To preserve shareholder value, every CEO in the world must study Publius’ Trump Management Protocol—TruMP—and pass the TruMP exam. The cost of failing TruMP is massive. Ask Qualcomm CEO Steve Mollenkopf.
Two days ago, Mollenkopf had to back out of a $44 billion deal to acquire Dutch chip maker NXP Semiconductors. The deal would have increased Qualcomm revenues by 42% and diversified its markets away from the very high-risk, low-potential 5G wireless market on which it and its investors were counting for growth.
And pony up a $2 billion breakup fee. Shareholder money out the window.
Why?
Dumb Don started a trade war with the Center of Everything (China in Chinese). The Center struck back by holding off approval of the Qualcomm-NXP deal, to which the parties had agreed before the election of our Hacksident, until after the deal deadline.
With no approval and the deadline at hand, down went the deal.
For Xi Jinping this was an easy one. Don stopped Broadcom from acquiring Qualcomm in March, claiming national security. Fine, said Xi, if it’s that important to you Don, that’s where it will hurt most.
Now Don has a massive problem. His trade war gave Xi Jinping control over any deals done anywhere in the world by any U.S. company that does any business in The Center.
Think about this for a second.
Xi controls everyone from Apple, Intel and Microsoft on one side to General Motors (Publius can tell you from first-hand experience that Oldsmobile is a huge brand in The Center) on the other.
None of these companies can say so much as hello to any potential M&A target anywhere in the world without The Center’s approval.
All this goes straight to TruMP. There is no way our Dumb Dude could have figured out Xi’s counter move because Don’s intellect is scrambled. And there is no way that any of his advisors could explain it to him because they know that he is too dumb to understand a word they say and would go nuts if they tried.
CEOs who have not passed TruMP are in an exceptionally high-risk position. As are their shareholders and employees and everyone in their supply chains.
As Publius has endlessly demonstrated using the Dumb Guy’s own words, Don cannot read or write. He could not have so much as glanced at a briefing paper on the implications of his trade war with The Center. And he would not have understood anything in it even if it was read to him.
What was brilliant about The Center’s move on Qualcomm was that it wasn’t a move. The Center did nothing. It just sat there and let the deal clock run out. The Center can do this to anybody who does business in China. The Center’s ability to hold global industry to ransom is the one thing Dumb Don didn’t think about in his claims that trade wars are an “easy win.”
The reason that Don didn’t think is, of course, because he cannot think.
American business leaders must pay the price for not standing up to Illiterate Don long ago and telling him to take a hike. Shareholders (think retirement savings!) and employees will get slammed.
CEOs have to face some hard facts. At his core, Don is antibusiness.
Don has never managed a supply chain and knows nothing about how one works. (See Publius on Dumb Don and Walmart.) He does not understand that, for all human history, we have evolved on an Information Cost-Velocity Curve. On the ICVC, ever-cheaper information, not the cost of goods, determines the structure of all organizations. Supply chains are an ICVC subset.
Because he never studied—could not study—at high school, let alone at university, Don’s crude thinking on trade predates Adam Smith’s Wealth of Nations, which, ironically was published in 1776, the year in which Don’s country was founded.
Take Smith, add Ricardo’s theory of comparative advantage now over two centuries old and layer these onto the ICVC. What you get looks nothing like Dumb Don’s bizarre, antediluvian rants. It looks more like Apple with its six days of sales in inventory run on an SAP single instance ERP.
Here’s what this looks like to folks on the street.
When you buy something in an Apple store, the sales clerk swipes your card on an iPhone and asks if you want your receipt printed or sent by email. You may think that you are being asked about your receipt. Not even close. With that card swipe, Apple’s entire global supply chain lights up to build and ship to the store a replacement product. No purchase orders, no paper, just bits. Apple optimizes everything on the flow of the bitstream. If it moves faster but costs more, Apple will buy it. That’s the ICVC in action. The ICVC is how Apple simultaneously crushed so many competitors and scaled so fast so profitably.
Do not try to explain the previous paragraph to Dumb Don. Simple though it is and only 112 words, he can understand none of it.
Which is why Don wants global business to move to the pre-telegraph era. It's the only thing he can comprehend. If it means destroying Apple and every other American company that uses information technology to achieve comparative advantage, Don is elated. He has no way of knowing that he should be crying.
CEOs must pass TruMP to protect their shareholders and employees.
Curiously, for all his rantings, the pro shops in Don’s golf clubs carry almost no American goods. Most are from China. And Don drives the top-of-the-line BMW (white).
The cost to CEOs of failing their TruMP is staggering, as the Qualcomm example shows. Don has handed The Center veto power over U.S. companies' growth options. U.S. shareholders will have to pay a stunning TruMP-driven tax bill: the loss of growth opportunities mandated by our Dumb Dude.
Happy retirement savings!