The CEO mayor

By Tom Lowry

updated 3:53 p.m. ET June 18, 2007

The American businessman-politician has a long and storied history. From Alexander Hamilton (industrialist) to Herbert Hoover (mining consultant) to New Jersey Governor Jon Corzine (CEO, Goldman, Sachs), wealthy and connected executives have, for better or worse, tried to bring corner-office management to the public arena. With the arrival of George W. Bush, MBA, we began to hear a lot about the so-called CEO President who was supposed to muster a greater degree of executive decisiveness and accountability. But four years of war and the Katrina debacle have blunted that talk.

Which brings us to New York City Mayor Michael R. Bloomberg. This forthright and prosaic 65-year-old billionaire just may have the right combination of managerial, risk-taking, and political skills to create a new model for public service — possibly even at the national level should Bloomberg run for president.

Applying lessons from an early career on Wall Street and from two decades building his eponymous financial-information and media empire, the mayor is using technology, marketing, data analysis, and results-driven incentives to manage what is often seen as an unmanageable city of 8 million.

Bloomberg sees New York City as a corporation, its citizens as customers, its sanitation workers, police officers, clerks, and deputy commissioners as talent. He is the chief executive. Call him a technocrat all you want; he's O.K. with that. "I hear a disparaging tone, like there's something wrong with accountability and results," he says. "What was I hired for?"

Yes, Bloomberg has endured setbacks. His failed attempt to build a football stadium in Manhattan gobbled up time and energy for much of his first term. And while his takeover of city schools five years ago from the state has led to dramatically improved test scores, there is a long way to go before the mayor can declare victory. Plus, some of his ideas—including his suggestion to pay kids for good grades—grate on educators.

Yet his checklist-obsessed operating style has resonated with New York's famously cynical citizenry — 70% approval ratings attest to that — and well beyond Gotham. "People see that this can be done in a place like New York, effectively managing something so large and complex," says Time Warner CEO Richard D. Parsons, a Bloomberg friend and someone mentioned as a possible mayoral candidate himself. "And they think, 'Hey, this can be done elsewhere.'"

The city is a brand
Put yourself in Bloomberg's size 9½ loafers on Jan. 1, 2002, the day he was sworn in as New York's 108th mayor. The city was grappling with the psychological and financial impact of the terrorist attacks. It faced a budget gap of nearly $6 billion. On Wall Street, there was talk of abandoning Manhattan for the safer precincts of New Jersey or Connecticut.

Bloomberg had three options: cut services, raise taxes, or both. He did what no mayor had dared to do in more than a decade: He jacked up property taxes. And he didn't agonize over the decision a bit. "It [was] easy to make that choice," he recalls.

Some of his aides tried to talk him out of it, fearing the move amounted to political suicide. And by the following summer, Bloomberg's approval ratings had plunged, to 31%. But the novice mayor was undeterred. Where most politicians would have seen only a fiscal solution to the budget gap, he spotted a marketing opportunity. He was protecting the New York City "brand." Bloomberg saw a low crime rate, good public transportation, and clean streets as indispensable to selling New York. Cutting back on services, he felt, would send the wrong message to the business community and the outside world.

More from BusinessWeek Online Slideshow: A Day with Mayor Bloomberg Slideshow: From Business to Government Bloomberg on Bloomberg

At the same time, Bloomberg boosted New York's promotional efforts. First, he consolidated three existing operations under a not-for-profit entity called NYC & Co. He tripled the city's contribution to the annual marketing budget, to $22 million. Then he went out and hired as CEO a veteran ad man, George Fertitta, whose branding and marketing firm had handled the likes of Coca-Cola, Perry Ellis, and Walt Disney. All cities have marketing arms. But Fertitta's operation is essentially an advertising agency with an in-house creative services unit that uses various media, from bus shelters to the city's cable channel, to help sell the Big Apple.

Ever the metric junkie, Bloomberg set a goal for NYC & Co.: Lure 50 million visitors a year by 2015. And knowing that foreign tourists spend three times as much as U.S. visitors, he ordered Fertitta to open more branch offices around the world. Today, NYC & Co. has a presence in 14 cities, with new offices set to open in Seoul, Tokyo, and Shanghai in coming months.

Since 2003, New York says it has added 151,100 new private sector jobs, boosting the economy and fueling a construction boom. And last year, partly owing to a weak U.S. dollar, the city reports attracting 44 million visitors, up from 35 million in 2002. As for that 18.5% property tax hike, it got a whole lot easier to swallow when the average value of a single family home surged by 55%. Now, with the city in surplus, Bloomberg plans to hand out $1.3 billion in tax cuts not only to homeowners but also to businesses and shoppers.

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