Grexit: A Crisis of Leadership?
Leaders don’t confuse managing a problem with solving it.
CamStrat’s Head of Business Strategy Gareth Coombs explains why you can’t manage a problem forever.
As widely anticipated, last week’s ‘ultimate deadline’ for Greece to make good on its next repayment proved no more conclusive than the previous five — the problem being kicked (yet again) just a little further down the road, only to re-surface with another ‘make or break’ news headline in a month’s time.
This feels like it’s been going on forever: Germany and European economic experts demanding Greek reform in exchange for propping up the southerners’ moribund economy; Greece offering just enough reform to unlock enough German cash to keep it running until the next deadline.
So after all the 11th hour negotiations, why do find ourselves back here again? Simple. Because either of the two long-term solutions are just too toxic to contemplate. It suits all parties to try and manage the problem to an acceptable level and hope that it somehow resolves itself before exploding out of control.
But hey, what’s the problem? It’s sort of worked for five years. Maybe we could just do this forever?
And at one level, we could. Germany has plenty of cash and even more credit — funding Greece isn’t really hurting them. Greece avoids having to make any killer cuts, stays in the Euro-zone and does just enough not to cause a political crisis in Germany.
At another level, this is a powder keg waiting to blow. Under the current conditions, the Greek economy will remain in a zombie state forever. If Greek Prime Minister Alexis Tsipras loses the patience of his electorate, no-one knows where Greece is headed next politically. Negotiators should also bear in mind; a lot of conflicting pressures in Germany are held together by the strength and steady nerve of Angela Merkel. She isn’t going to be around forever and if her successor lacks her consummate skill at balancing seemingly intractable forces; fault-lines could be exposed in Germany that will have repercussions across Europe.
You can’t manage a problem forever.
The never-ending Grexit crisis may seem just one more lamentable mega-farse of modern European politics, but in fact, this high-stakes brinkmanship is something that can be witnessed in boardrooms of many organisations and institutions.
At CamStrat we regularly encounter not dissimilar dynamics playing out in companies facing crises ranging from financial turmoil to dramatically shifting business landscapes. It’s at these testing times that an organisation’s leadership proves its worth: either rising to the challenge of dealing with unfortunate circumstances; or shrinking away from the painful reality and papering over problems. Leaders don’t confuse managing a problem with solving it. (Read more about what else leaders know in our free report ‘Leading From the Side’)
Navigating through crisis is much like bringing a plane into land; you’ve only got so much runway before you over-run and crash out. Every moment’s delay gauging the dials, managing the politics and avoiding uncomfortable truths is using up precious metres of safe landing space. Whilst certain short term priorities will inevitably need to be smoothed over (staff moral, for example), managing these intricacies must not slow steady descent to a real, long-term solution; or else risk ploughing the whole operation into the ground. Managing a crisis is wise only as long as each move leads the team/brand/organisation closer to that much needed solution. The dangers of operating in denial are grave.
How much runway does Greece have left?
The island of Cephalonia off the west coast of Greece — south of Corfu — boasts a small international airport that boarders on to the Med. Either end of the runway backs on to the shore with planes landing and taking off in between expanses of blue.
The treacherous terrain that Tsipras et al. have been navigating bears some similarity to this little costal terminus: snapping to any solution too hastily (something that was of course easy to avoid) risked plunging the Greek economy into turmoil; pushing back the deadlines one too many times in contrast could risk spiralling out of control (when Merkel steps away, for example) into a sea of uncertainty.
The question is — does Merkel, Europe or the Greeks have a long-term solution to work towards, or are they consumed by managing immediate challenges? If they do have a plan, will moving towards it be more or less painful as a result of the deliberation and delay? Is the end game likely to be better or worse as a result of letting the politics of it all play out, rather than facing up to the brutal and painful truths earlier?
This is when leaders need to lead.
We live in an age of diminished leadership. The corruption of our politics, criminal behaviour within trusted institutions, and the greed of gargantuan banks paint a grotesque background to any leader’s portrait.
At Cambridge Strategy Centre, we believe there is a new breed of leader working very hard to adapt to new conditions in the twenty-first century. To prove it, we’ve been carrying out in-depth interviews with CEO’s and leaders to uncover insights on the qualities needed to be a leader in the modern world.