Posted by: dstieglitz | January 18, 2013

Real Leadership Conversations Produce Results

“The measure of success is not whether you have a tough problem  to deal with, but whether it’s the same problem you had last year.” – John Foster Dulles

Effective leadership conversations often go unnoticed because problems are solved when they are small and crises seldom occur.  In stark contrast, the symptoms of chronically weak leadership – the kind that pushes companies into bankruptcy – are painfully obvious: tough decisions are avoided, poor numbers are justified, and strategic issues go unresolved. Effective leaders produce solutions while weak leaders fight the same problems over and over.

Kicking the Can Down the Road – Again. The 112th Congress and the president sidestepped the fiscal cliff New Year’s Day by delaying real decisions for two months. In the process, they replaced one crisis with three: (1) in February the country will hit its $16.4 trillion debt ceiling, (2) in March the continuing resolution expires and federal agencies may shut down, and (3) on March 31st $110 billion in automatic spending cuts may occur. For several months, economists have warned that “kicking the can” would be the worst possible outcome because it would extend economic uncertainty for federal agencies, businesses, and workers. No matter where people work or live, they must deal with the psychologically damaging effects of watching lawmakers argue endlessly.

Sustained Lack of Leadership. Today’s fiscal crises aren’t new. The gap between federal revenue and federal spending has been widening through a decade of weak leadership. Four consecutive $1+ trillion deficits aren’t likely to disappear easily. The bundling of so many fiscal issues at this time is the conscious and deliberate choice of polarized political leaders. An effective solution obviously requires tax increases and spending cuts on a scale that each political party would find unacceptable for different reasons. Where are the leaders who have the vision and courage necessary to make the tough decisions?

Leadership in New 113th Congress. Even though we re-elected the same president and House and Senate leaders, the 113th Congress sworn in January 4th still could identify thoughtful alternatives to the cliff if individual senators and representatives sought nation-wide solutions. It’s likely that some congressmen will be called on to make larger concessions than others, but Congress will succeed or fail as a team. If the 113th Congress doesn’t resolve the three crises, like the 112th Congress they too will have abdicated their leadership responsibilities.

The Challenge of Congressional Change. Congressional change is difficult to say the least. For example, more than ten years after the event, the September 11th Commission’s recommendations have been implemented with one glaring exception: that Congress create a single oversight for homeland security. The commission said in its report: “Of all our recommendations, strengthening congressional oversight may be the most important – and most difficult. Few things in Washington are harder to change than congressional committee prerogatives.” It was easier to reform the intelligence community, rearrange 22 federal agencies, and reassign thousands of federal employees than for Congress to relinquish the perks of committee membership. Today, over 50 subcommittees and committees still oversee portions of the Department of Homeland Security (DHS) budget. So it’s no surprise that DHS has conflicting priorities and is often accused of wasteful spending.

A New Business Model. Congress’ real challenge is to stimulate parts of the economy that have yet to recover from the 2009 crash. Leaders who specialize in corporate turnarounds know that spending actually must increase in some areas to avoid bankruptcy. Consider these areas at the federal government level:

Leadership in New 113th Congress. Even though we re-elected the same president and House and Senate leaders, the 113th Congress sworn in January 4th still could identify thoughtful alternatives to the cliff if individual senators and representatives sought nation-wide solutions. It’s likely that some congressmen will be called on to make larger concessions than others, but Congress will succeed or fail as a team. If the 113th Congress doesn’t resolve the three crises, like the 112th Congress they too will have abdicated their leadership responsibilities.

The Challenge of Congressional Change. Congressional change is difficult to say the least. For example, more than ten years after the event, the September 11th Commission’s recommendations have been implemented with one glaring exception: that Congress create a single oversight for homeland security. The commission said in its report: “Of all our recommendations, strengthening congressional oversight may be the most important – and most difficult. Few things in Washington are harder to change than congressional committee prerogatives.” It was easier to reform the intelligence community, rearrange 22 federal agencies, and reassign thousands of federal employees than for Congress to relinquish the perks of committee membership. Today, over 50 subcommittees and committees still oversee portions of the Department of Homeland Security (DHS) budget. So it’s no surprise that DHS has conflicting priorities and is often accused of wasteful spending.

A New Business Model. Congress’ real challenge is to stimulate parts of the economy that have yet to recover from the 2009 crash. Leaders who specialize in corporate turnarounds know that spending actually must increase in some areas to avoid bankruptcy. Consider these areas at the federal government level:

  • Infrastructure. A maintenance dollar cut is not a dollar saved, it’s a dollar (or more) that must be spent later. For example, requests by the Corps of Engineers to maintain New Orleans’ levees went unfunded for decades. The cost of rebuilding New Orleans when the levees broke was many times what the maintenance would have been – and that’s not counting the human costs.
  • Education. The U.S. human infrastructure is falling behind the      world. For example, U.S. students rank now 10th or lower among OECD      countries in all educational performance categories.
  • Enforcement. For example, cuts in IRS enforcement will reduce tax      receipts since historically each budget dollar has produced $10 in      additional tax collections.

Clearly, the federal government needs a new business model. Two blue-ribbon commissions have already said what spending should be cut, what spending should be increased, and how the revenue stream should be expanded. It’s time to pay attention to what they recommend.

Leading in 2013. 2013 will be more of a gentle downhill drift than an economic Himalayan cliff. Budget cuts will be more threatened than real as Congress and the President negotiate stop-gap measures that prolong the uncertainty. But uncertainty is scary. When employers and employees don’t know what will happen, they conjure up possibilities that often are worse than reality. 2013 could easily be a prosperous year for companies whose leaders replace uncertainty with clear offerings and strategic partnerships. What should business leaders do to prosper in 2013: (1) focus on offerings that customers consider to be essential, (2) trim the fat now by eliminating initiatives that have marginal value, and (3) invest in new products and services. That’s probably pretty good advice for leaders in government agencies, non-profits, the military, and education too.

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