Romney's missed chance

Republican presidential hopeful former, Massachusetts Gov. Mitt Romney speaks at the West Virginia Republican Delegate Convention, Tuesday, Feb. 5, 2008 in Charleston, W.Va.

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BOSTON (FORTUNE Small Business) -- If you trust the polls, John McCain will emerge as the likely Republican Party nominee at the end of Super Tuesday, today's multi-state primary. But the Arizona senator is hardly the most authoritative Republican candidate when it comes to the increasingly troubled U.S. economy, which business owners name as one of their top concerns in most polls.

That mantle belongs to former Massachusetts governor Mitt Romney, a wealthy and hugely successful businessman. Yet Romney's chances of becoming the next Harvard MBA in the White House appear to be dwindling. What happened?

Entrepreneurs and other voters who prioritize economic issues ought to find Romney appealing: he's the only candidate in either party with any business experience. Before they became career politicians, McCain was a soldier, Mike Huckabee a pastor, and Ron Paul a doctor. On the Democratic side, Hillary Clinton and Barack Obama were both lawyers before running for office.

Unlike those candidates, Romney, 60, is not a career politician. He entered politics seven years ago after a long career in the private sector, where he accumulated an estimated $350 million fortune. Romney also earned a reputation as a man with a sharp, analytical mind who loved his work and relished the challenges of making businesses profitable.

The son of former Michigan governor George Romney, himself a businessman/politician, Mitt Romney is a graduate of Brigham Young University with a joint degree from Harvard's schools of business and law. On graduating in 1975, Romney joined Bain & Co. the hottest management consulting firm in what was then the hottest field for newly minted MBAs. In 1983, Romney left to help found Bain Capital, an investment offshoot that funded some startups but specialized in leveraged buyouts of later-stage companies.

Romney did well as a consultant but vastly better as an investor. One of his early decisions was to put $600,000 into a start-up office supply company called Staples (SPLS, Fortune 500); the chain now has close to 2,000 stores, and the investment has been returned countless times. Bain Capital also helped bankroll the Sports Authority, Domino's Pizza, (DPZ) and Duane Reade.

"Wealth is an important part of his story," one hedge-fund dealmaker who has worked with Romney told me last year. "But there's an intellectual and analytical dimension to finance and equity that he absolutely thrives on. He likes to have 10 or 15 people around the table sharing their different views and just duking it out."

From boardrooms to Salt Lake City

In 1994, Romney left Bain to make an improbable run for the Senate against Ted Kennedy. He gave Kennedy a close race, but the deck was stacked against him in Massachusetts, where the liberal icon seems a permanent fixture. After that, Romney returned to Bain. And in 2000, he took over the job of salvaging the Salt Lake City winter Olympics after financial scandals.

His 2004 book, Turnaround: Crisis, Leadership, and the Olympic Games, is devoted entirely to the story of how he not only fended off disaster in Salt Lake, but finished the Olympics with a $100 million surplus. The book was clearly intended to serve as a forerunner to his presidential campaign, which is telling. While McCain's autobiography recounts his military heroics and Barack Obama's focuses on his multicultural upbringing, Romney's campaign manifesto is essentially a business book.

In Turnaround, Romney lays out four guidelines he used as president and CEO of the Salt Lake Organizing Committee. First rule: Know why you're taking on a job. Second: Assemble the right team. Third: Carry out a strategic audit. And fourth, communicate the vision and challenge the team.

Romney tried to apply those principles when he returned to Massachusetts and was elected governor in 2002 - with mixed results. The state had real economic problems: budget deficits, job losses, high taxes, structural problems such as expensive housing and energy costs that made it difficult to recruit big businesses and launch small ones. Romney also faced a hostile, overwhelmingly Democratic legislature.

Romney tried to be a pro-business governor. He managed to avoid raising taxes, although he did increase dozens of state fees to balance the state budget. He also devoted attention to cutting regulations that hampered small business and job creation. And as he pushed for a health plan that would help fund universal insurance for Massachusetts citizens, he went out of his way to ensure that the cost of that plan would not be born by businesses, whether large or small.

Romney also vetoed a bill that would have raised the state minimum wage to $8 an hour, making it the highest state minimum wage in the country. (The legislature overruled his veto.) Still, says Bill Vernon of the state chapter of the National Federation for Independent Business, "I think that small businesses felt they had a friend in the governor's chair when he was here."

In the second half of Romney's term, however, his attention turned to running for president. In an effort to court ideological GOP voters, he tacked sharply to the right on several core Republican issues.

Romney had never had much to say about illegal immigration. But with the White House in his sights, he suddenly started talking about national ID cards and repatriating millions of Mexicans. While he had once expressed support for Roe v. Wade, now he stressed the sanctity of life and opposed stem cell research - a significant business sector in Massachussetts, with its wealth of hospitals, universities and biotech start-ups.

Not until the beginning of this year did Romney even start emphasizing his economic experience on the stump. Until then, he had effectively repudiated his entire career by presenting himself as the candidate for social conservatives rather than economic ones.

Which may explain why Republican voters aren't choosing Romney. It's unclear that he can be trusted not to abandon his positions for the sake of political expedience. Romney's pragmatism served him well in business. But in this election at least, voters seem to want a president who will stand up for his beliefs.

Richard Bradley is the editor of 02138, a New York-based magazine for Harvard alumni.