In the 2008 election that propelled him to power, John Key declared himself “ambitious for New Zealand”. He makes speeches that enthuse audiences but which, in executive suites in the cold light of the next day, leave lingering doubts he will turn ambition into strategy.
That is a puzzle. His extraordinary public acceptability would enable him to sell major initiatives that could change the game. But in his first year he seemed content to play in the pack on topics like climate change, for example. Even in rejecting the smacking referendum, where some colleagues saw courage, he simply sang in tune with the majority, comfortable with compromise.
The cruisey first year is also at odds with his origins. As a teen he was determined to be Prime Minister. In his early working life as a trader he would, according to a workmate, analyse thoroughly and then take big risky positions which almost always turned out right.
From trading room to cabinet room, Key sees parallels between trading and politics in the mix of collective and individual decision making.
In the trading room, he says, “layers of risks are woven together”. A collective house view is formed of the short and medium term, which must be supported by the economic fundamentals and take into account what clients are thinking, but which also gives them the “right” advice.
Then individual traders are expected to take a view. They are held more accountable for making money than for holding to the house line.
“I used to take quite large short-term risks, whereas a lot of people took smaller, long-term risks,” says Key. “Mathematically you don’t have to be right 50 percent of the time and wrong 50 percent of the time. You can actually be right 20 percent of the time as long as you are disciplined about the way that you handle your losses.” As in trading, so in politics: “If I am on the wrong side of something, I tend to cut it.”
Key extends the parallel: “Question time [in Parliament] is exactly like the trading floor. It’s about theatre, intimidating opponents and enthusing your supporters.” After a hesitant start learning the ropes – the unwritten rules of the House collective, Key showed enthusiasm and verve. By the end of last year he had Labour leader Phil Goff, a 25-year political veteran, on the ropes.
That is Key: a fast learner who backs himself after doing the homework. Foreign affairs grandees are impressed with how quickly he has come from scratch to skill in a complex and subtle field, albeit with the odd lapse such as his dismissal of Europe when he visited Japan.
Parliamentary question time offers another parallel with the trading floor. Its rituals mystify outsiders. A visitor to Parliament sees bullying, bluster and barracking. MPs see a take-no-prisoners battle. Reputations are made and lost on the floor of the House. Key’s is being made.
Key extends the parallel even wider. His National caucus is “58 individual franchises bound together by the master franchise” – the party. “You’ve got a whole lot of individuals but collectively you’ve got, hopefully, a view that binds you together,” he adds, instancing Sandra Goudie, whose Coromandel electorate requires a different approach from other electorates.
Warming to his theme, Key adds: “Traders are born, not made. Politicians are too. You can’t teach people instincts.” But both get better with experience and acquired institutional knowledge. Key instances Winston Peters, a man he does not otherwise admire.
As on the trading floor, so in the cabinet. Key’s Labour predecessor, Helen Clark, kept close muster on her herd. Her chief of staff, Heather Simpson, was her enforcer. Key thinks this “slowed up activity because too much went to the [prime ministerial suite on the] ninth floor”.
Under Key, good ministers like Bill English, Simon Power and Steven Joyce shine. Weak or wayward ones make mistakes, which will be politically costly in a second or third term. He deals with that by “buttressing support around them or letting them know I expect an improved performance”. In Key’s book, it is important not to become too risk-averse.
The nexus is trust. Do the job well and be straight with him. Lose Key’s trust, as Richard Worth did, and that is “irrevocable”. Beneath that agreeable, affable exterior is a steely interior. You don’t make $40 million by just being Mr Nice Guy.
But Key is a nice guy. People warm to him, even many of those opposed to his policies or who inhabit the socioeconomic and ethnic corners normally aligned with Labour.
Key works his cabinet, his MPs and his supportive party leaders on a person-to-person basis. Ministers and support party leaders like how nice he is to them.
He and English work well together. They crack put-down jokes about each other in public that would have created headlines between Clark and her deputy Michael Cullen, as they did occasionally when Cullen’s wit exceeded his better judgement.
“There is nothing he [English] would say behind my back that he wouldn’t say to my face,” says Key. We can’t, of course, know. But that he asserts it, attests to Key’s self-confidence.
Clark and Cullen divided responsibilities for running the government. Cullen handled much of the detail and fixed some of the toughest issues or worst messes, notably the foreshore and seabed fiasco. Clark helicoptered in on selected issues that were likely to present the government in a good light. Until her frayed and fraught final year, Clark played the good cop and Cullen the attack man.
If anything, Key and English might have the good cop/bad cop routine the other way round, something to ponder going into their second year. Key’s niceness won’t always trump him brawling in the House.
As to their cabinet business management, insiders talk of an 80:20 government, reflecting English’s responsibility for a mass of detail and Key’s higher-level positioning. Of the six economic “work streams”, for example, English runs five and Key just one, on science and innovation. He doesn’t (yet) have Clark’s mastery of portfolio detail.
So is the Key-English combination akin to that of former National prime minister Jim Bolger and his deputy Bill Birch in 1993-96, or to that of Labour’s finance minister Sir Roger Douglas and prime minister David Lange in 1984-89? Lange was a brilliant salesman for Douglas’ reforms. Douglas was the driver. Bolger was pre-eminent and Birch laboured in his shadow.
Key personifies his government as Lange did. But his 20 percent is more than the mathematics suggest. English ticks off his thinking before it becomes a cabinet paper. And ministers insist it is Key’s cabinet, as Bolger’s was Bolger’s.
Like Clark, Key hoovers up information travelling across wide social terrains. And like Clark, he feeds it back to ministers, though he and they draw the line at sending texts at 1am, a Clark habit. And, like Clark, Key is accessible to the media. A text, and he usually calls back.
Still, he has yet to demonstrate to outsiders, including many of his supporters in business, that he is in command of strategy.
That is his 2010 challenge, and it is one he says he will tackle.
A test will be his response to the taxation working group and the capital markets development task-force.
Key expressed outright opposition to, or discomfort with, some of the tax group’s initial papers last year. But, by December when it presented some tax re-mixes for discussion, he was less judgemental.
This approach illustrates a Key characteristic. He often thinks aloud without first gathering all the evidence and thinking the issue through. It can be confusing given that what a Prime Minister says is usually taken as government policy gospel. Key can, therefore, appear to hold up to three positions on a topic as it unfolds. Or, he can appear more conservative or radical than he really is.
When, for example, ACT Party leader Rodney Hide pushed for full private sector competition for the Accident Compensation Commission during negotiations for support for ACC Minister Nick Smith’s ACC legislation, Key, who was at the time standing next to Hide, proclaimed that he generally favoured competition. The comment set off speculation of impending ACC root-and-branch reorganisation. Key soon returned to the official National policy of competition only in the worker account and maybe in some service delivery.
Can a prime minister who thinks aloud be strategic? Does Key have a long-range programme for taking the country somewhere? Is there a vision, as distinct from some aspirational phrases? Or is John Key a project manager, in the Clark mould, with only moderately different leanings?
And what should we make of Key’s reverence for polls? He told the Tourism Industry Association conference last October he considered polls scientific and, while Parliament wasn’t a hotbed of poll-driven fruitcakes, it pretty nearly was. He often drops a recent poll or focus group finding into a conversation. His shift from opposition to the anti-whacking bill in 2007 to initiating a compromise was prompted by poll signs of softer women’s support for National.
Key doesn’t need polls. He has accurate antennae. He dragnets opinion across a wide spectrum of society. He marries it with accurate instincts which reflect a middle-class upbringing that included a spell in a poor area and is not weighed down with ideology. He insists: “I don’t use polls to make decisions. I just use them to confirm what we’ve done.” They are a check marking the dividing line – necessary on a trading floor – between being confident and cocky.
Attention to polls also rules out “blind ideology”. Key nevertheless insists that leadership requires action. “People elect you to make decisions, even if they don’t like them and agree with all of them,” he says. Leadership is “having a sense of what is important to people, having the confidence to implement it and having the determination to make good on it”.
That sounds much like a transformational leader who could bank his acceptability to make and sell bold and far-reaching changes that are in keeping with, and necessary to realising Key’s ambition to catch New Zealanders’ wages up with Australians’ by 2025. He could as Prime Minister revisit his risk-taking, getting-rich days.
In 2009 John Key looked rather more the transactional leader, the sort who manages the show. He talked “step-change”, but the step didn’t look very big. Is he a game-changer or does he just want to up the game a bit?
And if it is the latter, how does that mesh with the fact that under the combined impact of information technology, globalisation and geopolitical and geosocial change and a financial crash the world’s economic game has changed?
His speeches and interviews do not reflect a changed world. That may be because he is on the cusp between baby-boomers and the next generation and is not actually a new-generation leader. Key has shown no interest in exploring potentially game-changing “green growth” – whatever that is. The economy is #1, and “green” and “growth” are a zero-sum game in his book.
As Key tells it, that tentativeness may be about to change.
Key considers 2010 pivotal and the budget in May to be the “focal point”. With recession-hit 2009 behind him, a raft of working parties, taskforces and other groups are starting to deliver policy options in areas as diverse as tax, science and innovation, the “drivers of crime” and reducing disadvantage in the very earliest months and years of life.
This year, Key aims to demonstrate “step-change”, though he expects the changes will not fully flow through until the second term. Tax reform will be a major test. English and he began meeting on that in December. Ministers and officials have been talking up an “economic growth agenda” to be featured in his annual Parliament opening speech on February 9.
“Tightening up on law and order” and “improving education standards” are, along with the economy, the two other “objectives” Key says the Government was elected on.
But he has another, personal, ambition. Above all, he wants his prime ministership to be remembered for reducing the disadvantage that flows from a poor or bad early start in life. Paula Bennett, who shares that ambition, has a mandate. He bothers greatly about the fifth of teenagers who leave school inadequately literate and numerate.
This is a large, economic (a capable workforce), personal and social ambition. For those reasons there is unlikely to be much evidence of success, if any, until into a third term.
Key doesn’t grandstand about a third term, but he wants one. And he hopes that on the way he will “step-change” the electoral geography through his relationship with the Maori party. He wants to “redefine the National party”, so that it stops being a party of white middle-class males. “The party needs to reflect our growing multi-ethnic diversity.”
Those are big ambitions. By the end of 2010 we should have some fix on whether John Key will realise them and, whether “step-change” is upping the game or game-changing and, whether he is a visitor to politics or a serious operator under all that affability.
The high-risk trader might marginally punt on the latter – but there is some homework to do yet.

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Key on management and governance
John Key is, it seems, concerned about the capability and quality of New Zealand organisational management. He is also keen to see an improvement in director performance.
Management, he says, is improving but there is still “a way to go”. Key has been talking to business groups about it but there are no detailed plans.
“As the Government we are trying to strengthen the governance of the entities that we control. There has been significant improvement in the quality of the boards in the last 12 months. There is always room for growth in the capability of our management. By and large it is improving, though there is still room for improvement. Places like the Auckland University Business School can play a role in that,” he adds.
“We have had some discussions with business groups about (management capability and director performance). But at the moment we can identify the problem without necessarily identifying all the solutions.”
Key wants business leaders to lift their game and think more strategically and long-term. “Some of them are,” he says, “and are being rewarded for it.” But like in any organisation, “leadership comes from the top and the more that the leaders embrace the changes required, the more successful they will be”, he adds.
Is he worried that too many (good executives) are leaving to run top Australian enterprises? “We’ve had a bit of that but we’ve also seen quite a few coming back,” he says optimistically.

Colin James is New Zealand’s leading political commentator and NZ Management’s regular political columnist.