don’t recall that incident.”
Chris Murphy, a Democrat from Connecticut, asked Tillerson, “Was there any country in the world whose record of civil rights was so horrible, or whose conduct so directly threatened global security or U.S. national-security interests, that Exxon wouldn’t do business with it?”
Tillerson’s answer seemed unconcerned with ethics. “The standard that is applied is, first, Is it legal?” he said. “Does it violate any of the laws of the United States to conduct business in a particular country? Then, beyond that, it goes to the question of the country itself. Do they honor contract sanctity?” The Senate voted to confirm Tillerson, but with forty-three votes against—more opposition than any other Secretary of State had faced in fifty years.
In 2013, at a ceremony in Moscow, President Vladimir Putin affixed a small blue pin to Tillerson’s lapel, signifying his membership in Russia’s Order of Friendship. For Tillerson, it was evidence of a connection that he had spent nearly two decades establishing. In Tillerson’s talk at the University of Texas, he noted that he had a “very close” relationship with Putin. “I don’t agree with everything he’s doing,” he said. “But he understands that I’m a businessman.”
Tillerson’s work in Russia began in the early 90’s, when Exxon, in partnership with Rosneft, a state-owned oil firm, won a multibillion-dollar contract to develop a natural-gas field off Sakhalin Island, in the country’s remote eastern territory. At the time, Tillerson was in charge of Exxon’s operations in Russia and in the Caspian Sea.
Exxon was one of several Western oil companies trying to exploit Russia’s vast oil and gas reserves. As Putin saw it, Exxon offered unparalleled expertise in tapping deposits in hard-to-reach places. Equally important to the Russians, it offered access to the highest echelons of American power. “They think the C.E.O. of Exxon can control anything,” a former senior American diplomat who worked in Russia told me.
In 2006, though, the price of oil was rising dramatically, and Russian officials wanted a greater share of profits. Putin’s government and its allies began to make trouble for foreign oil companies. In another large project off Sakhalin Island, a joint venture of Royal Dutch Shell and the state-owned company Gazprom, Shell was forced to sell half of its share, at a loss of billions of dollars.
Not long afterward, Gazprom demanded that Exxon abandon plans to export natural gas from the Sakhalin field to China. Exxon executives feared that the demand was a prelude to another takeover, but they refused to be intimidated. They publicly warned the Russian government against violating their contract. “Exxon, because they’re so big, they have this swagger,” a second former senior American diplomat who worked in Russia recalled. “They told the Russians, Fuck you. And the Russians backed off.”
According to several people with knowledge of the Russian oil industry, the tug-of-war over Sakhalin marked the start of the relationship between Tillerson and Igor Sechin, the president of Rosneft; Exxon’s representative in Russia owned a weekend house outside Moscow that was next door to Sechin’s, and Tillerson liked to visit when he was in town. Sechin, a close associate of Putin, was a former translator for the Soviet military in Angola, but he found that he had chemistry with the Boy Scout from Texas. “Sechin wants to be the next Rex Tillerson, the head of the world’s biggest oil company,” Konstantin von Eggert, an executive for Exxon in Russia, told me. “Tillerson is very confident. He’s very tough. The Russians respected that.” At one point, Tillerson took Sechin on a tour of New York, including a stop for caviar, with Putin, at the upscale restaurant Per Se. (When Sechin was later barred from travelling to the U.S., he joked that he regretted missing the opportunity “to ride around the United States on a motorcycle with Rex Tillerson.”)
Still, both Americans and Russians told me that Tillerson’s relationships with Sechin and Putin were purely transactional. “Tillerson courted Sechin,” a former American diplomat with deep experience in Russia told me. “He only got in to see Putin when Sechin needed him to—as a way of fluffing Tillerson.” At a ceremony in Russia, Putin and Tillerson toasted the signing of the deal. “I wish you great success,” Putin said, as Tillerson smiled and raised his champagne flute. As Tillerson’s relationship with Putin developed, American diplomats hoped that he would share his impressions of the powerful Russians he encountered. Tillerson did not .“I don’t think he thought it was important to see us,” a former senior American official who worked in Russia told me.
In 2011, Exxon signed a deal to explore for oil in the Kara Sea, a forbidding Arctic region that may contain hundreds of billions of dollars’ worth of oil. The agreement also allowed Rosneft to carry out joint projects with Exxon in the United States—an unusual opportunity for a relatively unsophisticated company.
In early 2014, Russian troops invaded the Crimean Peninsula, in Ukraine, claiming that it was historically Russian territory. The move was denounced worldwide, and the Obama Administration moved to impose economic penalties on Putin’s government. Among these was a ban on oil exploration, which meant that Exxon had to shut down its operations in the Kara Sea. Exxon lobbied against the sanctions; public records show that Tillerson visited the White House five times in 2013 and 2014, twice to see Obama. “Of all the companies we dealt with, Exxon was by far the most resistant to sanctions,” a former American official who worked on the issue said. “They were used to people caving in, used to bigfooting people.”
In the end, Obama imposed the sanctions. “The Kremlin was very much surprised,” von Eggert told me. “The idea that the American government could kick Exxon around was very novel to them.” Exxon asked for an extension, to wind down its exploration in the Kara Sea; its executives told the White House that, without more time, the remnants of their operation could damage the environment or be seized by the Russian state. Despite objections from State Department officials, the Treasury Department granted the reprieve. On the final day of work, Exxon announced that it had discovered oil. “We were pretty pissed off,” a former Obama Administration official told me. “They were obviously trying to roll us, to get more time.”
In addition to imposing sanctions on the Russian government, the U.S. targeted Sechin and other senior officials close to Putin. Yet the relationship with Exxon continued. Company officials made a number of oil deals with Sechin, and, after Tillerson’s confirmation, applied for a waiver to the sanctions that prevented work in the Kara Sea. The Treasury Department subsequently fined Exxon two million dollars for the deals it made with Sechin, and denied its request for a waiver. “I was very pleased about that,” a former U.S. official who worked on Russia sanctions told me. “The integrity of the people at Treasury held up. It didn’t matter that Tillerson was Secretary of State.”
Ever since the 1970’s, when scientists began asserting that the burning of fossil fuels was causing the planet to warm, Exxon has been in the vanguard of American corporations attempting to undermine their conclusions. According to public records, Exxon gave tens of millions of dollars to organizations, like the Competitive Enterprise Institute, that challenged the science. Records show that, even while Exxon was publicly denying that the climate was changing, its own scientists had concluded that it was. Naomi Oreskes, a professor of the history of science at Harvard, examined nineteen papers and reports on climate change produced by Exxon scientists between 1999 and 2004, and compared them with a series of essays from Exxon that were periodically published as advertisements in the Times.“Exxon’s scientists were very good,” Oreskes told me. “At the same time that they were telling their bosses that the climate was warming, Exxon was taking ads out in the Times saying that the science was wrong.”
Exxon has recently come under scrutiny for claims it made to its shareholders about how it was responding to climate change. In 2014, the company published a report saying that it had begun to add a “proxy cost” to all of its activities—a notional tax, in anticipation of increased environmental regulations, which sometimes amounted to as much as eighty dollars per ton of carbon emissions. Such an added cost could affect crucial decisions about whether projects were profitable. At a conference with shareholders two years later, Tillerson said, “We impose that cost in all of our investment decisions, our operating decisions, our business plans.”
In 2015, Eric Schneiderman, New York’s Attorney General, began an investigation into whether Exxon’s accounting related to climate change was fraudulent. The gist of the argument is that Tillerson’s assurances to shareholders were fictitious, or at least greatly exaggerated. The actual additional cost that Exxon was figuring into its business decisions was much lower, Schneiderman claimed. “Exxon’s proxy-cost risk-management process may be a sham,” John Oleske, an attorney in Schneiderman’s office, wrote in one court filing.
A consultant who has worked with Exxon for many years told me that Tillerson and the company’s senior executives viewed the investigation as a baseless intrusion into their business. “The law Schneiderman is investigating Exxon under seems to have been created so attorneys general of New York could run for governor,” the consultant told me. “I can’t tell you how angry they are.”
Exxon has fought the investigation relentlessly, taking the unusual step of suing Schneiderman in federal court, on the ground that his suit violated the First Amendment. “The coercive machinery of law enforcement should not be used to limit debate on public policy,” lawyers for Exxon said.
In the thousands of documents that Exxon has turned over, two things stand out. The first is that Tillerson, when he was C.E.O., maintained an Exxon e-mail account under an alias, Wayne Tracker. Schneiderman’s lawyers found dozens of e-mails from the account, which, they say, Tillerson used to send messages about the risks posed by climate change. In court filings, Exxon lawyers said that the Wayne Tracker account was set up because Tillerson’s original account was flooded with e-mails sent by “activists.” When investigators asked Exxon to turn over other e-mails from the account, employees claimed that they had been inadvertently destroyed.
The second discovery was a document that Schneiderman’s lawyers believe helps prove their claims about Exxon’s accounting. According to court filings, Jason Iwanika, a supervisor for Imperial Oil, an Exxon subsidiary in Canada, asked his superiors in the United States whether he should apply Exxon’s proxy cost to a project. “What is the guidance?” he wrote. According to Schneiderman, Iwanika’s Exxon supervisors told him to use a smaller tax, suggested by the Canadian government.
The suit will likely take years to resolve, but it will undoubtedly form part of the calculations about Tillerson’s legacy at Exxon. At this point, his legacy seems mixed. Exxon is one of the largest and most consistently profitable corporations in the world, and will continue to be as long as fossil fuels are a dominant source of energy. But, since 2010, its stock price has mostly been below that of Chevron, which would have seemed unimaginable in Lee Raymond’s time. Tillerson charted Exxon’s future based on the idea that, as developing economies matured, the demand for fossil fuels would continue growing for decades. But, as the threat of climate change increases and the prices of alternative energy decline, Exxon has been slow to respond. In 2009, Tillerson led an investment in oil shale, purchasing a company called XTO, in a deal valued at thirty-six billion dollars. The effort is widely seen as ill-considered and belated. “Exxon is going to be paying for that for a long time,” a former Exxon executive told me.
During Tillerson’s time as C.E.O., Exxon stopped funding some of the most aggressive anti-climate-change groups. At his confirmation hearing, he said that he “came to the conclusion a few years ago that the risk of climate change does exist, and that the consequences of it could be serious enough that action should be taken.” Tillerson added that he thought our ability to measure the effect of fossil fuels on the climate is “very limited.” But, when asked if he supported the Paris climate accords, he praised them. “I think we’re better served by being at that table than leaving that table,” he said.
On the issue of climate change, at least, Tillerson had managed to improve his company’s public image. But, as Secretary of State, that stance has done him little good. In June, Trump backed out of the Paris accords, despite Tillerson’s support for them. “We don’t want other leaders and other countries laughing at us anymore,” Trump said. “And they won’t be.”
When the United States emerged from the ruins of the Second World War as the world’s richest and most powerful country, its diplomats were determined to avoid another global catastrophe. Dean Acheson, the Secretary of State under President Truman and one of the principal architects of the postwar international order, wrote later, “The enormity of the task . . . was to create a world out of chaos.” Their idea was to devise political and economic arrangements that would bind the world together through free trade and encourage the spread of Western-style liberal democracy.
In the past seven decades, this system has grown into a web of relationships, treaties, and institutions that span the globe and touch every aspect of daily life, from the protection of human rights to the conduct of global trade. Such mundane but essential concerns as the flight paths of airliners, the transfer of patents, and the dumping of waste in oceans—even the number of bluefin tuna that can be taken from the sea—are governed by international agreements.
The system came to have many crucial components—NATO, the European Union, the United Nations—but its indispensable member was the United States. The U.S. has given billions of dollars to help expand trade, fight disease, and foster the growth of democracy. It was largely through American leadership that the wars in Bosnia and Kosovo ended, that Saddam Hussein’s invasion of Kuwait was reversed, that the wars between Israel and Egypt and between Israel and Jordan were brought to a close. (The American wars in Vietnam and Iraq were notable because they were carried out to a great extent in defiance of allies and international organizations.) The postwar system, for all its injustices and hypocrisies, has achieved the principal purpose that Acheson and others set out for it: the world has not fallen into a third enveloping war.
Daniel Kurtzer, a former U.S. Ambassador to Israel and to Egypt, told me that in his time abroad the idea of American global leadership was so pervasive that he never saw it seriously challenged. “Whenever I would walk into a room filled with other ambassadors, everyone would sit down and wait for me to speak,” Kurtzer told me. “They didn’t always agree, but they wanted to know what the United States was going to do.”
During the 2016 campaign, Trump struck a fervently nationalistic tone. For years, he said, the United States has protected ungrateful allies who were freeloading on America’s labors. He questioned the value of NATO, suggested that the U.S. might abandon such allies as Japan and South Korea, and promised to negate some of the country’s longest-standing trade agreements. Trump presented a world view in which the interests of the United States were much more narrowly defined; in which only enemies that attack us directly, such as ISIS, merited a military response; and in which international agreements had to show more tangible benefits if the U.S. was to remain a party to them. Trump was describing not just an abdication of global leadership but an America more concerned with asserting its prerogatives than with maintaining long-term friendships.
Tillerson’s own vision—apart from a commitment to efficiency—is less clear. Unlike his predecessors, he has not given a major foreign-policy address in which he has outlined a world view. The few statements that he has made sound remarkably like those of Secretaries past: he has reaffirmed America’s historical commitments, whether to NATO or the U.N. or Japan. “America has been indispensable in providing the stability to prevent another world war, increase global prosperity, and encourage the expansion of liberty,” he said at his confirmation hearing.
Since then, he has given a handful of television interviews, but, aside from a few brief conversations with journalists, he has not spoken to a reporter for a newspaper or a magazine. Early in his term, he moved to reduce the number of journalists accompanying him on trips, at one point requesting a plane too small to accommodate reporters. In May, after Trump’s summit in Saudi Arabia, Tillerson called a press conference for the foreign press, but excluded American journalists.
Even in his public role, Tillerson has conducted himself more like a businessman making deals. “If you’re a senior executive at Exxon, any day you wake up and you’re not in the newspapers, that’s a good day,” a former senior American official who knows Tillerson told me. “I don’t think he’s used to operating in the public glare.” He has effectively abandoned an essential part of the top diplomat’s role: that of explaining his actions, and the world, to the American public.
On Tillerson’s first day as Secretary of State, he appeared in the lobby auditorium of the nondescript building, on C Street, in Washington, that houses the State Department, and spoke to a crowd of employees. He started with a joke: “We apologize for being late. It seemed that at this year’s prayer breakfast people felt the need to pray a little longer.” The line elicited a rush of laughter, and Tillerson got applause as he went on.
Much of the enthusiasm fell away in a matter of days, when Tillerson told staff members that he intended to cut State’s budget by nearly a third, possibly eliminating two thousand diplomatic jobs and billions of dollars in foreign aid. When the White House announced a ban on travellers from seven Muslim-majority countries, nine hundred State Department employees signed a petition protesting it. “I think it gave him the impression that he was heading into enemy territory,” a retired senior diplomat told me. Tillerson responded with a series of moves that, to many veteran diplomats, suggested a disdain for the profession itself. Indeed, as time went on, Tillerson appeared to be one of several Trump Cabinet secretaries, like Scott Pruitt, at the Environmental Protection Agency, who were essentially hostile to the departments that they were heading.
Tom Countryman, like many senior officials I spoke to, was demoralized by Trump’s election, but he decided to carry on until his replacement was named. Countryman entered the Foreign Service in 1982, and served in Egypt, Tunisia, Italy, Yugoslavia, Greece, and the Pentagon. Under President Obama, he was the Assistant Secretary of State for International Security and Nonproliferation. In the crazy-quilt makeup of the modern State Department, Countryman was one of twenty-three Assistant Secretaries, each appointed by the President and confirmed by the Senate. Some Assistant Secretaries are political appointees, but most, like Countryman, are career diplomats.
In late January, he boarded a plane to attend two conferences overseas. At the first, in Jordan, he would speak with representatives of Russia, Great Britain, and the Arab League about the creation of a nuclear-free zone in the Middle East. When it was over, he would fly to Rome, to discuss nuclear-nonproliferation efforts at a conference of the G-7 countries, a group that includes most of the world’s largest economies.
As he was getting ready to leave Jordan, he got an e-mail from Arnie Chacón, the director general of the Foreign Service, asking him to call. Countryman, as is customary for Assistant Secretaries, had submitted a letter of resignation, which the White House could act on at will. Chacón told him that the White House had accepted his resignation, along with those of four other Assistant Secretaries and an Under-Secretary of State. Countryman asked who his replacement was; he was told there was none. “We agreed that it would be better if I just came home,” Countryman told me. So he flew back, and a staff member of the U.S. Embassy in Rome attended the conference in his place. With no new post on offer, Countryman decided to retire. Chacón was dismissed not long afterward.
At the start of every Presidency, most senior officials at the State Department, and most ambassadors in the highest-profile postings, resign, meaning that every new Secretary of State has to fill a large number of vacancies. But the number during this transition has been unusually high; according to several former State Department officials, at least three hundred career diplomats have departed, including most of the upper tier. In the months after Tillerson took over, scores of senior diplomats retired, quit, or requested sabbaticals. Few were fired outright; as civil servants, they retained substantial protections against being terminated. Some left after being told that their jobs were to be eliminated and others after they were removed from their posts without being reassigned. Some were unwilling to serve in a Trump Administration. Others concluded that neither Tillerson nor Trump understood the role of diplomacy in American foreign policy.
Typical of those who have left is Victoria Nuland, a thirty-two-year veteran who spent her formative years in Moscow during the collapse of the Soviet Union. Nuland speaks Russian and French; she served in Vice-President Dick Cheney’s office and worked for Secretary of State James Baker under George H. W. Bush; her last job was as Obama’s Assistant Secretary of State for European and Eurasian Affairs. Nuland told me that she decided to leave because she could not accommodate herself to the President’s views on Russia. “Trump is a hundred and eighty degrees off what I believe,” Nuland said. “What am I going to do, turn on a dime?”
It appears that many of the departed employees will not be replaced. At the moment, forty-eight ambassadorships are vacant. Twenty-one of the twenty-three Assistant Secretary positions, the most senior stations in diplomatic service, are either vacant or occupied by provisional employees, because Congress has not confirmed appointees to fill them. In August, Tom Malinowski, an Assistant Secretary of State in the Obama Administration, described to me a visit to State’s headquarters, in Foggy Bottom: “There’s furniture stacked up in the hallways, a lot of empty offices. The place empties out at 4 P.M. The morale is completely broken.”
As at Exxon, Tillerson has surrounded himself with a small group of trusted employees: a handful of experienced foreign-policy professionals and a chief of staff, Margaret Peterlin, who is said to wield extraordinary influence. But he has had a difficult time finding anyone else to join him. Much of the Republican foreign-policy establishment opposed Trump’s candidacy; dozens of former officials who served in senior positions in previous Administrations spoke against Trump or signed public proclamations declaring him unfit for office. According to Trump officials, those candidates have been blackballed.
Even when Tillerson finds suitable candidates, he has struggled to get them approved by the White House. One official said that as many as a dozen people in the White House have veto power. Steve Bannon told me that he had personally scuttled Tillerson’s choice of Susan Thornton to be Assistant Secretary of State for East Asian and Pacific Affairs. Thornton is a career diplomat, and a fluent speaker of Chinese and Russian, but in Bannon’s view she had not been tough enough on China’s trade policies. “She’s not hawkish enough toward China,” he told me. “I had to throw myself in front of her.”
Just before the Inauguration, Tillerson chose Elliott Abrams to be his Deputy Secretary of State. Abrams, a veteran of the Reagan and George W. Bush Administrations, had publicly criticized Trump, but had not signed any of the Republican proclamations against him. When Tillerson brought Abrams to the Oval Office to meet Trump, the encounter went smoothly. “I thought everything was set,” Abrams told me. The next day, Tillerson called to tell Abrams that his nomination had been dropped. “Trump had seen Rand Paul denounce me on Fox News,” Abrams said. “That was it.”
Tillerson’s proposed budget cuts would considerably reduce the number of American diplomats working abroad, possibly by thousands. In addition, Tillerson suspended the hiring of new Foreign Service officers, including many who had accepted fellowships in the expectation of a job. (He has since allowed two Foreign Service classes to move forward.) “These cuts will decimate the Foreign Service,” Nick Burns, a former Under-Secretary of State, told me. “The Foreign Service is a jewel of the United States. There is no other institution in our government with such deep knowledge of the history, culture, language, and politics of the rest of the world.”
Tillerson’s aides insist that Mick Mulvaney, the President’s Budget Director, initially asked for still deeper cuts, and that Tillerson fought to limit them. “I thought we were going to end up being the Black Knight in ‘Monty Python and the Holy Grail’—no arms and no legs, a stump in the middle of the road yelling at people,” one aide told me. “But the Secretary was able to scratch back some of that money.” When I asked Tillerson about the cuts, he maintained that they could be made without harming America’s diplomatic efforts or its standing in the world. He said that the work of some State Department programs was duplicated by the Pentagon and by other federal agencies. And he suggested that State had been so lavishly funded for so many years that its employees had lost the ability to make difficult choices. “We’ll do the most we can do with the money that’s appropriated to us,” he said. “I want to spend it wisely.”
Some of Tillerson’s supporters in State argue that claims of wrecking the diplomatic corps have been exaggerated. Kurt Volker, the special representative for Ukraine negotiations, told me that he was summarily dismissed from a senior job by the Obama Administration in 2008, much as the political appointees are being dismissed now. “No one will tell you this, but there’s a lot of dead wood around here,” he said. Others suggested that Tillerson was bound to run into opposition, because the majority of diplomats were politically liberal. “I think a lot of the people had it out for him from Day One,” a longtime diplomat in Asia told me.
A number of veteran diplomats conceded that there were areas at State that were unnecessary. The best example, they said, was the sixty-six special envoys and representatives, created at various times by Congress and the White House—essentially, senior diplomats given ambassadorial rank. There are special envoys who cover North Korea, Afghanistan, and Guantánamo, but their jobs overlap substantially with those of ambassadors and Assistant Secretaries. “No one, starting over, would design something like this,” Bill Burns, a former Deputy Secretary of State, said.
But what Tillerson has proposed is far more ambitious than eliminating a few dozen jobs. He has suggested deep cuts for humanitarian aid and economic development—the whole range of initiatives designed to alleviate suffering and to advance America’s interests. His budget called for drastically reducing or completely dissolving programs to help refugees, deliver aid to countries hit by disaster, support fledgling democratic movements, protect women’s groups, and fight the spread of H.I.V. and AIDS. The proposed cuts to such foreign-aid programs total some $6.6 billion.
Foreign-policy experts, including many Republican senators, rejected Tillerson’s proposal as impractical. “It was a total waste of time to go through the line items and even discuss them, because it’s not what is going to occur,” Bob Corker, a Republican and the chairman of the Senate Foreign Relations Committee, told Tillerson at a hearing. Several current and former diplomats told me that what was happening at the State Department—the unfilled ambassadorships, the conferences not attended, the foreign aid not given—amounted to a slow degradation of America’s global leadership. “My fundamental concern is that he is so decimating the senior levels of the Foreign Service that there’s no one to show up at meetings where the U.S. needs to be represented,” a retired diplomat told me. “Whether it’s the oceans, the environment, science, human rights, broadband assignments, drugs and thugs, civil aviation—it’s a huge range of issues on which there are countless treaties and agreements that all require management. And, if we are not there, things will start to fall apart.”
In small ways, the breakdown is already showing. The Secretary of State’s office has typically sent guidance to diplomats on how to speak publicly about important decisions. According to the longtime diplomat in Asia, after the withdrawal from the Paris accords the State Department sent paraphrases of Trump’s speech denouncing the accords. “The guidance we got was juvenile,” the diplomat said. (A more thorough memo came twenty-four hours later.)
The larger effects may become apparent in a moment of crisis, or they may develop only in the long term. “You look out over the next ten, twenty, maybe thirty years, and the United States is still going to be the preëminent power in the world,” Bill Burns told me. “We can shape things, or wait to get shaped by China and everybody else. What worries me about the Trump people is that they’re going to miss the moment. There are sins of commission and sins of omission. And sins of omission—not taking advantage of the moment—cost you over time.” A number of diplomats pointed to the example of the Trans-Pacific Partnership, a twelve-nation trade deal that Obama officials negotiated in order to develop a regional counterweight to Chinese influence. Trump withdrew from the T.P.P. soon after taking office, saying that he had done a “great thing for the American worker.”
As the Trump Administration pushed for cuts in diplomacy, it was proposing to increase defense spending by fifty-four billion dollars—roughly equal to the entire budget of the State Department. The choice seems to reflect a sense that force is more valuable than diplomacy in international affairs, and that other countries, even allies, respond better to threats than to persuasion. “All of our tools right now are military,” a former senior official in the Obama Administration told me. “When all of your tools are military, those are the tools you reach for.”
Obama regards the deal to constrain Iran’s nuclear program as one of the capstones of his Presidency—and his aides believe that the agreement in all likelihood prevented a war. During the campaign, Trump criticized the agreement as “the dumbest deal” in history, and his Administration has raised the possibility of backing out of it altogether. At a meeting of the International Atomic Energy Agency, held this summer in Vienna, Tillerson’s aides aggressively questioned the Iranians about cheating on the deal. “We took the I.A.E.A. to places it had never been before,’’ a senior aide to Tillerson said.
In my talk with Tillerson, he suggested that the agreement represented only a small part of the relationship with Iran, but was worth retaining. “I think it has usefulness in terms of holding Iran to the limitations—as long as we have very strong enforcement,’’ he said. Trump apparently disagrees. In early October, it was reported that the Administration will refuse to certify Iran’s compliance with the agreement. Such a move would not automatically kill the deal; instead, it would leave it to Congress to decide whether to reimpose sanctions on Iran that were lifted as part of the agreement. Some former officials from the Obama Administration predict that, even if Congress decides against doing so, European countries will be alarmed by the possibility of new sanctions, and begin to cancel investments in Iran. “Death by a thousand cuts,” one official told me. “I’ve always thought that is the most likely way they kill the nuclear deal.”
Trump’s apparent refusal to reaffirm the agreement is part of a more aggressive strategy to confront Iran. Officials in his Administration believe that Obama’s desperation to strike a deal emboldened Iran, which embarked on a campaign of hostile actions across the region, extending its influence to Iraq, Syria, and Lebanon. “We inherited an Iran that is feeling as hegemonic as it has felt in a very long time,” the Tillerson aide told me. “We intend to roll back those gains.” The Administration also hopes to stop Iran from developing ballistic missiles, which would be capable of hitting targets across the region, from Riyadh to Tel Aviv.
But how? At the moment, there appears to be little appetite in either Congress or among our allies in Europe to levy new sanctions on Iran—which, after all, appears to be adhering to the deal. Trump officials were reluctant to describe the new strategy, but some suggested that an expanded program of covert action may be in the works. “It’s classified,” the Tillerson aide said. “I can only tell you that we’re taking a dramatically different approach to Iran.”
The other challenge is North Korea. On its face, the confrontation seems like a prelude to war: North Korea’s leaders have vowed to develop a nuclear missile capable of hitting the United States, and Trump has vowed to stop them, by force if necessary.
Tillerson faces this crisis with a diminished diplomatic corps. Nine months into Trump’s term, he still has not named an Assistant Secretary for East Asian and Pacific Affairs, and no Ambassador to South Korea has been confirmed. Susan Thornton, despite being rejected by the White House, has stayed on as the acting Assistant Secretary. An American official who visited northern Asia told me that some of the officials in the region who were most concerned with the crisis had largely stopped dealing with the U.S. Embassy, saying that it no longer seemed relevant. One Asian official said, “Why call the Embassy when the only thing that matters is what the President tweets?”
According to the senior Administration official, Nikki Haley, the U.N. Ambassador, is seen as the most effective diplomat in the crisis; twice she has rallied unanimous support for tighter sanctions at the U.N. Security Council, despite the members’ reluctance to discomfit China. “Nikki’s getting it done,” the official told me. “She’s bringing home the bacon.” This has apparently fed an enmity between Tillerson and Haley. “Rex hates her,” the official said. “He fucking hates her.”
In March, Tillerson made his first visit as Secretary of State to Beijing, where he tried to persuade the Chinese leader, Xi Jinping, to force North Korea to acquiesce by squeezing its economy. According to an official who was briefed on the meeting, the encounter was uneventful, until the end, when Tillerson made a striking diplomatic slip: he told the Chinese that he was hoping for a relationship with “no conflict, no confrontation, mutual respect, and win-win coöperation.” Chinese officials saw it as a recognition of their country’s equal status in the Pacific—or, more cynically, as an admission that the U.S. would not resist its aggressive moves in the region. “Tillerson’s words came as a surprise, to the delight of many in Beijing but to the dismay of some in Washington,” China Daily, a Communist Party newspaper, reported. The slip did not go unnoticed among American observers. “He had not adequately consulted the experts when he went into those talks,” the senior Administration official told me.
Since then, though, Tillerson and others in the Administration have maintained pressure on the Chinese. A South Korean official, who spoke on the condition of anonymity, praised the approach. “No previous Administration has been willing to put the relationship with China at risk. Trump has. We think that’s good.” A former senior official in the Obama Administration also endorsed the idea of focussing on China. “Our policy failed,” he said. “My impression is that Tillerson is getting North Korea policy about right.”
And yet, as Tillerson has tried to persuade America’s allies in Asia to help resolve the crisis peacefully, he has been repeatedly undercut by his boss. Trump has threatened to “totally destroy” the North Korean regime and even to penalize South Korea—a crucial ally in resolving the crisis—for its trade practices. In late September, as Tillerson returned from a trip to China, he disclosed that he was in direct communication with the government of Kim Jong Un. The next day, Trump tweeted, “I told Rex Tillerson, our wonderful Secretary of State, that he is wasting his time trying to negotiate with Little Rocket Man.” He added, “Save your energy Rex, we’ll do what has to be done!” When I asked Tillerson about Trump’s warlike comments, he demurred. “The President may say something that I didn’t expect him to say,” he told me. “If the policy is not robust enough to handle that, then we probably had a fragile policy to begin with.”
The Administration believes that the prospect of a nuclear-armed North Korea is worse than the prospect of war. The North Koreans, similarly, have suggested that they prefer war to giving up their nukes. If Tillerson and his fellow-diplomats want to avert a conflict, they must forge a compromise between Trump and Kim Jong Un—who have seemed, at least in their public rhetoric, disinclined to compromise. Tillerson told me that he hoped a diplomatic solution could be found. But he added, “In the United States, diplomacy has always been backed up by a very strong military posture. As I said to the state councillor of China, ‘If you and I don’t solve this, these two guys get to fight. And we will fight.’ ”
In early October, a few hours after NBC reported that Tillerson had considered resigning, he appeared in a State Department briefing room to lavish praise on his boss. “President Trump’s foreign-policy goals break the mold of what people traditionally think is achievable on behalf of our country,” he said. “We’re finding new ways to govern that deliver new victories.” Members of the Administration took pains to emphasize the good relations between Tillerson and Trump. A senior official at the State Department told me that they talk several times a week, often several times a day—“All the time.”
But the most significant achievement of Trump’s foreign policy—the tightening of economic sanctions against North Korea—was accomplished largely by Haley. The other major foreign-policy actions—renewing the commitment in Afghanistan, degrading ISIS—have been almost entirely military. For Tillerson, there seems to be a mismatch of means and ends; he has spoken as though the U.S. will remain as engaged in the world as it has been under previous Administrations, while proposing budget cuts that would make it very difficult to do so.
A senior European diplomat, who spoke on the condition of anonymity, told me that the overwhelming perception of American foreign policy among European governments was chaos—that there was no way to know what the Trump Administration wanted to do, whether it was withdrawing from the global scene or just acting unilaterally. The uncertainty was compounded by the fact that there were few people in the White House or the State Department whom they could talk to. “Obama, Kerry—we talked all the time,” the diplomat said. “Tillerson has never taken the initiative to call.”
With hundreds of vacancies at State, the diplomat said, there is no “working level” to sort out problems. The diplomat recalled that some colleagues recently asked Tillerson for help with a national-security issue involving North Africa. Tillerson merely repeated Trump’s language of not getting involved, and so the diplomats went to Haley instead. “Something like that, North Africa—in this kind of Administration, there is not enough political interest,” the diplomat said.
Some observers believe that Tillerson is overwhelmed by the volume of decisions that he and his team have to make. According to current and former diplomats, Tillerson has centralized decision-making so aggressively that he is unable to keep up. A senior Trump Administration official told me, “Where things fall in the cracks is in the area of management and leadership of the organization, and in leveraging the immense amount of expertise in that building.” Why isn’t Tillerson making better use of his people? “I can’t explain it,” the official told me. “I cannot frickin’ explain it.”
Part of the problem is that Tillerson has not entirely given up the perspective of an imperial C.E.O. He rarely meets with legislators, and has sometimes been high-handed with fellow Cabinet members. “It is a fundamentally counterproductive form of hubris,” the official told me. “People who should be easy allies for him, he’s kneecapping them.”
His most crucial relationship, with the President, may be broken beyond repair. In recent weeks, the Washington chatter has intensified about how long Tillerson will remain in the job. Rumors have surfaced about possible replacements, including Mike Pompeo, the C.I.A. director. “Think about it,” one of the aides I spoke to told me. “Tillerson was contemplating his retirement from Exxon, after which he could do whatever he wanted—travel the world, sit on corporate boards. Now he’s got to feel like he’s covered in shit. I can’t imagine this is what he expected.” Another official told me that Tillerson’s sole reason for staying was loyalty to his country: “The only people left around the President are generals and Boy Scouts. They’re doing it out of a sense of duty.”
The essential task of diplomacy remains the same today as it was in Dean Acheson’s time: to make a world out of chaos. The difference, for Tillerson, is that the chaos comes not just from abroad but also from inside the White House. In the popular mythology, the generals and the Eagle Scouts—Tillerson, Mattis, Kelly, and H. R. McMaster, the national-security adviser—can protect the country from Trump’s most impulsive behaviors. But the opposite has proved true: Trump has forced them all to adopt positions that seem at odds with their principles and intentions.
Tillerson confronts an unstable world and an unstable President, who undermines his best efforts to solve problems with diplomacy. Still, he carries on, conceding by his persistence that the best course is to accommodate Trump’s policies while apologizing for his most embarrassing outbursts. At Exxon, Tillerson was less a visionary than a manager of an institution built long before he took over. With Trump, he appears content to manage the decline of the State Department and of America’s influence abroad, in the hope of keeping his boss’s tendency toward entropy and conflict from producing catastrophic results.
In June, shortly after the Administration announced that it was pulling out of the Paris accords, David Rank, the Deputy Ambassador to China, decided to resign, rather than deliver the official notice of withdrawal to the Chinese government. Rank told me that his greatest fear is that the damage done to the State Department, and to the American-led international order, will be too extensive to repair. Reflecting on his three decades as a diplomat, Rank said, “Maintaining our network for foreign relations is hard. It requires constant attention, a lot of people, a lot of work. Sometimes it’s beyond us. But rebuilding it? Not a chance.” ♦
I am sometimes asked what world figure I most want to interview. For me, the answer is obvious: Kim Jong Un. The general impression around the globe continues to be that the North Korean leader is crazy, provocative and unpredictable, but I think that he might well be strategic, smart and utterly rational. Because I am unlikely to get that interview, I have decided to imagine it instead.
Q: Marshal Kim, why do you keep building and testing nuclear weapons and missiles, even though they result in massive, crippling economic sanctions?
A: My nation faces a fundamental challenge — survival. The regime is more threatened than ever before. My forefathers had it easy. The Great Leader, my grandfather, ruled with the support of the world’s other superpower at the time, the Soviet Union, as well as our gigantic neighbor, China. The Dear Leader, my father, still had Beijing’s help for the most part. But today, the Soviet Union is history and China has become more integrated with the Western system. And the sole superpower, the United States, has made it clear that it seeks regime change in my country. And yet, we have survived with our ideology and system intact. How? Because we have built a protection for ourselves in the form of nuclear weapons.
Q: But China still provides you with crucial supplies of food and fuel. Don’t you see it as an ally?
2017 News Maker of The Year–Keeping Trump, Xi, Putin Abe and Moon Jae-in on on their toes
A: China is ruthlessly pragmatic. It supports us for its own selfish interests. It doesn’t want millions of refugees — or a unified Korea on its border that is a larger version of what South Korea is now, with U.S. troops and a treaty alliance. But I believe that China no longer considers us an ally. It has voted to sanction us in the U.N. Security Council. The current president, Xi Jinping, cultivates close relations with South Korea. He has never met with me, the leader of North Korea, something that the leader of China has always done. Meanwhile, he has had about 10 meetings with the last two presidents of South Korea. At the grand celebrations in Beijing two years ago commemorating the 70th anniversary of the end of World War II, he placed the president of Russia and the president of South Korea at his side. In North Korea, we pay a lot of attention to ceremonies and what they signal.
Q: Is that why you seem to go out of your way to embarrass China and Xi specifically?
What does it take for him to sit down and talk since sanctions only strengthens his resolve to pursue the nuclearisation of his country and unify his proud people?
A: We will not be pushed around. We heard that senior officials in China and the United States were discussing whether to encourage a coup in North Korea to get a more pliable ruler. So I’ve taken steps to ensure that this can’t happen. The man in our government closest to the Chinese, who could have arranged such a coup attempt, was my uncle. The man who would have been my natural replacement was my half brother. Both have been liquidated, as have more than 100 disloyal high-level officials.
Q: So will you come to the negotiating table? Will you agree to denuclearization in return for the lifting of sanctions?
A: Yes and no. We will readily come to the table. But we will never give up our arsenal. We’re not stupid. It’s all that is keeping us alive. Look at Saddam Hussein — and we never forget that North Korea was named as part of the “axis of evil” a year before the United States invaded Iraq. Look what happened to Moammar Gaddafi in Libya after he agreed to give up his nuclear weapons program. Look at what’s happening to Iran right now. After Washington signed a deal and the Iranians have been certified to be adhering to it, President Trump now says he’s going to tear it up anyway. Do you think we would be stupid enough to believe American promises after all this? We are a nuclear power. That is not negotiable. We are willing to talk about limits, test bans, freezes — but we would need to be given something in return, and not just money. We need security, in the form of diplomatic recognition by Washington and guarantees of nonaggression from China, Japan and the United States.
Q: Many Americans worry that you will soon have the capacity and the intention to launch missiles at the United States.
A: We will have the capacity. And it serves my purposes to keep you off guard. But why would I strike America and invite a retaliatory counterstrike that would put an end to my regime? Keep in mind, the whole point of this — my entire strategy, all our efforts and the hardships we have borne — is to ensure that my regime and I survive. Why would I risk that? I believe in assassination, not suicide.
The former Prime Minister isreinventing himself as a leader of the Opposition
The Doctor seeks a Return to the House
WHEN Mahathir Mohamad spent a week in hospital last year, at the age of 91, talk naturally turned to his legacy as Malaysia’s longest-serving former Prime Minister. How naive. Dr Mahathir may have stepped down in 2003 after 22 years in office, but he has hardly been retiring in retirement. His constant sniping helped topple his immediate successor, Abdullah Badawi, who lasted until 2009.
Now the old warhorse is picking a fight with Najib Razak, the Prime Minister since then and now leader of Dr Mahathir’s former party, the United Malays National Organisation (UMNO), which has run Malaysia for the past 60 years. Dr Mahathir has registered a new political party and persuaded Pakatan Harapan, the fractious coalition that forms Malaysia’s main opposition, to admit it as a member. Now Pakatan is debating whether to make Dr Mahathir the chairman of their coalition—and, perhaps, their candidate for Prime Minister at elections which must be held within 13 months. Having long said that he would not be returning to Parliament, Dr Mahathir has lately been hinting that he would consider another stint in the top job.
In Politics there are no permanent friends, only permanent interests
It is difficult to imagine a more unlikely turn of events. The original incarnation of the coalition Dr Mahathir might soon be running was formed in the late 1990s to oppose his own interminable rule. Its founder, Anwar Ibrahim, was Dr Mahathir’s deputy until the latter sacked him during a power struggle; he was later jailed on sham charges of corruption and sodomy. The current government’s methods are copied directly from Dr Mahathir’s playbook. Since 2015 Mr Anwar has been back in prison following a second sodomy conviction, this one just as dubious as the first. The reversal of the authoritarian turn Malaysia took under Dr Mahathir is one of Pakatan’s main objectives.
What makes all this even tougher to stomach is that Dr Mahathir’s conversion to the Opposition’s cause looks disturbingly incomplete. Though he is hobnobbing with former enemies, the old codger still finds it difficult to apologise for the excesses of his tenure. Many of his views remain wacky: in May he told the Financial Times that he still thinks the American or Israeli governments might have arranged the attacks of September 11th 2001. Can Malaysia’s opposition really find no more palatable leader?
These are desperate times, retort Dr Mahathir’s supporters. Since 2015 news about the looting of 1MDB, a government-owned investment firm from which at least $4.5bn has disappeared, has dragged Malaysia’s reputation through the muck. American government investigators say that 1MDB’s money was spent on jewellery, mansions, precious artworks and a yacht, and that nearly $700m of it went to the prime minister. Mr Najib says he has not received any money from 1MDB, and that $681m deposited into his personal accounts was a gift from a Saudi Royal (now returned). He has kept his job, but only after replacing the Deputy Prime Minister and the Attorney-General.
The Prognosis is that Najib Razak is likely to win GE-14
One might expect this scandal to propel Pakatan into power at the coming election, but instead the opposition looks likely to lose ground, perhaps even handing back to UMNO and its allies the two-thirds majority required to amend the constitution. This bizarre reversal has much to do with Malaysia’s regrettable racial politics: the Malay-Muslim majority largely favours the government and the big ethnic-Chinese and -Indian minorities tend to vote against it. Mr Najib has baited an Islamist party into renewing calls for more flogging for moral lapses, forcing them to leave Pakatan. The split in the opposition will lead to lots of three-candidate races, in which UMNO will romp home.
Put in this context, Dr Mahathir’s reappearance is a godsend. It stands to transform Pakatan’s chances by granting access to a broad swathe of rural constituencies that they had previously thought unwinnable. Many Malays have fond memories of the booming economy of Dr Mahathir’s era (they overlook its crony capitalism and his intolerance for dissent); in their eyes, he put Malaysia on the map. As coalition chairman, Dr Mahathir might also bring some order to Pakatan’s noisy council meetings. His backing could be invaluable after a narrow victory or in a hung parliament, when UMNO’s creatures in the bureaucracy might be expected to put up a fight.
All these benefits could probably be obtained without offering to make Dr Mahathir the Prime Minister. But he may be the only front man upon whom most of the coalition can agree. That role had previously fallen to Mr Anwar, but it has become clear to all but a few holdouts that he cannot continue to manage the quarrelsome coalition from his cell. Voters are not sure whether to believe Pakatan when it says that, should it win, it will find some way to catapult Mr Anwar out of his chains and into the country’s top job. Nor are they much inspired by the notion of accepting a seat-warmer to run the country while this tricky manoeuvre takes place.
It could be worse
This is a depressing mess, even by Malaysia’s dismal standards. The opposition bears no blame for the dirty tricks which, over several shameful decades, the government has used to hobble Mr Anwar and many others. But by failing to nurture—or even to agree upon—the next generation of leaders, they have played straight into UMNO’s hands.
It is possible that the thought of hoisting Dr Mahathir into the top job will at last force the coalition to thrust a younger leader to the fore (some suspect that this is the outcome that Dr Mahathir, a shrewd strategist, has always had in mind). But it is also possible that, facing only uncomfortable options, they will end up making no decision at all. Some in Pakatan seem happy to barrel into the next election without telling voters who will lead Malaysia should they win. That might seem like pragmatism, but it is really just defeatism.
This article appeared in the Asia section of the print edition under the headline “Doctor on call”
America listen to Hillary Clinton. You now realise what a colossal mistake you made when you put Donald J. Trump into The White House. Your 45th POTUS is not making friends. To us who are not citizens, he is a disaster. But we are wondering what you and Congress what going to do about his conduct of public affairs? –Din Merican
What business has learned from Clayton Christensen.
By Larissa MacFarquhar
You can tell from the way I speak I had a stroke about eighteen months ago. I’ve been learning how to speak English again, and you’ll see I still can’t come up with the right words sometimes.” The most influential business thinker on earth looked up and smiled apologetically. He stood with his hands in his pockets. His hair was neatly parted on the side. He was very tall. “I have a tendency to speak to the floor,” he said. “It’s because if I look at you, you distract me.”
Clayton Christensen liked to feel a connection with people he was trying to help, whether he was giving a talk in church or to a business group like this one, so it was too bad he had to look at the floor, but he would do his best. He was pretty sure he’d find the words, because he was going to tell a story he knew by heart. He had told it to thousands and thousands of people, ever since his first book, “The Innovator’s Dilemma,” came out, fifteen years ago. Yet somehow, and he was so grateful for this, still more people seemed to want him to tell it—seemed to think that the puzzle it posed, and the answer he’d come up with, would save them from ruin.
He pointed his clicker at the screen and the first slide appeared. “For those of you who haven’t made a lot of steel, historically there are two ways to make it,” he said. “Most of the world’s steel has been made by massive integrated steel companies. The other way to do it is to build a mini mill. In a mini mill, you melt scrap in electric furnaces, and you could easily fit four of them in this room. The most important thing about a mini mill is that you can make steel for twenty per cent lower cost than you can make it in an integrated mill. Now, imagine you’re the C.E.O. of a steel company somewhere. In a really good year, your net profit will be two to four per cent. Here is a technology that would reduce the cost of making steel by twenty per cent. Don’t you think you’d adopt it? And yet not a single integrated steel company, anywhere in the world, built a mini mill. Today, all but one of the integrated mills have gone bankrupt. So here is why something that makes consummate sense can be impossible for smart people to do.”
The question he’d begun with, twenty years ago, was: Why was success so difficult to sustain? How was it that big, rich companies, admired and emulated by everyone, could one year be at the peak of their power and, just a few years later, be struggling in the middle of the pack or just plain gone? He had initially assumed that technology moved on, and the older players couldn’t keep up. But when he began to look into it he found that this wasn’t so: as technologies grew more sophisticated, whether by small improvements or radical leaps, the established companies, with their well-funded R. & D. departments, nearly always led the way.
Some people thought it was a matter of bad leadership—stupid managers grown too cautious or complacent to change. But Christensen was a generous man; he didn’t like to call people stupid, and, besides, the very same managers who were being called stupid today had been called geniuses last week, when the company was doing well and they were doing exactly what they were doing now.
“In the steel industry, as in your industry, there are tiers in the market,” he said. “At the bottom of the market is concrete reinforcing bar”—rebar. “Anyone can make rebar, but steel used to make appliances and cars”—sheet steel, at the top of the market—“is really tough to make. In the beginning, the mini mills were making steel from scrap, so the quality was crummy. The only market that would buy what the mini mills made was the rebar market, because there are almost no specs for rebar, and once you’ve buried it in cement you can’t verify if it made them anyway, so it was just the perfect market for a crummy product.
“As the mini mills attacked the rebar market, the reaction from the integrated mills was, man, they were happy to get out of rebar, because it was truly a dog-eat-dog commodity, and why would they ever want to defend the least profitable part of their business when, if they focussed their assets on angle iron and thicker bar and rod, the margins”—twelve per cent—“were so much better? So, as the mini mills expanded their capacity to make rebar, the integrated mills shut those lines down, and, as they chopped off the lowest-margin part of the product lines, their gross-margin profitability improved.”
The first industry that Christensen studied was disk drives. He had started out in consulting, then co-founded an advanced-materials firm called C.P.S. Technologies, but then he decided to follow the academic track that led to his becoming a professor at Harvard Business School. Someone told him that disk drives were the fruit flies of technology: they were ideal subjects for studying evolution, because a generation in disk-drive technology was incredibly short. He saw that the companies that made fourteen-inch drives for mainframe computers had been driven out of business by companies that made eight-inch drives for mini computers, and then the companies that made the eight-inch drives were driven out of business by companies that made 5.25-inch drives for PCs. What was puzzling about this was that the eight-inch drives weren’t as good as the fourteen-inch drives—they had a lower capacity, and a higher cost per megabyte—and the 5.25-inch drives were inferior to the eight-inch drives. So why hadn’t the fourteen-inch-drive companies simply started producing eight-inch drives? It didn’t make sense.
Around the same time, Christensen happened to remember that in 1962, during the Cuban missile crisis, a neighbor had brought in a big, powerful steam shovel to build a bomb shelter in her back yard, and he thought, Gee, you don’t see those big excavators anymore—you only see hydraulic backhoes. I wonder if the same thing happened to the excavators as happened to fourteen-inch disk drives? Sure enough, he discovered that although the hydraulic backhoe was used only for tiny jobs when it was first introduced—it was so weak, and its reach so short, that the only thing it was better than was a man with a shovel—over the years it had got better and better until, at last, it put the big excavators out of business.
The Fourth Industrial Revolution characterized by Disruptive Technologies
In industry after industry, Christensen discovered, the new technologies that had brought the big, established companies to their knees weren’t better or more advanced—they were actually worse. The new products were low-end, dumb, shoddy, and in almost every way inferior. The customers of the big, established companies had no interest in them—why should they? They already had something better. But the new products were usually cheaper and easier to use, and so people or companies who were not rich or sophisticated enough for the old ones started buying the new ones, and there were so many more of the regular people than there were of the rich, sophisticated people that the companies making the new products prospered.
Another example he remembered from his own life was the transistor radio that Sony marketed in the nineteen-fifties. It was a terrible radio, you could barely make out the music for the static, and it had no chance of competing against the nice big RCA or Zenith consoles that middle-class families had on tables in their living rooms. But the transistors succeeded wildly at the bottom of the market, with the rebar of humanity: teen-agers. For teen-agers at that time, the alternative was nothing, and the transistor was better than that. Then, gradually, the transistors got better, and, by the time they got good enough to interest grownups, RCA and Zenith were too far behind to catch up. The same thing was happening now with phone cameras: when they first appeared, they took terrible pictures, but they were so convenient that people used them anyway, and over time they got better. Christensen called these low-end products “disruptive technologies,” because, rather than sustaining technological progress toward better performance, they disrupted it.
Christensen was himself a low-end kind of guy. He grew up poor, on the west side of Salt Lake City, which was the wrong side of the tracks. He collected paper tray liners from fast-food restaurants. For years, he drove a 1986 Chevy Nova that he barely fit in—there was a spot on the ceiling where his head would rub that always had a few hairs stuck to it. At home, he wouldn’t let food be thrown out: no matter how disgusting it had become, he would eat it, on principle. So if anyone was primed to be the champion of low-end products that triumphed because they were cheap and dumb and low-end people could use them, it was he.
The integrated mills and the mini mills were happy with each other until 1979. “That was the year that the mini mills succeeded in driving the last of the integrated mills out of rebar,” Christensen said. “Bam!—the price of rebar collapsed by twenty per cent. It turned out that there was a subtle fact that nobody had thought about, and that is that a low-cost strategy only works when you have a high-cost competitor. As soon as the integrated mills fled upmarket, it was just low-cost mini mill fighting against low-cost mini mill. So what were these poor suckers going to do? One of them looked upmarket and said, ‘Holy cow, if we could make better steel, we could make money again!’ So they attacked the next tier of the market. And the integrated mills? Man, were they happy to wash their hands of that business. Because it was truly such a dog-eat-dog commodity business, and why would you ever defend a twelve-per-cent-margin business when you could focus your assets upmarket on structural steel, where the eighteen-per-cent margins were so much more attractive? And so the very same thing happened again. And as the integrated mills lopped off the lowest part of their product line their profitability improved.”
Christensen didn’t blame big companies for moving upmarket. They had to grow a certain amount every year, so selling bad products at low margins (like rebar) was never going to seem like the sensible thing for them to do. And venturing into markets that barely existed (like teen-age radio consumers) didn’t seem sensible, either, because, without the benefit of hindsight, how could you tell the difference between a bad product poised to take over the nation and just a bad product? You couldn’t invest in every dumb thing that came along—you’d go bankrupt. The sensible thing for big companies to do was to pursue higher margins, or to wait until a new product’s market became visible enough to be analyzed and large enough to be interesting—but by then it was too late. Meanwhile, the big companies kept doing what they were supposed to, listening to their customers and improving their products in ways that mattered to those customers, until they had improved them too much, climbed so far upmarket that they sailed right off the upper-right-hand corner of the graph, adding more features and power and degrees of perfection than anyone could possibly use, and by that time the bad, cheap, low-end product had improved to the point where it could finally appeal to the big companies’ customers, and the big companies failed.
Israel –The Start-Up Nation of Innovators and Achievers
“Toyota did not come to America with Lexuses,” Christensen said. “They came with this rusty little subcompact in the sixties that they called the Corona. And then they went from the Corona to the Corolla, Tercel, 4Runner, and then a Lexus. General Motors and Ford were up here on the integrated-steel trajectory, making big cars for big people. They’d look at Toyota coming at them from the bottom and say, You know, we ought to go get those buggers, and they’d send down a Chevette or a Pinto. But why would they keep making little subcompacts when they could be making bigger cars for bigger people? It just made no sense.”
India is Looking and Acting East
After studying a few exceptions to the pattern of disruption, Christensen concluded that the only way a big company could avoid being disrupted was to set up a small spinoff company, somewhere far away from headquarters, that would function as a start-up, make the new low-end product, and be independent enough to ignore what counted as sensible for the mother ship. But truly independent spinoffs like these were rarely created. Why would you hire an entirely new staff—a new marketing department, for instance—when you already had a crackerjack marketing department that would keep costs down and margins up? And why would you open a new factory far away, where its managers couldn’t benefit from your expert advice? Now, having done his research, Christensen could tell you that getting away from your expert advice was exactly the reason that creating a spinoff was necessary. But why had so many managers, people just as smart as he was, failed to see what he saw? Why had they all fallen into the same trap?
After puzzling over this mystery for a long time, he finally came up with the answer: it was owing to the way the managers had learned to measure success. Success was now measured not in numbers of dollars but in ratios. Whether it was return on net assets, or gross-margin percentage, or internal rate of return, all these measures had, in the past forty years, been enshrined into a near-religion (he liked to call it the Church of New Finance) by partners in hedge funds and venture-capital firms and finance professors in business schools. People had come to think that the most important thing was not how much profit you made in absolute terms but what percentage of profit you made on each dollar you put in. And that belief drove managers to shed high-volume but low-margin products from their balance sheets, even though nobody had ever come across a bank that accepted deposits in ratios. This was why he called it a church: it was an encompassing orthodoxy that made it impossible for believers to see that it might be wrong.
Intel’s Innovator-in-Chief Andy Grove(1936-2016)
One of the first C.E.O.s to understand the significance of Christensen’s idea was Andy Grove, the C.E.O. of Intel. Grove heard about it even before Christensen published “The Innovator’s Dilemma,” in 1997. Grove had sensed that something was moving around at the bottom of his industry, and he knew that this something was threatening to him, but he didn’t have the language to explain it precisely to himself, or to communicate to his people why they should worry about it. He asked Christensen to come out to Intel, and Christensen told him about the integrated mills and the mini mills, and right away Grove knew this was the story he’d been looking for. He had Christensen tell the same story to his staff, and “rebar” became a company mantra. Intel brought out the Celeron chip, a cheap product that was ideal for the new low-end PCs, and within a year it had captured thirty-five per cent of the market. Soon afterward, Andy Grove stood up at the COMDEX trade show, in Las Vegas, holding a copy of “The Innovator’s Dilemma,” and told the audience that it was the most important book he’d read in ten years. The most important book Andy Grove had read in ten years! A man from Forbes was in the audience that day, and in 1999 Grove and Christensen appeared together on the cover of Forbes, and things were never the same for Clayton Christensen again.
His timing was perfect: it was the turn of the millennium, dot-com businesses were springing up all over the place, Digital Equipment Corporation, a giant of the computer age, was disintegrating, and AOL was suddenly and inexplicably worth as much as Time Warner. Obviously, everybody had to be on guard, but against what? Into this chaos and uncertainty came Christensen, telling his story about the steel industry. Not only was the story convincing; it was also what anxious executives wanted to hear. After years of being told that smart managers succeeded and stupid managers failed, here was someone saying that smart people could fail because they were smart, because they did everything they were supposed to do. This was not only comforting; it also made the theory sound more counter-intuitive than it really was. In the end, after all, it was saying what every management theory said: managers failed because they did something wrong.
The other thing about Christensen was that his book wasn’t just for geeky staffers in strategic-planning groups. He was a master storyteller, and C.E.O.s learned through stories, they remembered stories, and they repeated stories to the people who worked for them. Within a year or two, Christensen’s theory of disruption was ubiquitous. Steve Jobs told people that he had been deeply influenced by Christensen’s book. Michael Bloomberg sent copies of it to fifty of his friends. Bill Gates complained that Christensen’s theory had become a required slide in every funding presentation, but he also invited Christensen to his house. The book sold half a million copies and kept on selling.
“Everybody talks about disruption now,” George Gilder, a technology writer and onetime business partner of Christensen’s, says. “Clayton inserted that word in the mind of every C.E.O. in technology. Everywhere you go, people explain that they’re disrupting this or disrupting that. Every big company now tries to disrupt itself all the time, and it’s not clear to me that it’s always a good thing—companies that have a good business may prematurely disinvest from it because they see this inexorable process that Clayton describes.”
“His ideas are pervasive,” Paul Steinberg, the chief technology officer of Motorola Solutions, says. “It doesn’t matter what industry, it’s almost like a universal law. I’ve had ideas of my own squished for just the reason he said they would be, so now that I’m in a higher position I realize there has to be a way of incubating those ideas or the company will perish. He scared the crap out of me.”
Christensen is a Mormon. There have been Mormons in his family on both sides for four generations, which is to say very nearly since the founding of the church. His great-grandfather on his father’s mother’s side, Hans Magleby, was a carpenter in a small town in Denmark who was converted by one of the earliest groups of Mormon missionaries to Europe, in the eighteen-fifties. He travelled to America and took a train to Iowa, which was as far as the railroad went. He couldn’t afford a covered wagon, so he made a handcart for his belongings and pulled it on foot a thousand miles to Salt Lake City. Utah had been incorporated as a U.S. territory only in 1850; when the first Mormons settled there, they were fleeing persecution in the United States, and the land was still part of Mexico. Most of the region was so dry as to be nearly uninhabitable, but Brigham Young sent new immigrants to farm the desert, and Magleby was sent to Richfield, a tiny outpost a hundred and sixty miles south of Salt Lake.
Christensen’s mother’s family emigrated from Germany and went to live on the prairie in Alberta, Canada, where Mormons had also settled in the nineteenth century. His mother, Verda Mae Fuller, attended Brigham Young University, in Salt Lake City. She graduated at nineteen and went to work as a scriptwriter for radio, and when television came to Utah, just after the war, she wrote and anchored a news show for farmers. She met Christensen’s father, Robert, at a church function. He worked at a grocery store, stocking shelves. They married and settled in an area called Rose Park. Their house was a small brick bungalow, like most houses in the neighborhood—they were starter homes for returning G.I.s, built right after the war. The women in Rose Park mostly stayed home; the men were mailmen, or plumbers, or worked at the oil refineries north of Salt Lake, or at Kennecott, the copper mill out in Magna.
When they had their first child, Verda Mae quit working for money, but she stayed up all night writing scripts for church productions or articles for church programs, and took care of the kids during the day. There were, eventually, eight kids (Clayton, born in 1952, was the second), and they ate like horses. Before a basketball game, Clayton would fill a mixing bowl with cereal, mashing it down to get more in. Verda Mae served a lot of defrosted meat pies, and she liked to say at dinner that she’d been slaving over a can opener for five minutes. But she was always busy, and if a kid needed something done she would usually tell him how to do it himself. When Clayton found holes in his socks in second grade, she said to him, “If I were going to fix this for you, this is how I’d do it,” and he followed her instructions.
Every election, Verda Mae and Robert went door to door with the kids, handing out flyers. They were practically the only Republicans in their district, and Christensen claims he didn’t know that “dumb Democrat” was two words until he was in high school. He subscribed to the Congressional Record in fourth grade, and posted a large chart on a wall of the basement to keep track of the votes of selected congressmen and all hundred senators. Both of his parents were active in the church. Robert served as a stake president, overseeing the affairs of eight congregations, and he brought his kids to work with him on the church’s hog farm—the church had its own welfare system for the Mormon poor, and part of that was raising hogs to supply pork to the bishop’s storehouse.
“I’ll bet a lot of people wish they had a royal palace to return to.”
Christensen was a good child. He was on the school newspaper and in the Key Club. He made all-state in basketball. He read the World Book Encyclopedia all the way through, from A to Z. In high school, he was voted student-body president, and so, one time, when the rough kids from his school beat up the middle-class kids from another school, he went and apologized. He wanted to go to Harvard or Yale, and got into both, but his mother wanted him to go to Brigham Young. Not knowing what to do, he fasted and prayed, and he discovered that God agreed with his mother. That wasn’t the answer he was looking for, so he fasted and prayed some more, just to make sure he hadn’t misheard or something, but he hadn’t, so he went to Brigham Young.
During his freshman year, he met his future wife, Christine Quinn. They were both wearing Sterling Scholar pins, which they’d won in a statewide competition in high school. She asked him what his category was, and he said, “Social Science,” and he asked her what her category was, and she said, “Homemaking,” and he snickered a little. Then she said, “How did you do?,” and he said, “Pretty well, I was the runner-up”—second in the state. “How did you do?” And she said, “I won.”
Christine had grown up not far away, in Bountiful, but their families were as different as two families could be and still be Mormon. His family was, as he put it later, an affiliated group of individuals. His father, for instance, was very loving, but came to watch him play basketball only twice. This had always seemed just fine to him. His parents never pushed their kids to do anything in particular. Christine’s father, on the other hand, was an ex-Army officer, and his kids were expected to excel at whatever they did. When it came to extracurricular activities, the Quinns moved as a pack. If one Quinn had a swim meet, the thirteen other Quinns would be there in the stands, cheering the family cheer. When the two oldest Quinn boys played baseball, their father coached the team, three of the littler Quinns were bat boys, Mrs. Quinn sold Sno Cones to raise money for the league, and Christine, the eldest child, got trained as a scorekeeper.
Christensen found this continuous togetherness overwhelming, but he figured that he and Christine could do things their own way. Then, a week before they got married, he was driving her home, and she said, “Don’t you look forward to when our kids are playing ball and you’ll be the coach?” And he said, “But I don’t want to be a coach.” And she said, “What do you mean? My father was always the coach.” He said, “Well, my dad was never my coach and he was a great dad. I don’t have to be the kind of father your father was.” She said, “Stop the car, I’m getting out.” And so it came to pass that when they had children, five of them, he was their basketball coach, and he was a Scout leader for twenty-five years, and, in the merger of the Quinn-Christensen company cultures, the Christensen culture was entirely obliterated—which, he discovered, suited him just fine.
In his last year of college, Christensen won a Rhodes Scholarship, and he went to Oxford to study econometrics. Being a Mormon at Oxford, it was soon clear, was going to be extremely inconvenient. He had already served a two-year mission to Korea, and thought he was certain of his beliefs, but now he decided he’d better figure out for sure whether his was the true church. Each night at eleven, he knelt down and told God out loud that he needed to know whether the Book of Mormon was true. After praying, he sat and read one page, and then he stopped and thought about it. Then he knelt and prayed out loud again, asking God to tell him whether the book was true. Then he read another page. He did this for an hour each night for many weeks.
“One evening in October, 1975,” he wrote later, “as I sat in the chair and opened the book following my prayer, I felt a marvelous spirit come into the room and envelop my body. I had never before felt such an intense feeling of peace and love. I started to cry, and did not want to stop. I knew then, from a source of understanding more powerful than anything I had ever felt in my life, that the book I was holding in my hands was true.”
After that day, his faith grew steadily stronger, and God granted him special powers. He healed the sick. He spoke in tongues. He saw into the future. Over the years, as he became aware that some Christians didn’t think that the Church of Jesus Christ of Latter-Day Saints was really Christian, he spent a lot of time thinking about the difference between what he believed and what other sorts of Christians believed, and he concluded that Christianity had taken a wrong turn sometime in the first century or two after Christ. He didn’t know exactly what had happened, but he imagined that the early Christians had got impatient with their growth rate—converting people one by one was too slow—and so they had gone on a mergers-and-acquisitions binge. But, as with any merger, this process involved negotiation and compromise. “They went south to Egypt,” he says, “and in that merger the Christians said, ‘Man, this is gonna be complicated, because we have one god and no rituals to speak of, and you guys have multiple gods and lots of rituals.’ And so in the end they settled on one god with lots of rituals. Then they went over to the Greeks, and this was a tough one, because the concept of God as Christ taught it was that God exists within the universe, but the Greeks thought that God existed above the universe, and in the negotiations Christianity adopted the Zeus view of God.” These negotiations culminated in the fourth century, at the Council of Nicaea, where under the orders of Constantine a group of bishops voted on what would henceforth count as Christian orthodoxy. Fifteen hundred years later, the Latter-Day Saints, Christensen believed, had restored the true early Christian tenets, the ones that had come straight from Christ, such as the belief that there is a mother as well as a father in Heaven. But mainstream Christianity was a synthetic religion, its god a synthetic god.
“One of the big fast-food chains was trying to beef up the sales of its milkshakes,” Christensen said, pointing his clicker to call up another slide. “These were sophisticated marketers. They had developed a profile of the quintessential milkshake customer—actually, I fit right in the mold. People like me gave them very clear feedback, and they would improve the milkshakes on those dimensions, but this had no impact whatsoever on sales or profits.”
After the success of his first book, many companies had asked him to teach them how to avoid being disrupted. He decided to start a consulting company, Innosight, which would dispense advice based on his theories. (One C.E.O. who never asked for his help, despite his admiration for “The Innovator’s Dilemma,” was Steve Jobs, which was fortunate, because Christensen’s most embarrassing prediction was that the iPhone would not succeed. Being a low-end guy, Christensen saw it as a fancy cell phone; it was only later that he realized that it was also disruptive to laptops.)
“We decided to try a different approach, which was to ask, ‘I wonder what job a customer is trying to do when he hires a milkshake?’ We stood in one of their restaurants for eighteen hours one day and took very careful notes on what time each customer bought a milkshake, what was he wearing, was he alone or with other people, did he buy other food with it or just the milkshake, did he drink it in the restaurant or go off with it? It turned out that nearly half the milkshakes were sold in the very early morning. It was the only thing the person bought, and he was always alone. He always got in his car and drove off with it.
“We came back the next day and confronted these people as they came out of the restaurant, surreptitiously holding their milkshakes. And we asked them, in language they could understand, ‘What job were you trying to do that caused you to hire that milkshake?’ It turned out that they all had the same job: they had a long, boring drive to work, and they needed something to do while they were driving. One hand had to be on the wheel, but, jeez, somebody gave me another hand and there isn’t anything in it. And I’m not hungry yet but I know I’ll be hungry by ten o’clock. So what do I hire? If you promise not to tell my wife, I hire doughnuts a lot, but they crumb all over my clothes and they’re gone too fast. I’ve hired bagels, but they’re dry and tasteless, so I have to steer the car with my knees while I put the jelly on, and if my phone rings I’m in big trouble. But, let me tell you, this milkshake is so viscous that it takes twenty-five minutes to suck it up that little straw. And you can turn it sideways and it doesn’t fall out!
“Once you understood what job the customers were trying to get done, how to improve the product became clear: you make the milkshake even more viscous. You stir tiny chunks of fruit into it, not to be healthy, because they didn’t hire it to be healthy, but to make the commute more unpredictable—they’re driving along and—upp!—a lump of fruit. And you move the dispensing machine to the front of the counter and give people a prepaid swipe card so they can just gas up and go.”
This insight—that people go looking not for a product but for a solution to a problem they have—was not original to Christensen. The late Theodore Levitt, of Harvard Business School, liked to quote to his students the adage that a person doesn’t want a quarter-inch drill; he wants a quarter-inch hole. But Christensen’s milkshake experience was such a satisfying illustration of this idea, and the idea itself, which he dubbed “jobs to be done,” meshed so well with his personality, that it soon took its place alongside the disruption of the steel industry as part of his repertoire of lessons.
Christensen’s personal experience of products was one of prelapsarian simplicity: he had a need—a job-to-be-done—so he searched for an object that would help him meet that need. He understood that other people’s experience of consumerism was more complex than his own, involving nuances of status and imitation and manufactured desire, and his theory could accommodate that—your job could be to appear more high-class to your peers, for instance. But Christensen was a man of function, not form. He loved machinery, he loved to see how things were made and problems solved. Every Christensen family vacation included a trip to a local factory, and it was usually Christensen’s favorite part of the trip.
One recent Christmas, Christensen gave Christine, among other things, a homemade book in which he had pasted photographs of all the things he had bought her or the household over the years which she had made him return to the store. One of the Christensen traits that had stubbornly persisted in him, despite years of training and negative reinforcement, was that, when it came to products, he had no interest in perfection. He was a man of the good-enough dishwasher, the good-enough chair, the good-enough floor. For him, a good decision was a made decision. Christine, on the other hand, was still a perfectionist Quinn. And so, over the years, chairs that he’d fixed had had to be reupholstered, dishwashers that he’d bought had had to be disconnected and replaced, lighting fixtures he’d thought were just fine had to be unhooked and sent back.
Clayton and Christine
In December of 2009, Christensen and Christine were in Washington to see the Christmas lights on the Mormon temple on the Beltway. In the middle of the night, he felt pain in his back. At the hospital, doctors found three large tumors. He was told that he had a follicular lymphoma that was likely to be terminal. He was fifty-seven years old; his father had died of lymphoma at forty-nine. He said to God, “I think I have probably done things in my life that you wanted me to do. And if in your judgment there’s more work that needs to be done on the other side, I’m happy to go. And on the other hand if I can be more useful by staying in this side, my preference is to stay.” He said of this time, to Forbes, “I felt good. I don’t think that it was in any way depressing.”
Christensen tears up easily, but he cries mostly in gratitude. When he received his diagnosis, he was calm. “What would be depressing is if I’d spent my life to that point on things that didn’t matter,” he says. “But I felt that I could look back on my life and think about lots of folks that I helped become better folks. And I’ve tried to be as good a man as I could be.” He had always tried to help people, whether through teaching, or consulting, or helping out with money, or signing up every week he could in church for good deeds. He would miss his family when he was dead, but he’d see them again in Heaven. In the scale of eternity, it wouldn’t be long. The important thing was that he was right with God.
When Christensen’s mother, at the age of eighty-two, was told that she was going to die in six weeks, of pancreatic cancer, she was excited. Not resigned but actually excited. She said, “Clayton, do you know how long it’s been since I saw your father, or your brother Milton?” (Milton, her third child, had died, of a blood disease, when he was eleven. Clayton was thirteen.) She had lived a good life. She looked forward to the future.
Mormons believe that family is for eternity, and that in Heaven they will be together with their relatives as they were on earth. They believe that after death they will grow to resemble their heavenly parents as children grow to resemble earthly parents, until eventually they become gods. Even so, when Christensen told Christine about his conversation with God she said, “Wait a minute, you don’t go across town without us talking about it, and you’re suggesting a transfer to another sphere?”
She wasn’t surprised by his tranquillity, however. Two years earlier, they had been in Montreal over a weekend for a large church gathering. Christensen was then one of the Seventy—he was responsible, along with a few others, for the Mormon church in the northeast quadrant of North America. At three in the morning, he felt a terrible pain in his chest. He didn’t want to go to the hospital, because that would ruin the meeting the next day, so he knelt down at the side of the bed and said to God, “I have a problem. Whatever this is, could you please make it go away?” The pain did go away, so he went back to sleep, and he didn’t mention it to Christine. They went home. The day after that, he was raking leaves in their garden when he felt the pain again. He realized he was having a heart attack, so he fetched his briefcase on the chance that he would have time to get some work done, and then he told Christine that she needed to drive him to the hospital.
That can only come from commitment to Education
Christensen’s initial cancer diagnosis turned out to be incorrect. His lymphoma was a type that responded well to treatment. He underwent four months of chemotherapy and was declared to be in remission. Three months later, he had a stroke. He was giving a talk to a church group one Sunday in July when, in the middle of a sentence, he stopped making sense. He opened his mouth and things that sounded like English syllables came out, but they were not words. After the stroke, he lost almost all his language, but he worked fiercely for twelve hours a day to get it back. Christine was always there helping him; it was difficult to be so dependent on people. One night, he set his alarm for two in the morning so that he could leave the house alone, and drove to a twenty-four-hour drugstore, just to practice buying something, but he couldn’t find the words.
Little by little, he got his language back, except now he had to think about every word he used, and at the end of the day his brain hurt. Even after eighteen months, he often made mistakes. He would substitute words that rhymed: he said “store” instead of “shore,” and “bake” instead of “make.” He often mixed up “wife” and “mother.” Giving a talk at church, he had said “Saviour” when he meant to say “Satan.”
“I’ll just tell you a silly story to illustrate what’s going on.” Christensen had received a visit from an official at the University of Phoenix. “He said, ‘Clay, we’ve read your stuff, we’d like to record one of your best lectures to show to our students.’ So I went to our dean and asked him if he thought I should do this, and he was just incredulous, he said, ‘What’s going to happen to your brand?’ But I said, ‘It’s the low end today that is the mainstream tomorrow,’ and he said, ‘Well, fine.’ “
This particular low-end product had been an obsession of Christensen’s for some time. Years before, he had become fascinated by Howard Gardner’s theories about multiple intelligences and different ways of learning. Christensen thought in visual terms—he found language ambiguous, and didn’t feel that he really understood something until he could draw it as a graph. But he had learned from editors who begged him to remove the graphs from his books that this was not true of everyone. He realized that, whereas in a regular classroom students could learn only in one way—the way the teacher taught them—online learning offered students who thought differently from their teachers a way to get help. What’s more, recorded lectures and online learning were much cheaper than teachers in a room, so they had the potential both to bring otherwise unavailable courses to underfunded schools and to disrupt not-underfunded schools, like Harvard. Few people at the not-underfunded schools agreed with him—they couldn’t imagine that an online course could ever be as good as the old-fashioned kind. They didn’t realize that a low-end product didn’t need to be as good as a high-end one to drive it out of a market.
“Harvard won’t allow you to record in their classrooms, so these guys booked a beautiful auditorium in the Institute for Contemporary Art,” Christensen said. “Behind me was this massive bay window, and you could see the whole harbor. The guys had told me, ‘We’ll have forty or fifty students so you don’t have to present to an empty room.’ So I showed up about ten minutes early, and I looked out at the students, and, oh, my gosh! These were beautiful people! I went and asked one of them, ‘What school do you guys go to?’ And he said, ‘Oh, we’re not students, we’re models.’
“So I did my best, and about a month later the official came back and asked me, ‘Have you ever seen Clay Christensen teach?’ And I said, ‘Actually, no.’ He showed me the video. Holy cow! Clay Christensen was unbelievable! There was not a single word that didn’t need to be there”—they’d all been edited away. “And then, instead of this boring PowerPoint slide about the steel industry, theirs was three-dimensional and dynamic, and they even had music, so when the mini mills went up into the sheet-steel market the music came to a crescendo! I’m not kidding. It was fantastic! So I said, ‘Jeez, how many of your students are you going to show this to?,’ and he said, ‘Well, we’re thinking we might show it to all hundred and seventy thousand of them.’ And I said, ‘Oh. I thought Harvard was one of the bigger business schools in America, and we bring in nine hundred a year.’ And I thought, There is a concept that we used to hear about years ago, and it’s called scale. Ever heard of it? Oh, my gosh. And yet we feel no pain.”
Some people said that Christensen was a man with a hammer to whom everything looked like a nail. But he wasn’t the only one who saw nails everywhere. Not long after “The Innovator’s Dilemma” came out, Christensen got a call from William Cohen, at that time the Secretary of Defense under President Clinton, who asked him to talk to him and his staff about his research. Imagining a few second lieutenants and interns, Christensen was startled to see, upon entering Cohen’s office, the Joint Chiefs of Staff, the Secretaries of the Army, the Navy, and the Air Force, and their Under-, Deputy, and Assistant Secretaries, all waiting to hear him. Bewildered, Christensen told his story about the integrated steel mills and the mini mills, until the chairman of the Joint Chiefs interrupted him and said, “You don’t have any idea why you’re here, do you?” Christensen admitted that he didn’t, and the chairman explained that, for him and his staff, the Soviets were sheet steel, terrorism was rebar, and they needed to figure out how to reconfigure their organization to capture the low end of the market. (Later, the government decided to set up an independent spinoff terrorism branch, in Norfolk, Virginia.)
At one point, it was suggested that Christensen try to apply his theory to health care. Along with two doctors, he spent several years studying the problem. He concluded that in many ways health care was like the steel industry, but before the mini mills got good enough to make I-beams and sheet. Big hospitals were like integrated mills: they could do everything that could be done, because they had the best equipment and the best-trained specialists, but they were very expensive. Each patient was different, and required a different combination of resources. As a result, very little could be routinized, and the difficulty of managing all those thousands of unpredictable combinations resulted in layer upon layer of expensive administration.
He realized that some medical problems were complex and poorly understood, and needed to be diagnosed and treated in big hospitals by expert doctors. But many others were very well understood, their care had become routine, and they did not need experts or fancy equipment at all—they could be managed in some cheaper venue, such as a clinic or a doctor’s office. As medical science advanced, more conditions would become amenable to routine treatment, and expensive hospital care could be restricted to fewer cases. Just as the low-cost mini mills had pushed the integrated mills out of the steel market, low-cost clinics could disrupt the hospitals.
That was what ought to happen, he believed. What would happen would depend upon insurance companies and regulations. As long as hospitals were paid by the procedure, they obviously had no incentive to leave the simpler treatments to clinics. And as long as hospitals competed with other hospitals for patients they would continue to add ever more facilities, growing ever more expensive: in health care, because of the perverse incentives that insurance put in place, competition actually raised prices rather than lowered them. There needed to be some kind of integrated managed-care system where insurance and hospitals worked in concert, such as Kaiser Permanente in California, where doctors were employees of the system rather than independent operators. That gave the system an incentive to keep patients healthy while treating them as inexpensively as possible.
Applying his ideas to health care and education was exciting, and Christensen started a think tank, Innosight Institute, to keep that work going. But what he felt he had been put on earth by God to do was help people become better people. He decided to write a book (with two co-authors), “How Will You Measure Your Life?,” in which he applied his theories about how good companies lost their way to a discussion of how good people lost their way.
At his business-school reunions, he had talked to people whose careers had turned out to be boring or without purpose but who found themselves held captive by their expensive lives. He had seen people who had been through one divorce, two divorces, whose kids were far away or no longer spoke to them. And he had seen something that shocked him deeply: two members of his Rhodes class had been prosecuted for criminal behavior, one for insider trading (the charges were dropped), the other for having sex with a teen-ager; and a business-school classmate who had seemed to him a good man who loved his family, Jeffrey Skilling, the former president of Enron, was now divorced, had lost a son to a drug overdose, had been jailed for public drunkenness, and was serving a twenty-four-year prison term for financial felonies.
How did this happen? Each year, he saw wonderful, bright young people sit in his class and then graduate full of hope for the future. Many of them came to talk to him about decisions they were contemplating—what job to take, where to live, what most to value. None of them planned on failed marriages or lost children or meaningless lives. And yet each year some of these bright young people, almost all of them meticulous planners and careful analysts of risk, set themselves on courses that would lead them to ruin.
Christensen had seen dozens of companies falter by going for immediate payoffs rather than long-term growth, and he saw people do the same thing. In three hours at work, you could get something substantial accomplished, and if you failed to accomplish it you felt the pain right away. If you spent three hours at home with your family, it felt like you hadn’t done a thing, and if you skipped it nothing happened. So you spent more and more time at the office, on high-margin, quick-yield tasks, and you even believed that you were staying away from home for the sake of your family. He had seen many people tell themselves that they could divide their lives into stages, spending the first part pushing forward their careers, and imagining that at some future point they would spend time with their families—only to find that by then their families were gone. Christensen had made a pledge to God not to work on Sundays, and a pledge to his family not to work on Saturdays and to be home during the week early enough for dinner and to play ball with the kids while it was still light. Sometimes, in order to keep these commitments, he would go to work at three in the morning.
Another thing he worried about in both businesses and families was outsourcing. Look at Dell: over the years, the company had outsourced more and more of its manufacturing to a company in Taiwan—its returns increasing each time, as it focused on higher-level activities like design and marketing—until in the end the Taiwanese firm started making its own computers for less money. When he thought about Dell, he thought about how, when he and Christine were first married, she had made most of the family’s clothes, and they had picked apples and made applesauce, and picked tomatoes and made tomato sauce, but then store-bought clothes and applesauce and tomato sauce became so cheap that it seemed crazy to keep making them at home. Luckily, they had bought two wrecks of houses and fixed them up themselves, so there had always been Sheetrocking or plastering or painting to do with the kids, but he knew that most of his students would consider this a waste of time. Wanting their children to spend their extracurricular hours in the most profitable way, they would pay for lessons and smart, enriching activities, and they would outsource the low-end, dumb tasks like mowing the lawn and mending clothes, and the children would grow up without knowing how to solve practical problems by themselves, or do something they didn’t enjoy or thought they weren’t going to be good at.
He worried most of all about his students’ integrity. He told them about Jeff Skilling, but the thought of prison was so extreme he could see that most of them dismissed it. They didn’t seem to realize how easy it was for a good person (and he believed that almost everyone started out good; Mormons don’t believe in original sin) to make one tiny, unimportant compromise after another, until he was too compromised to find an honest way back. He told them about how at Oxford he had refused to play basketball on a Sunday, even though it was the national championships, because he had promised God he wouldn’t; and how much pressure his coach and teammates had put on him to compromise just that one time. Later, he realized that if he had said yes that time he would have had no standing to say no another time, and what he learned—one of the most important lessons of his life—was that it was easier to do the right thing a hundred per cent of the time than ninety-eight per cent of the time.
He had talked for more than an hour, and at the end of the talk several people asked him questions. He told each of them that they had asked a great question, and if they noticed that he said that to everybody, well, it didn’t matter, because he always meant it. He urged them to be in touch.
“If I can ever be useful to you, oh, my gosh, what a magnificent company,” he said. He looked up and smiled again. “If you ever need somebody to bounce an idea or two off, it’s the only way I can ever learn, if folks like you would give me a chance to think things through, so I would love to talk with you,” he said. “Thank you so much.” ♦
Larissa MacFarquhar has been a staff writer at The New Yorker since 1998.