Thursday, April 25, 2013

On The Euro Crisis


One cannot look into the Euro Crisis without thinking about leadership or the lack thereof. In my opinion it is a very interesting case because of its sheer size, its implications in Europe and globally, its complexity, and the number of different political leaders involved calling the shots. One can observe what it means when a collective of leaders, each one with a very different agenda, are making decisions based on the lowest common denominator. One can observe what impact it has when, instead of making the decisions based on reason and facts required for operating such a complicated currency system safely, shortsightedness, egoistic and emotional national thinking, and lack of integrity become the decisive force behind the curtain. 

On a personal note: I think a unified Europe is the very best thing that we can have for all the different European nations. The European Union is of course far from perfect, but also much, much better than the alternative of falling back into separated national states. What is required though is that everyone of the population, no matter what nationality you might have, goes behind the European idea and makes a stand for it! We cannot leave that just to our politicians. We have elected them to make it work, and not to make it dysfunctional. Complaining about that and then turning your back to such a wonderful idea is obviously not helpful for anybody. We are in the information age and everyone can be informed instantly, can learn and understand! There is no excuse for not doing it ... and then still electing our leaders based on ignorance. “People will always elect the government they deserve!” - quote attributed to Joseph de Maistre. 

It’s up to each one of us to deserve better!

The Situation (a very brief snapshot)

The Euro Crisis to me is the quintessence of the complete lack of leadership. It began as a rather, as it seemed, good idea way back in the early nineties. Also, it had a lot to do with unification of the two Germany’ s: The Federal Republic of Germany and the German Democratic Republic. France had a problem with that and made it clear that Germany had to pay a price for that, and the price was giving up the D-Mark. France thought that this would balance better the economic power of a reunited Germany. Germany on the other hand had a different problem: It had to shoulder the impact of the reunification, resulting in huge transfer payments to the former GDR. Basically everything had to be rebuilt in that part of Germany. Great Britain neither wanted the two parts of Germany being reunited, nor did they want the Euro at all. However, it was agreed that the Eurozone would certainly anchor Germany much better within the EU. Politically it was already an ambitious undertaking, given the different open and hidden agendas of the players. Economically, the Eurozone makes a lot of sense, provided you set it up right, and that is an enormous challenge, even without the political constraints and prohibitions. 

The Case

In 1992 the Maastricht Treaty was signed. It obliged most EU members of the so called Eurozone to adopt the Euro upon meeting certain monetary and budgetary convergence criteria.
 At first the necessary research was done and it became pretty clear what it would take to bolting together such a currency union. A currency union by itself is a rather complicated system, but a system nevertheless. Therefore it is possible to design this system, describing and determining the essential components required to make the system work flawlessly. Also, control mechanism must be installed enforcing the compliance with the system criteria. Granted, it is a huge project indeed. As far as we can know that was actually done and the first design took these findings into consideration. It became very clear though that not each and every country could become part of the currency union. Actually, only a few countries, comparable in their economies, would be fit to join the Eurozone in the beginning. Others might have the chance to join later once they would meet the determined criteria. There was a consensus about that between all those understanding the matter. 

And then at that point the politicians came in ...

With the political meddling an already complicated system got its complex dimension. Each one of the political leaders had and has his / her own constraints and prohibitions. First and foremost they are worried about their reelection. Once they have such a position of power, they become very reluctant to give it up. That can be seen very clearly in the handling of the creation of the Eurozone.

What one would expect from Leadership:

From Leadership, and that includes each one of the political leaders, you would expect that they listen, learn and understand the system, in this case the currency union. It does not mean that the leader has to become the specialist, far from it, the leader needs a general understanding of systems and, in this case, how currencies work, how money is created, how an economy works and its financial subsystems, ... it sounds very complicated and it actually is, depending on how deep down into the rabbit hole you want to go. A leader must understand enough to be aware of the consequences of decisions made ... or the lack thereof.

You would expect that, for instance, a prime minister / chancellor / president with the help of their specialists, the secretaries of Finance, the leaders of their Federal Banks, and their financial advisers have enough of an understanding of such matters. That’s what they have been elected for, right?
You would expect that such leaders, given the understanding of the system, would come to similar conclusions. Then, they should actually be able of making a rationale decision taking into consideration the facts, the system constraints, and the safety / security measures needed. And, as political leaders of the European Union, you would expect them that to have first and foremost the agreed upon overall goal in mind: Bringing Europe’s nations even closer together by creating the Eurozone as a tool to increase the overall prosperity for all european citizens in the long run. 

What actually happened:

Even though there was a general understanding of the leaders (at least they claimed that they understood it, however, one can never be sure ...) of the system and the overall goal for Europe, each one put on the table their very own agenda. Their “own agenda” means that there was the official own agenda and also the hidden own agenda. What was supposed to be rationale approach became an emotional and political debate ... well, more like a push and pull over the table ... kind of a “don’t confuse me with the facts” approach. How many political leaders in the EU are required to screw in a light bulb? Answer: they can’t even agree what a light bulb is ...

Meanwhile we know the result. Countries definitely not fit for the Eurozone could join anyway (“We cannot leave Spain and Italy out ...”), numbers after all were just numbers and could be changed ... especially in Greece and with the infamous help of Goldman Sachs. Control mechanisms were either not even installed, or limited in their function. People understand the matter and warning were either told to shut up (“not your responsibility”) or simply removed. Gaming the system became the sport as it seems. And sadly enough Germany, the country which was most insisting in the strict criteria, control, and penalties, was with France the first one in not fulfilling those criteria. That opened Pandora’s box. Then Greece joined and actually no one was in charge to check their numbers (“One cannot go to Greece demanding that they show us evidence how they got to their numbers”).

The irony is that, what France thought would kind of limit Germany’s economic power, actually strengthened the economic power of Germany. Especially, because Germany became painfully aware of what needed urgently to be reformed in the country, and it went through very painful reforms, resulting in an increasing economic and financial strength. For Germany the Eurozone was definitely of advantage.

Where the Eurozone is now

2008 and 2009 the biggest financial crisis broke out, the so called “Financial Meltdown”, originated in the US. The reasons for that are well known in the meantime and numerous analysis and books have been written about it. Since the large banks in Europe obviously participated in this gamble the crisis hit Europe as well and became the litmus test for the Eurozone ... and what a litmus test! Without mercy this crisis showed the failures and shortcomings of the Eurozone system. Also, it showed the failure in leadership when creating the Eurozone, and also during the last years the failure in leadership to recognize and understand the roots of the problem. On top of that the old problem of European political leaders became again apparent: their inability, unwillingness, and downright ignorance of the bigger picture of Europe. Again each one was and still is pursuing their very own agenda. The result of that we know: Greece going down, Portugal, Ireland, Spain, Italy on the brink. In hindsight not surprising at all. Germany can choose between two evils: Staying in the Eurozone and paying for everything, or leaving the Eurozone and getting back to the D-Mark. Is there still hope? No one, not even the experts, can know. Time will tell ...


One can look at it from many angles, yet, it is very clear that the cause of the problem is the lack of leadership. Blaming the system is all too easy. When you build it wrong and on top leaving out essential parts, you are setting the system up for failure. And that’s what the European leaders did. 
It also shows clearly that 27 leaders trying to lead and no one following does not work. It will always end up with the lowest common denominator if anything, and not with the best possible decision. On top to even reach the lowest common denominator takes up so much time you just don’t have ... especially when facing such a huge fire. 

Of course, it is easy to look into all that and find the flaws ... especially in hindsight. Being a leader is a very tough job, even more in such circumstances within the constraints of the European Union. There is no such thing as command and obey, you lead by your own example and your ability to communicate on multiple levels with each and everyone involved. It is what Stanley McChystal called: shared consciousness and purpose. 

Now let’s think about how each one of us would have performed being one of the 27 European Leaders ... 

Friday, March 01, 2013

On Complexity

Our world is complex and it always was. However, the complexity leadership is confronted with today, extends beyond common comprehension.


Globalization requires leaders able of knowing and understanding different cultures, different cultural backgrounds. Understanding the Art of Communication, tuning in into the frequency of others no matter where they are from, is indispensable for any leader. Situations, where a leader has to deal with many different cultures simultaneously, are becoming much more frequent now in our connected world. Discussions on a daily basis via, for instance, video chats with people from all over the world are meanwhile normal. Teams are already consisting of people from different countries, and that will increase dramatically. Collaboration and cocreation on a global scale is becoming the norm, since people can easily connect to each other in real time 24/7. Hence, this is adding big time to the complexity of leadership. 


Technology is creating an ever faster paced environment, putting information at the fingertips of everyone in real time. Big data is suddenly available in a depth and richness unprecedented in history. Getting these vast amounts of data analyzed and made sense out of it is simply essential for leadership. Leaders then must be able to quickly assess what the data means for their decision making. For that their team is crucial ... a stellar team with diverse backgrounds. 

The Transformation of Organizational Structures and Society

We are just at the beginning of a massive transformation of how organizations of any kind will be structured and operating. You ain’t seen nothing yet ...

The increase in complexity, coming with that transformation, adds to the uncertainty Leadership is facing and being exposed to in any given situation. More often than not leaders will find themselves in unfamiliar and sometimes extreme situations. Yet, they will have to assess almost instantly how to act upon or react to whatever comes along. For that to happen leaders need to be trained in developing the highest situational awareness. And the leaders alone might not, cannot always see everything. Too many things might be happening all at once, too much data coming in. In such a complex environment only the well trained team in close cooperation with an equally well trained leadership makes the big difference. The role of the leader is transformed into that of a connector in an ever more complex system. Leaders, who surround themselves with world class people, capable of challenging the status quo ... people bringing, each one of them, different and controversial points of view. That requires more than anything trust in the capabilities of everyone, trust that each member is doing its job in excellence, trust that the leader truly leads the team from the front, from within ... becoming one with the team, so to speak. The new leader is in that role, as I see it,  the primus inter pares, the first among equals.

We need this new kind of leadership ... the leadership of the 21st century ... able and trained to take on the challenges of this transformation ... seeing and seizing opportunities where others might only see chaos ... thus, creating the mutually beneficial organizational change ... creating the new society. We need Excellence in the Art of Leadership! 

Monday, February 25, 2013

On Dealing With The Unexpected

As a leader more often than not you have to deal with the unexpected.  Face it, also as a leader you know much less, than you might think you do. Yet, your people you lead are looking at you, are waiting for you to lead. You must develop this awareness of what you truly know, and even more what you don’t know ... cannot know. Your decision making, the quality of your decision making depends heavily on that. You must know when to make a decision for taking action, and you must know when not to decide for action, in any case, you decide! 

Imagine this situation:

February 1982 in Mexico. We were just at our office when the President of Mexico made his announcement. He was informing the nation that the country was dead broke ... that this was the fault of the international corporations ... that therefore the oil industry will be nationalized ... the entire banking sector will be nationalized ... that the rest of the industry will be under tight government control, especially pricing and importing goods ... that international traveling will be restricted ... that accounts in USD or other foreign currencies will be exchanged into Mexican Pesos at an arbitrary exchange rate ... that having foreign currency may be penalized ... and those were just the big points. How do you handle such a situation as a leader in your company? It feels like all alarm bells ring at once ... including the master alarm ... and you have not much time to react ... you must assess the damage and quick ... you must decide without having the essential facts for good decision making ... what do you do? Employees and workers were at the brink of panic, looking at us in leadership positions ... desperately waiting for being told what to do. The Titanic was sinking and rearranging the chairs on the deck would not be good enough ... 

That was the day, and I was a very young area controller back then, when all my naïveté suddenly fell off me ... when I realized that neither I, nor my top leaders had ever been prepared for something like that. We met in an emergency meeting with our Managing Board and went through our options ... well, you could barely call that options ... and one person was remarkably calm: our CEO ... a former U-Boat captain and used to the unexpected ... we assessed the damage, main problem was our cash reserve under these circumstances, then made some tough decisions right away: We had to lay off 15% of our workforce immediately, had to size down production levels to one shift only. And then the most important decision was made: with the cash we had we would pay first the salaries of the workers, then employees, then managers, and if there would be still something left top managers would be paid. We wanted to make sure that even facing the lay offs people would know and understand that we wanted to keep as many of the as we could. Keeping the knowledge and knowhow on board was crucial for the turnaround waiting for us. 

There was a moment when the discussion went towards shutting down everything and then just wait ... saving money through dramatically reduced cost. But reason kicked in and the understanding that you cannot save yourself rich, so to speak. The operation had to go on to avoid the sinking. We made all those decision for action we had to make right away to keep the company alive, and we postponed all those decisions we could to gather more data / facts and then decide actions to take. All that we discussed and decided in a matter of hours. 

What would you have done?

Friday, February 15, 2013

On The Magic of Storytelling

Leadership is first and foremost having the vision of where to go. A vision is always long term, and, to me, long term means envisioning 10, 20 years ahead. Then, only then you can think about the strategy and tactics you might have to deploy to get there. And for that matter you need your people and their fantasies, and your people need to understand your vision ... they must become one with your vision, so to speak. Broadcasting your vision will not be good enough though, you must engage and excite your people ... you must play to their fantasies. Wrap your vision in a story ... a story compelling enough to get their full attention. The daily life is rough enough for people, the daily trivia numbing them already. To get their undivided attention, to tap into the full potential of their fantasies, people want to be romanced by your story. Enrich their world with your story! The greatest leaders in history were also great storytellers! There lies great power within the Magic of Storytelling.

Wednesday, February 13, 2013

On Reputation

Everything depends on your reputation, especially being a leader. Reputation is based on your core values ... such as Integrity, Honesty, Trustworthiness. People will measure you against your values, looking into what you are saying and even more what your are doing. Building your reputation takes a lot of time. Protect your reputation with your life if needed, so to speak. Stay always true to yourself and your values, never settle for less! Your reputation is a decisive factor when it comes to true leadership. When you slip only once it will be gone in a second ... and so will be the people having trusted you! And always remember: How you do anything in life, you do everything! 

Tuesday, February 12, 2013

On the Secret of The Casual Conversation

The Secret of The Casual Conversation is one of the essential pieces of the Art of Communication. Knowing and understanding casual conversation, and then mastering it enables the leader to sense the underlying motives, concerns, wishes etc. of people. An excellent general knowledge is, of course, indispensable and any true leader must have that! Mastering Casual Conversation allows for connecting with others on a much deeper level. Being able to eloquently and educatedly participate in any conversation about any general topic, and demonstrating empathy for the others, attracts people to be listening to you. Leadership is about the influence a leader has in those who follow. and influence can only be built via establishing likability and trustworthiness. The Secret of The Casual Conversation is an essential skill any leader must have.

Monday, February 11, 2013

On the Art of Communication

A true leader must first and foremost master the Art of Communication! Communication is the single most essential ingredient getting across your thoughts to people. It requires the ability to tuning in into the frequency of others, thus being able to sense where they are coming from. Empathy for people is absolutely crucial, and so is integrity, honesty, and trustworthiness in your doing. Accepting people and acknowledging them as who they are is the key to truly connecting with them on a deeper level. Communicating begins with listening, and continues with even more listening. It is about the others and not about you as a leader. Paying attention to what they want is opening the channel for cooperation, collaboration, and cocreation. Hence, people will feel that what they do is meaningful. And people doing meaningful things are most motivated to deliver excellence!

Friday, February 08, 2013

On Ethics and Integrity

As a leader you have power, and with power comes responsibility.

Immanuel Kant once said: "So act that your principle of action might safely be made a law for the whole world!" 

Nothing less can be expected from a leader. Today more than ever, and in the time to come we need true leadership ... leadership based on the highest values such as integrity, honesty, trustworthiness. This is true for society at large, not only for organizations. 
With the ever advancing technology, as seen in virtual social networks, people have now more than ever the ability to hold leaders publicly accountable. However, there is an important point people must observe: The very same integrity, honesty, and trustworthiness we expect from out leaders, applies to us as well. 

Tuesday, February 05, 2013

On Traditional Leadership

In the long history of mankind there was always a small group of people leading. Sometimes, these were the smartest, and sometimes these were the strongest and bravest. Over time different systems brought about different leaders. Yet, they were all either smart, strong, or brave ... or all three of it. One quality, however, has been there in all of them: they knew that power is never granted, power is taken! This has never changed. The traditional system evolved being based on command and control, a system that worked so well ... or so it was thought. 

With the rapid advancements in technology, mainly information technology, virtual social networks appeared. These networks are effectively disrupting the way information was exchanged before. Suddenly, everyone has the ability to participate on these platforms, to cooperate and cocreate, and, even more important, make oneself heard. Corporations, organizations at large are feeling the impact and their leadership must react. Reacting alone might not be good enough though. Knowing and understanding the art of communication, and the power of cooperation and cocreation is making it necessary to creatively destroy the old systems and bring about a new kind of leadership: Leadership embracing cooperation and cocreation!

We are just at the very beginning of understanding what we have at hand already.


Monday, February 04, 2013

On the Transformational Power of Social Media

Technology is advancing very fast. It brings about a dramatic change on how our organizations at large, our societies will be structured. There is a shift in power taking place, a shift towards cocreation and collaboration on a global scale. People are no longer just employees ... paid slaves so to speak ... these jobs are being eliminated fast during the next years. People are effectively becoming the enterprise: You are the enterprise! And these people want to participate in the process, they are an essential part of our society to come. They want to do meaningful tasks, they want to be heard, acknowledged, and respected. The new kind of leadership is becoming part of that process ... more moderator than commander ... more coach than boss ... more empathy than distance! You ain't seen nothing yet ...


On New Leadership

What we need, in my humble opinion, is a complete makeover of Leadership ... creative destruction if you so will ... and bring about this new kind of Leadership: people, who not only repeat, like nowadays in many cases, what they have been taught as skill sets ... people, who truly live this new kind of leadership required ... why are these people leaders in the first place?. Then trust can be built with the employees. To me, this is not only a task for companies ... this is the task at hand for society at large!


On Requirements for Leaders

We had great leaders in the past, we have leaders now, and we will definitely have leaders in the future! Each organization needs leadership, needs direction, needs vision. The requirements for leaders are changing / evolving, and that has always being the case. The qualities of a leader, which distinguish a true leader from others, are still the same and are certainly not defined by, for example, a CS degree combined with the thinking / believing that people are just data. You are a good leader when people freely and confidently choose to follow you, when people see your integrity, your honesty and choose to trust you! If you want to find out, just turn around and look if someone is following you.

On Traditional Hierarchies

No longer is it good enough to have the traditional hierarchical structures in place. The new leaders don’t get their power out of preset / pre-described positions. The new leaders are getting their power based on the knowing and understanding of these complex networks, are getting their power from their ability to read and understand the connections , are getting their power from their ability to tuning in into the frequency of others, are getting their power on the degree of influence they have with the many followers, are getting their power based on their knowing and understanding that human beings are so much more than just a bunch of data left behind . The new leaders are the central connectors within the system, the new leaders make the connectome (see: work.

On the Impact of Technology

Technology will enable communication in a way never seen before. People in these organizations are connected on a worldwide scale, communication is interwoven / entangled and every bit of information is available instantly and on your fingertip.

The amount of information is already beyond comprehension and often adding confusion at a grand scale. And that’s the crucial point where leadership is required.

On Organizational Change and The Leadership of The Future

Technology is of course influencing organizations, thus forcing them to adapt. Nothing new here. Virtual social networks are indeed a game changer, and organizations are already being reshaped taking advantage of the possibilities. So called social layers will be integrated into these evolving organizations, facilitating communication within the organization and also outside the organization. The borders between inside and outside will subsequently be more and more blurred.

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