Righting the Economy – Economic Reovery

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In the May 30, 2011 issue of Time, Fareed Zakaria presented a compelling analysis of the causes of and solutions to the sorry state of the United States economy. Mr. Zakaria referee to a global recession and, almost simultaneously, made a case for the economic downturn being less than global. Data from an on-going study of leadership with participants from more than fifty countries supports statements by Mr. Zakaria that some countries and economic sectors have suffered less, if at all, during the so-called global recession than others. Leaders hoping to change the current course of the United States economy can learn from these other leaders.

Mr. Zakaria identified five areas for leaders’ attention: manufacturing, retraining, growth industries, small businesses, and immediate needs. Each of these areas is more discussed than acted upon by leaders in the United States. Leaders wring their hands over lost manufacturing jobs and take few effective steps to stimulate the technical, skilled manufacturing jobs that the United States can sustain and that are difficult to send offshore. Leaders have talked about retraining as essential to economic recovery for several decades, but the talk receives inadequate translation into policy and funding to prepare people who lost jobs for new positions in potentially new industries.

Healthcare, especially tourism related to healthcare, media production, and general tourism stand out for Mr. Zakaria as growth industries. While worthy of exploration and strategy development, other industries must have comparable potential. Leaders in the United States should convene public fora to stimulate thinking about and planning for new growth opportunities for the economy. Small businesses are well-known job stimulators. Leaders need to examine and, where possible, remove barriers to small business growth. At some point, perhaps the definition of small business needs to be stratified so that companies that employ ten or twenty people do not have to compete with companies employing several hundred people for small business set-asides.

Mr. Zakaria recognized the need to get people in the construction and housing sectors back to work. Housing, with apparently systemic or systematic problems with realistic valuation and demand, may not be addressable quickly. Infrastructure, on the other hand, with frequent mention of “shovel-ready” projects dating to at least 2008, should be straightforward for leaders willing and able to lead. Roads, bridges, airports, and other infrastructure elements are in obvious need of repair.

The United States taxpayers invested, or authorized through their representatives the investment of, approximately one trillion dollars, give or take a couple hundred billion, to stimulate the economy. Some day we may learn what stimulation actually occurred, if any, and be able to compare where the money went with where long-term gains might have been seen.

A Lack of Leadership – Prison Overcrowding

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In a letter to the editor in the June 2, 2011 Wall Street Journal, Charles Plushnick of Brooklyn, New York cites the recent U.S. Supreme Court ruling calling for the release of prisoners from California’s prisons as an example of failed leadership in California’s statehouse. Plushnick observed that neither former Governor Arnold Schwarzeneger nor former-now-current Governor Jerry Brown were or are capable of the kind of leadership demonstrated by former New York City Mayor Ed Koch, who increased the capacity of his city’s jails when faced with a similar challenge three decades ago.

Plushnick may be accurate in his assessment of the comparative leadership capabilities of the mayor and two governors. Plushnick seems to avoid the more compelling story of failed leadership. Failed leadership created the overcrowding in our correctional institutions. The problem is not that current facilities lack the needed capacity but that the demand for housing in correctional facilities dwarfs current capacity. That the demand for correctional facilities is so high is the real evidence of failed leadership.

Why blame the prisons? Somehow blaming people responsible for building prisons is easier than blaming parents, community leaders, churches, schools, civic organizations, and myriad other individuals and institutions and their failed leadership. It is easier to say we need more correctional capacity than to say our society is doing a poor job raising and socializing the children we conceive. It is easier to say that a governor in a budget-challenged state did a poor job allocating resources than to say that the number of children we are incapable of raising and of developing into employed, productive members of society, for which leaders at many levels and in many locales should be accountable, has become a number that is unacceptably, even unconscionably high. As a society, we have to start identifying and solving the right problems and stop wasting our time on tangential issues.

Failed leadership is a significant problem. Identification of good leaders by electorates at all levels is also a problem. Perhaps the problem of the electorate is another symptom of the problem behind prison overcrowding.

Leading in the Economic Recovery

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An ongoing study of leadership roles, practices, and behaviors explores distinctions between individuals who disclose that they personally or their companies were financially harmed in the recent economic downturn and those who indicate that they or their companies experienced no financial harm. The responses vary by country.

Economic harm seems more likely among residents of Europe and North America than in Africa, Asia, Australia, or South America. Respondents from North America to date see 70% of 280 reporting financial harm while residents of Europe to date see 58% of 36 reporting a negative financial impact from the economic downturn. Africa, Asia, Australia, and South America reported 43%, 47%, 42%, and 71% respectively. If leading during economic recovery is different from leading at other times, and residents of Europe and the Americas are more likely to have experienced economic trauma than residents in the rest of the world, then we might expect leadership in Europe and the Americas to look differently than leadership elsewhere as the economic recovery proceeds.

Two somewhat universal themes emerge from research and experience. The first theme is that leaders rise to the surface. People display leadership that is disconnected to the position that they hold. When looking for leaders in organizations, we should not limit our search to people in somewhat traditional positions of leadership. It may be that future holders of positions of leadership come out of the ranks of leaders whose leadership is unrelated to their position. At the moment, these leaders have followers and these followers, rather than organizations or communities, give them power or authority based on the value that they bring.

The second theme is related to this added value. One value that leaders consistently add is a vision for the future that followers find compelling, attractive, and attainable at some level. As much as so many people promote the idea that people are afraid of change, the reality may be that the fear is of specific changes and that certain change is not only tolerable but desired at a visceral level. Leaders communicate a vision for a changed workplace or community or world that a critical mass of followers crave, or at least find positively exciting.

To find the leaders, look for the followers. To understand why they are leaders rather than somebody else, look for the vision.

Job Creation and Recovery

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It appears to me that the public discussion, at least coming out of politicians and the press in Washington, DC, seems to be missing several key points in the encouragement of businesses to create jobs.

For 25 years, I have, among other things, helped companies and government entities to improve productivity and operational and financial performance. For decades, companies have pursued improved productivity, leaner operations, and more efficient processes, with less waste, less rework, and less labor content. Consultants like me have helped government entities and companies in most, if not all, industries tie staffing levels to demand for products and services. I’ve helped insurance companies align staffing with sales activity, policies in force, and claims caseload. I’ve helped an accounts payable department in a government entity tie staffing to incoming bills to be paid. I’ve helped startups understand the timing of when to add staff, add executives, expand offices, and open new offices, all tied to workload.

Of course, I have done many other things but the point is that the mindset of people in the US economy is geared to connecting hiring to increased workload and demand for products and services. For fifty or sixty or more years, companies have been trained to avoid speculative hiring and to not add staff until existing staff is “fully” utilized with an acceptable level of overtime.

Government entities may have the luxury of hiring without corresponding demand for goods and services, but for-profit companies no longer feel they have that option. In this economy, it may not be reasonable to expect companies in the US to hire until demand for goods and services improves. Perhaps that is the intent of the various economic stimulus packages, but the connection, other than providing cash, between stimulating the economy and stimulating hiring is cloudy, perhaps as indicated by the tepid hiring and slow recovery.

If the federal or state governments want to stimulate hiring, the stimulation needs to be directed at demand and not simply at providing funds to act on assumed demand. The large cash hordes in so many companies may be the best indication that cash is available but demand is growing weakly, if at all.

Transitioning Out of Latent Conflict in Kenya: A Call for Leadership

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The continuing political crisis in Kenya, as reported at The Independent among other places, continues to surprise some and disappoint many who have been to Kenya for business or pleasure. Having visited Kenya 12 times since 2004, to attempt to offer hope to refugees at the Kakuma Refugee Camp and to serve as a resource to leaders seeking a sustainable resolution to the, until late 2007, somewhat latent conflict in Kenya, I have been disappointed yet not surprised by the recent dispute between Kenya’s President and Prime Minister. This time the conflict appears to be over the authority of the Prime Minister to discipline Cabinet Ministers; this may be the symptom rather than the underlying problem. As with 2008’s post-election violence in Kenya and other episodes of conflict in the world today, a primary issue seems to be ineffective leadership.

In recent research for my doctoral dissertation, a leadership model emerged from the consensus among 375 leaders in Uganda’s Acholi sub-region that may apply to the Kenya context. Leaders, by what they say and do, and by what they do not say and do not do, define the beginning and end of conflict, the resolution of issues, and the reconciliation of interests and of individuals. Leaders divide people and reintegrate them.

Based on input from 375 leaders in Uganda, effective leaders suppress self interests in favor of community interests; when persons in leadership positions pursue self interests over community interests, members of the community may feel that the community is receiving ineffective leadership. Effective leaders pursue, develop, and provide culturally appropriate leadership training to help groom the next generation of leaders. To the extent that the same people seem to be recycled through positions of leadership and new people remain invisible or are not developed as the next generation of leaders, members of the community may question whether promises of new vision and change are empty slogans.

Leaders seeking a sustainable post-conflict heal broken relationships, guide define and guide needed change in their community, coordinate resolution of development issues and resource acquisition and allocation. Post-conflict leaders may become pre-conflict leaders if they pursue division and the opening of wounds. Leaders communicate a compelling vision to the community, model culturally appropriate behavior, and collaborate with other leaders within and outside the community. If the vision is not compelling or is poorly communicated, if the modeled behavior is culturally inappropriate, or if the would-be leader appears to isolate rather than collaborate, community members may suggest the would-be leader, or the people in positions of leadership, are not exhibiting leadership.

The more than 17 million refugees and internally displaced people in the world today, the conflicts in Uganda, Kenya, Nigeria, Sudan, Somalia, the Democratic Republic of the Congo, and elsewhere may indicate ineffective leadership. The world’s refugees and internally displaced, along with those of us fortunate to not be direct victims of the world’s conflicts, deserve effective leadership and people in positions of leadership who exhibit leadership. The context for leadership in regions transitioning from conflict to post-conflict is different from the context of most other types of organizations. An appropriate model for leading out of conflict may facilitate the recovery and rehabilitation in the world’s conflict zones. Will leaders choose to lead?

Elected leaders need to set aside their self-interests and lead the whole governmental unit, whether a nation, state, or district, and not meet only the needs of their party, people group, or clan. If historical, latent conflicts exist, resolve them rather than perpetuate or rekindle them. Where consensus exists, build on it; where consensus is lacking, either build consensus or seek compatible, parallel paths. Heal wounds and restore or, if possible, celebrate differences without creating an “us versus them” climate or dehumanizing “them” because of perceived differences. Create opportunities for all to advance rather than advantages for the few.

Above all, leaders should understand that would-be followers expect leaders, especially those in elected positions of leadership, to lead. A self-described leader who lacks followers may likely find that others do not consider the person a leader or their practices to represent effective leadership. Eventually, a person in a position of leadership who does not lead may find themselves removed from their position. The history of coups, revolutions, and elections in Africa and elsewhere should provide sufficient evidence that eventually people expect their leaders to lead them.