(FORTUNE Magazine) – Ronald Reagan was typically relaxed and jovial when he sat down in the Oval Office to talk about himself as a manager rather than as a politician. As FORTUNE managing editor Marshall Loeb, Washington bureau chief Lee Smith, and associate editor Ann Reilly Dowd interviewed him, the discussion ranged widely. Excerpts: Your friend Roger Smith, chairman of General Motors, says that you've done a great job of focusing on the big picture without getting bogged down in detail. How do you decide which problems to address personally and which to leave to subordinates? Maybe part of it is dictated to me by a little plaque on my desk that says there's no limit to what you can do if you don't mind who gets the credit. Beyond that, I believe that you surround yourself with the best people you can find, delegate authority, and don't interfere as long as the overall policy that you've decided upon is being carried out.

In the Cabinet meetings -- and some members of the Cabinet who have been members of other Cabinets told me there had never been such meetings -- I use a system in which I want to hear what everybody wants to say honestly. I want the decisions made on what is right or wrong, what is good or bad for the people of this country. I encourage all the input that I can get. And this has led to some of those press stories, since the walls of the building leak profusely, saying that we're torn with dissension or something. No. I want to know. And when I've heard all that I need to make a decision, I don't take a vote. I make the decision. Then I expect every one of them, whether their views have carried the day or not, to go forward together in carrying out the policy. How do you make time to think about the future and do what managers might call strategic planning? Do you close the doors for 15 or 30 minutes every day and just look out the window and think? Oh yes. There's always time for that. But you know there's another place where a lot of things come to you very clearly -- that's on the back of a horse. I've never given up riding, and I do that whenever I have an opportunity. Once a doctor I was going to told me that when he had a particularly worrisome, delicate operation slated for the morning, he got up extra early and went for a horseback ride and came in feeling much better equipped to undertake that operation. I hadn't thought about it much at that time, but since then I found out that he was right. When the embassy in Beirut was bombed and the space shuttle Challenger exploded, all your aides said you were very cool. Corporate leaders face many crises too. Can you give them any advice on how to handle crises well? I think it's making the decision. It's uncertainty that I think leads to panic and upset. The decisions that give you the most trouble are the ones where you're all agreed on the goal, but there's a difference of opinion on how best to arrive at that goal. But the other ones, actions such as (bombing) Libya, and others, there the solution is pretty obvious. It just takes having the nerve to do it. It's the putting off of a decision that I think is wearing, because then it's always back here. You wake up in the middle of the night with it. No, you have to sit down and go at everything that you've heard. And I find that usually I've made the decision, if not within 24 hours, certainly in the second 24. How do you make those hard decisions? Pray? Trust to instinct? Lincoln said he'd been driven to his knees many times in this job because there was no place else to go. And he said he could not perform the duties of this job for one day if he did not feel that he could turn to one who is stronger and wiser than all others. And, yes, I've found myself doing that. It's so easy to become isolated in the Presidency. How do you avoid that? For one thing, I like people and always have. But that goes with my previous life too. I think most performers do (like people). People are your stock in trade there. Your success depends on their pleasure. When you go to the ranch you're surrounded by people, everyone from neighbors to people who work for you. I've never felt that I am isolated from people. I grant you, I can't suddenly say I'm going to run down to the drugstore. Anyplace I go anymore, I'm a group. I can block traffic. But the people in the West Wing (of the White House), they're people like everybody else, and they're not all top executives. You get to know them and their troubles. I love when we go out on the road. I delight in getting outside the beltway, because there is a kind of difference out there. Other managers in high positions sometimes let their jobs drain them completely. How do you pace yourself? I have a little exercise routine I do at the end of the day. I go home from here and exercise, then take my shower. And contrary to what a lot of people think must go on in the White House, a great many evenings, most of them as a matter of fact, you'll find Nancy and me in pajamas and a robe having dinner, and then early to bed. Many management experts think that fostering a degree of conflict within an organization has good points. As you have mentioned, you get different views. Is there a point, in your mind, when creative tension turns destructive? Oh yes. I don't believe in the kind of conflict where you've got two people who are really at odds. That can get to be quite a strain. But that's different from saying to everybody, ''Look, don't hesitate. Don't try to guess what I may want to hear. I want to hear what you want to say.'' It took a little while here for them to recognize that they could speak up. Sometimes I sit silent and the conversation goes back and forth across that table (in the Cabinet Room). But everybody can disagree without being disagreeable. And many times, finally when I come back in here (to the Oval Office) and make the decision, I realize that there are going to be several who feel, well, okay, their viewpoint was rejected. And yet because the very next day it might be that I'm on their side, I don't think any of them go away feeling any personal rejection. People say that you're a good negotiator because you have principles and your timing is superb. Recently you seem to have shifted from a strategy of tough talk to the Russians to one that's more conciliatory. What made you conclude it was time to make this subtle shift? Well, it wasn't really subtle to me. I came here believing that in years past there had been a lack of realism in our approach to the Soviet Union. We were sort of seeing them in a mirror image, thinking that if we'd smile and were kind and generous and so forth, they'd smile and be kind and generous. I was blooded rather early with regard to Communism, in the motion picture industry. (When I headed the Screen Actors Guild) there were 43 guilds and unions in the picture business. During the war there grew up a thing called the Hollywood Conference of Studio Unions, and it had been taken over (by Communists). I'm talking now not of redbaiting, I'm talking of card-carrying members. They wanted to use a jurisdictional strike to close down the motion picture industry. And then with everybody out of work, the proposal would be made of (creating) one gigantic union of actors, cameramen, crewmen, everybody. And guess who would control that union? But we won. Do you get along better with Mikhail Gorbachev than with previous Soviet leaders? Yes. (At first) we couldn't have any meetings because they kept dying on me over there. There wasn't anyone to meet with. Finally, along came this new leader. I think he believes completely in their system. I think he also believes, having grown up in it, in their propaganda. But at the same time he has big economic problems. And he's realistic enough to know that he's got to make some moves to solve those problems. And therefore we can sit down and talk to each other, and I'm not sitting there saying, oh gee, if he smiles, great, we've won a victory. No. He's got some problems that need solving, and we've got some problems that need solving. And, okay, how close can we come together on something which will be beneficial to both sides? When do you think you can cut a deal with him? Well, he is the first Russian leader who has ever proposed eliminating weapons they already have. Now that's a great milestone. That says something about their economic problem. I think we can do business with him, but it's going to be on that realistic note. I find Gorbachev affable, completely different from many of the leaders I've met with from their side. But I don't have any illusions that I can convert him or talk him into anything. He's got a system we don't like. They don't like our system. Okay, we've got to live in the world together. Now do we want to live in the world fighting each other or do we want to live at peace? I honestly think there is a basis for us being able to find agreement. Do you have any words of advice for the managers of American business, given that you've got the No. 1 chief executive's job in the world? I don't know that I should be advising them. You see, I've lived under the illusion both as governor and President that I was kind of copying them, doing what the successful C.E.O.s did. I think you set a policy that you believe is the best way to meet your goal. And get back to those three rules that were the Screen Actors Guild's rules in negotiations: Is it good for us? Is it fair to the other fellow? And is it fair to the customer? Do you want to stay another four years? No. I strongly believe that the 22nd Amendment is wrong. I think it's a violation of the people's democratic rights. If they want to vote for someone, we shouldn't have a rule that tells them they can't. Good Lord, we've got senators who have been there 40 years. But I have also always said -- and this has not been repeated enough -- any President who is approving of (allowing more than two terms) should make it plain that it is being done for the President who is following him. I'll go home.