Crisis Leadership
Whether we like it or not, the United States in a crisis… and it is just not a financial crisis.
This is good and bad news.
Obviously, the bad news is obvious… the financial markets are in turmoil. Companies and individuals are overly leveraged, companies can’t get credit, individuals are max-ed out on their credit cards and many are losing their homes.
But there is good news….the United States is a CRISIS society and only takes constructive, difficult actions when it is in crisis.
Let me explain
1. Why the crisis is more than what is happening on Wall Street and in housing.
2. How we have responded constructively to past crises and hopeful can respond to this one.
3. What type of strategic leaders we need and some of the actions required.
More than Wall Street and HousingWith the advent of television and cable there have been more coverage of the financial market and so the rise or fall of stock prices has been be the surrogate for the US economy. When the markets are going up, as they have been over the past five years, everyone thinks the economy is good and you should continue to spend. When markets decline, as they have been in the past few months, the "gloom and doomers" appear and everyone begins to worry.
But in recent months, the housing bubble has deflated, sub-prime mortgages have caused most the key financial firms to write off billions, take enormous losses, get funded by “foreign governments, billionaires”merge, change their legal status and even go out of business. Commercial and private foreclosures and deflates have increased and people are often walking away and are unable to pay.
So now there is panic and all of the politicians want to save us by “quick fixes”.
But it is just not these problems that are putting us in a crisis situation.
Our infrastructure has been “harvested” or milked and are not able to sustain their simple needs of people to commute to work, fly and even heat and light their homes. There is grid lock in major cities on its highways, airports are reporting more “near misses”, when it rains the electricity goes out, the railroads are almost non-existent and not a major factor in providing transportation or shipping. We could enumerate more problems in health care, education, water and flood control. In short, we have a “third world infrastructure”.
But it is worse, we have become a debtor nation. Our balance of trade, weak dollar has enabled China, Dubai, Saudi Arabia to make major acquisitions of United States company and technologies. We have exported our manufacturing jobs and have become a service economy. Individuals are max-ed out their credit and can hardly afford to live. We have also decreased our security and ability to respond if attacked.
Students are graduating from our colleges heavily in debt and unable to find jobs that can allow them to pay their loans. The quality and rigidity of the educational system has declined. Some students can’t write, others have no idea of what is happening in the world. Colleges often have no classes on Friday and the students take a minimum work load.
More examples could be furnished but it is fair to say that there is a crisis is all phases of the United States economy and it is not just one problem, but the combination of these problems that put us in crisis.
TOO MANY RISKTAKER/CARETAKES AND NOT ENOUGH SURGEONS.
Risktaking and Caretaking PresidentsSince the end of the Second World War, the United States presidents have been either risk taker or caretakers… none, have been surgeons, and though the country has been harvested and there have not been any undertakers…yet.
Let’s take a look at the situations that each of these president’s faced and their style of leadership.
· Roosevelt--- inherited a country in crisis… the depression required taking major risks to jump start the economy. His first act was to close all of the banks… move the country to a more socialistic than capitalistic situation. He took enormous risks in helping England survive and some even believe the was willing to let the Japanese bomb Pearl Harbor to get the country into the war.
· Truman… the risk taker of all time…he bet on dropping the bomb…even though he had very little insight in how it would work out…
· Eisenhower was the caretaker of all time… he just let the world happen… no waves..
· Kennedy… not in time long enough to really classify… he was a risk taker when he tried to invade Cuba, but lacked the courage to see if it would work… he took a major risk with Russia and they backed down…so he was more of a risk taker than a caretaker.
· Nixon…was a risk taker, but his personality negated what he was able to do.
· Carter…was a true caretaker and a micro manager…
· Reagan was a risk taker.. and was able to create an economic evolution and the creation of a CULT.
· Father George BUSH was a caretaker… really doesn’t do much. His invasion and quick retreat of Iraq demonstrated this.
· Clinton the typical caretaker… was willing to change to fit the popular reaction.
· Bush W.. was a risk taker…but didn’t really understand the risk he was taking and surrounded himself with individuals that supported a “hawkish, foreign policy.
Crisis Leaders… but the United States has had other major crises in the past and has had a few leaders able to rise to the occasion. Let’s review a few.
· Civil War was our greatest crisis. When Lincoln took office, South Carolina split from the union and the Confederacy was formed. The bloodiest, “brother against brother”, family against family war ensued and Lincoln had to take actions that didn’t even have the support of those in the Union. His great talent was to be able to work with both friends and advocates and keep the country afloat.. a remarkable accomplishment, which should be imitated by leaders today.
· Great Depression… In the 1920’s the United States experienced many of the same blessings as it has in the 1980- 1990 period. There was affluence. People lived well and most of them lived over their heads and were speculators. Towards the end of the period there were signs that the “the good life” was in jeopardy…but the “if it isn’t broke…don’t fix it” mentality ruled and even though Hoover proposed programs they were rejected. It took the collapse of Wall Street to force changes and it was very painful. Roosevelt seized control and the government took over. NRA, WPA and other alphabet programs were introduced and people just tried to survive.
· World War II--- again prior to the “bombing of Pearl Harbor” the UNITED STATES wanted to pretend that the aggression of Hitler and Japan were not their problem, but the bombing again changed everything and the country again gave away its individual rights for the national interest. There was rationing, blackouts and a draft…
· Sputnik was another major event that changed the United States. The ability of the Russians to put a man in space and our inability to do so, enabled Kennedy to get people to honor his famous words: ‘ask not what the country can do for you, but what you can do for the country”… the space program has significantly contributed to our stand of living and given us many of the products that we now enjoy, like cellular, micro-electronics, new materials etc.
· The September 11th attack is another example…but this one is still unfolding so it is too early to see if has really changed us.
The message is that when the United States has been forced to make major changes and to focus on what is good for the nation and not their own selfish interests. The country has been ready, able and willing to make these changes and we have had the resources and leadership to pull it off.
But in each and every case, the country has refused to accept the reality of change before it happened and then has been forced to move rapidly.
Fortunately it has worked.
EVERYONE WANTS CHANGE.
We are now in a prolonged primary period in which we have had to listen to hopeful “presidents” tell us that we need to change. Some say “Washington is broken”, others say that we need to Spend MORE…others say we need to spend less…but none of the messages are really significantly different than we have been.
We have now have a “house of lords” called the Senate, consisting of long tenure, complacent individuals, many of whom have been in office for over 20 years. These individuals are more interested giving “pork” to their constituents, so that they can stay in office, than really making major changes and they have no term limits.
The House of Representatives are continually running for office and they appear more interested in “getting their unfair” piece of the government funds to keep their constituents happy and willing to provide them with the funds to get re-elected.
The nation is totally divided. There are racial, ethnic, economic, social advocacy groups that all want their way and the lobbyists, populated by ex-government officials and former elected officials to get represent vested interests.
In short, we have constructed a government that is only viable if the country is infinitely wealthy and has not really deficiencies. It is like the government of the Roman, Greek and other empires that all declined and fell because they lived in a “glass palace”.
SO WHAT?
These are the two words have applied in all of my professional career. Is there a solution?
I think there is a solution but it will be painful and must be executed now.
The first solution is to change the type of leaders we have now. I think that we have a government of too many “caretakers”, who are more concerned with the status quo and their own personal needs and wants. Note: the word…too many… I am not saying that we don’t have some of the right type of leaders, but if we do they are a small minority and not the majority.
Right Leaders for the Right TIME and SITUATION.
In my 1993 book Risktaker. Caretaker, Surgeon, Undertaker- the four faces of strategic leadership, I classify leaders into four types and describe their characteristics. This is a summary of each of the leadership characteristics and its relationship to the life cycle of the organization.
· Risk takers are most appropriate for start up situations. These individuals are missionaries, intuitive, dynamic and excellent communicators. They have a mission and are willing to bet their lives on making them happen. They are revolutionary.
· Caretakers are more cautious, managerial and tied to evolutionary rather than revolutionary changes.
· Surgeons are required when an organization is in trouble and needs restructuring. These leaders are willing to challenge the statusquo and folklore and hold NOTHING SACRED…everything and everyone is challenged and subject to being divested or liquidated.
· Undertakers are those able to take an organization and either wind it down or divest or merge it with another more viable organization.
The names are not critical, but what is critical is that there are NO LEADERS FOR ALL TIMES and that if you put the wrong leader in the wrong situation they will fail.
WANTED—Surgeon Leaders.
The United States now need leaders in the Executive and Legislative branches that are willing to take actions that will set priorities and allocate the resources consistent with the priorities, they are SELECTIVE and not “all things to all people”.
This means that they are willing TO CUT programs, Be POLITICALLY INCORRECT and recognize that they will antagonize some of the their constituents and even other nations.
· “NOTHING and NO ONE is SACRED”- The country leaders, including the President, his administration and Congress must be will to step back and evaluate all of the country needs and requirements and not make anything or anyone sacred.
· Set Priorities and Allocate Resources- Using a clear set of viable criteria the leaders must do an OBJECTIVE evaluation and set priorities and then be willing to communicate what needs to be done and what can’t be done… this means being POLITICALLY INCORRECT is needed.
· DO what they SAY…this is the essence of strategic leadership. Strategy is what you do and not what you say. Unfortunately, this will take a major change in the “political mindset”..where it is common to say one thing and do something else.
· LINE ITEM VETO- The president must be able to cut out the pork and not permit the valuable and needed programs to be surrounded by politically motivated, non-productive waste full pork.
· BALANCED BUDGET. Willingness to live in our means and not just continue to add to the debt… this means that there must be a CONSTITUTIONAL BALANCED BUDGET and no exceptions. If programs are increased in one area, others must be decreased or more revenues must be generated.
· TERM LIMITS FOR EVERYONE- Time limits on all members of government. Roosevelt made it clear that there must be time limits on the Presidency and so we have a two term president. But the Senate have become the House of Lords and a long tenure group of “too comfortable” and too Powerful individuals. If it make sense for two terms for the PRESIDENT, why doesn’t make sense for the Senate. The House members terms should be extended to four years and they two must only be able to serve for two terms.
· STOP FINANCING OUR ENEMIES. Stop all FOREIGN aid and examine where it should go. Don’t give money to our enemies or to those who are wealthier than we are. We can’t buy friendship and these funds should be used to solve real problems and be time limited. No annuities that go on and on and are actually used to undermine their purpose.
· NO MORE POLICEMAN AND MISSIONARY- Moving from the policeman and “democratic” missionaries to willing to allow other countries to manage their own countries and select the best form of government for them and not what may work of us. This also means a reality test on whether democracy is really working here. It is only partially working.
IMPOSSIBLE DREAM??
Reading this list of requirements may make you think that I am totally Nave and it is impossible to get these type of changes. After all, the current systems and policies protect the incumbents in government and allow them to get enough “pork” to keep them in office. There are too many and strong lobbyists who have created one of the only growth industries in the United States. There is a great fear of not giving away money to all nations even to our enemy since the country is already unpopular.
So, on the surface it is impossible and the current policies and practices will continue UNTIL THERE IS A REAL CRISIS. The crisis is likely to take the form of major recession, combined with massive unemployment and even some form of the “bread lines of the Great Depression”.
In conclusion… the United States must recognize its world role is changing and it must focus on being a little more self centered and not try to be the policeman and democracy missionary of the world. If it doesn’t it will just become another “historical” empire who self destructed because it lived in a “fairyland” and not in a real, changing and highly competitive world.
Bill Rothschild, author of THE SECRET TO GE’s SUCCESS and RISKTAKER, CARETAKER, SURGEON, UNDERTAKER- the four faces of strategic leadership.
