Bob MacDonald on Business

Sage Advice for Superior Business Management

Bob MacDonald on Business header image 1

Teams Don’t Lead … Leaders Lead

October 19th, 2014 · Business Management, Politics and Politicians Gone Awry

Consensus is what you seek when you don’t really know what you seek.

After almost six years in the White House President Obama has consistently demonstrated a proclivity to deal with any problem or crisis by seeking a solution based on consensus and coalition. This has resulted in the impression – true or not – of Obama as a ponderous, indecisive and ineffective leader.

Considering Obama’s background as a constitutional lawyer, community organizer and even U.S. senator, it should not be a Obamasurprise that as president he would adopt this collegial, deliberative approach to problem solving. These qualities of consensus building and collaboration can be effective when confronting a problem – indeed are often required – when one lacks clear executive power, but they are ineffective ways to demonstrate the leadership demanded of those vested with power.

Rightly or wrongly, the American people expect their president to lead, not mediate. When it comes to leadership –especially political leadership – the dependence on consensus-building and coalition to set an objective or solve a problem are perceived to be signs of waffling and weakness, not resolve and confidence. It is one of the reasons why – having experienced power and its use in the public arena – state governors and military leaders have tended to be more effective presidents.

Same Old, Same Old

No matter what challenge or crisis that has confronted Obama – health care, immigration, Iraq, Afghanistan, the “Arab Spring,” Libya, Syria and now ISIS – the approach has been the same. He has offered the words of a leader, but the actions of a manager; and a bureaucratic one at that. In effect, Obama has made the most damaging mistake a leader can make and that is to promise more than can be delivered and to deliver less than has been promised. Those who seek to lead or are in positions of leadership must understand that it is the communication of a clear, consistent vision, combined with a focused commitment to a specific plan of action that creates the aura of leadership. In other words, to be successful, leaders must give followers a reason to follow.

Don’t get me wrong here, consensus and coalition are important tools in a leader’s arsenal, but they should never be used by a leader to determine what should be done; they are only effective when used to develop a plan for how the objective is achieved. Teams can be of value in determining actions needed to meet the goals of a plan, but they are ineffective at creating a plan. Teams don’t lead, leaders lead.

Examples of Obama’s inability to demonstrate clear, focused leadership – especially in foreign affairs – are too legion to list fully. After calling for and promising support for the expansion of democracy in the Middle-east and then standing on the sidelines as the tumultuous “Arab Spring” exploded, Obama gave the perception of out-of-touch leadership. The often repeated promise that Syrian leader Bashar al-Assad “must and will go,” and yet unwilling to take specific actions to achieve that end, only send a message of confusion and weakness. Remember the infamous “don’t cross this red-line or you will be sorry” message to al-Assad? And then when the line was crossed, Obama blinked and rushed for “consensus” from both friends and enemies to decide what to do. He had offered strong words, but his actions signaled vacillation and weakness of resolve. That is not the way to project strong, confident leadership! The irony is that this opened the door for Russia’s Putin to take the lead and receive the credit for solving the problem.

The projection of weakness always emboldens bullies. One has to wonder if Obama had a reputation for saying what he means and doing what he says, would Putin and Russia have at least thought twice about the incursion into the Ukraine and annexation of Crimea? Did Obama’s often repeated declaration that “the war in Iraq was over” and America would not be involved again embolden ISIS to act?

The threat from ISIS and how to confront it is just the latest example of Obama’s reliance on consensus and coalition that creates the image of confused weak leadership. He calls for the “total destruction” of ISIS, (which is probably impossible, short of nuclear war) but in the same speech limits the involvement of American power to do so and calls on other countries to step up with plans and actions. Obama then directs the arming of rebel groups in Syria to fight ISIA. The very same groups he refused to arm to fight al-Assad, because they were too dangerous to American interests. This does not portray an image – or reality – of clear, consistent leadership. Is it any wonder that other countries are standing back and doing nothing? Can you explain what Obama’s plan for the “total destruction” of ISIS is? That’s the problem, neither can he!

In fairness, any problem presented to a president is complex. There are no easy solutions and Obama is certainly not the first president who has failed to resolve the issues. But there are lessons here that any leader can learn. You can’t portray the image or reality of a strong leader by unequivocally stating that “American troops will not be involved” and then equivocating by slowly but surely creeping back into a war.

The responsibility of the leader – if they want to lead – is to develop, communicate and be committed to a vision that is reasoned, clear and achievable. What confidence will a leader engender by going to the followers and asking: What should we do? The ability to create a consensus and to enlist the support of others are valuable talents for a leader to develop, but they should be used to determine how to do something, not what to do.

Another lesson a leader can learn by observing Obama’s leadership style (or lack thereof) is the value of consistency. Nothing destroys the credibility of a leader faster than saying one thing and then failing to consistently – even stubbornly – stick to what was committed. We have seen the impact on the leadership perception of Obama when his only consistency has been to make commitment and then fail to stick to it. People may not – and really don’t have to – agree with the decision the leader has made, but when they can rely on the unwavering steadfastness of that decision, they will know what to do. Without that decisiveness, followers tend to be immobilized, waiting for the next change.

Reagan1And if you need an example of unremitting presidential decisiveness, recall Ronald Reagan’s leadership when in 1981 he fired virtually all 11,000 of the nation’s striking air traffic controllers. You may disagree with his decision, but you have to admire Reagan’s leadership on this issue and steadfast resolve to stand behind his decision which became viewed as “one of the most important events in late twentieth century U.S. labor history”.

That’s why weak leaders are so contemptuous; they hide behind “consensus and coalition” because this approach to a problem can tamp it down and delay making the tough decisions that will ultimately resolve the problem. This approach may hide a crisis, but the crisis will always return. And when it does, a new leader has probably been installed to meet it.

And the Moral of the Story …

The lesson here is that if you seek to be a leader – at any level – then you have to be willing to lead. As Obama has learned (or should have), leading is not following. The leader must be willing to stand up, stand out and even stand alone to identify, communicate and commit to a clear, attainable vision to problem solving and success. Only after that has been accomplished can consensus and coalition be used as tools to reach the desired objective.

The only path to success as a leader is to first understand that leaders lead and teams follow.

PDF Creator    Send article as PDF   

→ No CommentsTags: ···

AIG’s Hank Greenberg is the Poster Child for the Greed, Arrogance, Hubris and Lack of Shame Exhibited by Many Big Bankers and the Denizens of Wall Street

October 12th, 2014 · Business Ethics, Business Management, Financial Services, Improving Your Business Leadership

It is a classic case of megalomaniac superciliousness and brazen hypocrisy. Hank “the snake” Greenberg is suing the U.S. Government for $40 billion. His claim? The government was “unfair” to him and other shareholders when it pumped $184 billion of taxpayer funds into AIG to rescue it from certain bankruptcy.

It may seem like only yesterday when the U.S. was hammered with the worst economic decline since the Great Depression but if you had any delusions that the kind of economic insanity exhibited by bankers, financial gurus and insurance execs who pushed us to the brink of economic annihilation has disappeared, that notion was just shattered by Hank R. Greenberg who has filed a new complaint against Uncle Sam. More about that in a minute.

Greenberg, of course, is the former head of AIG Insurance, and if you don’t remember Hank’s role in this monumental financial firestorm, you’ve probably also forgotten that, not only did Nero play music while his people suffered and Rome burned, but he was a greedy and ineffectual leader in a time of crisis.

The apparent psychotic delusions of Greenberg are so grandiose and in such conflict with the reality of what happened, it is difficult to apply any form of logical sanity to his repugnant action, a fiddling Nero notwithstanding. It is impossible, one could argue, to underestimate the craftiness, deceitfulness and guile of Greenberg and those of his ilk. “Doing the right thing” is the first victim of those like Greenberg who are driven by the testosterone of greed, arrogance and lack of any level of shame or accountability for their actions, no matter how egregious they might be, or how well defined.

gall 1 |gôl|
1 a: brazen boldness coupled with impudent assurance and insolence
1 b:  see temerity or alternately, “Hank Greenberg.”

Greenberg should be in court all right, but he should be the defendant, not a plaintiff. If it were not for the lessons to be learned by dissecting the abhorrent attitude that gives Greenberg the unmitigated gall to take legal action against the government over the AIG bailout, the best thing would be to simply mock him for being so blatantly unscrupulous. But in this latter day immorality play it’s futile to rely on reality and logic when dealing with someone who is so wholly deranged by deep-seated greed and personal hubris.

The Greenberg Lawsuit: a model of fallacious reasoning

The mistakes of history are often repeated when those who made the mistakes are allowed to rewrite the history of those mistakes or when the lessons learned from those mistakes are forgotten by those who were victimized and are allowed to be repeated. It appears that Greenberg is relying on both these factors in his effort to extract more money for himself from the government.

The basis of Greenberg’s litigation is that (1) the government exceeded its constitutional authority by forcing AIG shareholders (of which Greenberg was the largest) to sell 92 percent of their stock to the government for $184 billion. And (2) the terms of loans made to AIG by the government at 14 percent interest were tantamount to “extortion.” By reason of the latter, Greenberg now claims the government (i.e., we taxpayers) owes him $40 billion.

His logic is utter nonsense. As one pundit discussing the lawsuit put it, this is akin to a house fire caused by your own negligence and then, after the fire department saves your home, you sue them for getting your furniture wet. Greenberg’s only hope to be victorious in this lawsuit is that there will be mass amnesia as to the reasons why the government was forced to bail out AIG and its shareholders in the first place.

In September of 2008, AIG, then the largest insurance organization in the world, was on the precipice of bankruptcy. AIG had been pushed to the edge of implosion, because of irrational decisions motivated by the seemingly boundless greed of Hank Greenberg and others at the company. This stupendous lack of good judgment prompted AIG to insure hundreds of billions of dollars in potential losses from toxic mortgage securities sold by virtually every major financial institution in the world. In doing do, Greenberg drove AIG to violate every fundamental insurance law of risk management, all in a self-serving determination to maximize short-term profits and bonuses.

When this mine field of poisonous mortgages began to explode and rip through the economy, AIG found itself saddled with hundreds of billions of dollars in claims that dwarfed the total assets of the company. Not only was AIG insolvent – some say within hours of running out of money and being forced to close its doors – but the companies that had purchased AIG’s “mortgage guarantee insurance” would also face failure. This could have quickly caused the entire American economic structure – if not the global economy –to collapse in panic.

So here’s the sticker:  If Greenberg’s AIG had been isolated in this financial quagmire, the government would probably have kept hands off and allowed it go bankrupt; just as it had in the case of the Lehman Bros. bankruptcy a few months earlier. But Greenberg had allowed AIG to assume so much risky liability from so many companies, that the government arguably had no choice – specific power or not – but to intercede. The potential economic catastrophe of failing to act as AIG collapsed was just too frightening to risk. It is not hyperbole to suggest that such a result could have challenged the very concept of capitalism.

Keep in mind that had the government allowed AIG to fall into bankruptcy and be dissolved (as happened with Lehman Bros. and numerous other companies) then Hank “the snake” Greenberg and every other shareholder would have found their stock to be totally worthless. As it was, in 2010 Greenberg sold his remaining stock of AIG for $278 million; not a bad “reward” for a guy whose greed helped trigger one of the largest and most painful economic declines in American history.

So what is the basis for the Greenberg suit against the government – really all of us as taxpayers?

Greenberg wants to rewrite history. He wants us to forget the chaos and panic that would have been exacerbated by the failure of AIG. With a straight face and feigned indignation, he argues that the government had no legal authority to “seize” his property by forcing him to sell his stock to the government. If anything, this argument just validates what a total sleaze Greenberg really is. He has no concern for the country or anyone but himself.

This snake Greenberg then compounds what should be our utter revulsion of him by claiming that, even if the government did Aig_logo-2have the power to force the sale of his stock, the price the government paid — $184 billion – was a rip-off and he should have been paid a lot more. When the government stepped in, the market value of AIG was $15 billion; and yet the government paid $184 billion. Just who got ripped-off here? And again, let’s not forget that if AIG had been allowed to fail, Greenberg’s stock would have been worthless!

There is a touch of ironic humor in Greenberg’s suit. (Actually, more than a touch if you follow the likes of political satirist Jon Stewart). Initially the government made an emergency loan to AIG of $40 billion dollars. This quick-shot of capital was critical to keeping AIG functioning while a long-term rescue plan was developed. The government charged AIG 14 percent interest on the loan. Now, in his perverted sense of reality, Greenberg is claiming that the loan terms imposed by the government amounted to “extortion.” This jerk has no shame!

The irony here is that AIG was a subprime borrower. The company was insolvent, unable to pay its bills and about to go out of business. With no other option for capital sufficient to save the company – 14 percent was a cheap rate! Can you imagine what a “private equity” firm would have charged AIG if one had the willingness and capital to bail out AIG? And, just for good measure, remember that even with a good credit record, banks charge individuals 18 percent on credit card debt. Yet, Greenberg has the gall to claim that the government ripped off AIG!

But Here is the Worst Part

It would be one thing if Greenberg were an aberration when it comes to the type of mentality and attitude he brazenly exhibits. He could be dismissed as simply a delusional, demented kook. But unfortunately, when it comes to big banks and corporate tycoons, Greenberg is more the norm than the exception. Remember that Greenberg was just a player, albeit a major player, in the economic meltdown.

Believe it or not, there are a number of investment firms and corporations that are supportive of the Greenberg lawsuit. They seem to feel that if they also get “to big to fail” and are about to, that the government will step in and do to them what it did to AIG. They should be so lucky! And the banks – the incompetent herd of complicit conspirators whose actions triggered the financial meltdown in the first place, are now chafing under the new rules (the old ones that had worked so well for 70 years were repealed) designed to keep them away from sharp knives so they can’t hurt themselves or us again. It is mind-boggling how irrational some can be when they rewrite history in their own minds and have self-imposed amnesia when it comes to their mistakes of the past.

And the Moral of the Story …

In the end, I have only one thing to say to Hank “the snake” Greenberg: Go “#@*&” yourself! And while you are at it, all those you rode in with. Take the hundreds of millions you sucked out of the government (taxpayers) and AIG and go crawl back in your hole. You should be the one sued, not the American people.

PDF24 Creator    Send article as PDF   

→ No CommentsTags: ··

The Secret Weapon Known to All Successful Leaders

October 5th, 2014 · Building Better Business Managers, Business Management, Effective Leadership

Anyone can be calm before the storm. The trick is to be calm during the storm.

There are many diverse talents a person in a position of leadership needs to be successful. Any search for the “qualities of leadership” will consistently uncover terms such as visionary, integrity, inspiring, innovative and confident. When looking for the “techniques of leadership,” the capabilities most often mentioned are consistency, communication skills, decisiveness, planning ability, transparency and focus. Certainly without the systematic interplay of these qualities and techniques, the chance for leadership success is extremely limited.

There is one other leadership component, however, that is absolutely essential to the success of any leader even though it is rarely mentioned and is never given the prominence it deserves. As such, this talent has become the “secret weapon” that successful leaders draw on in times of need. With it, every crisis can be reduced to a manageable size and without it every crisis will be magnified and create the potential for it to spin out of control.

Can You Recognize the Secret Leadership Weapon when You See it?

Sunday, December 7th could have been a day that lived in leadership infamy. When word reached the White House that the Germans had bombed Pearl Harbor, it is fair to say that all hell broke loose. As reports of further devastating attacks in the Pacific05-fdrandpacificwarcouncil5201943-398h filtered in to Washington, government leaders and military bigwigs rushed to the White House in a virtual state of panic. All day long and into the night cabinet officers, administrators and generals shuffled into the Cabinet Room of the White House for meetings.

Sitting at the head of the table, acting as if it were just another day at the office, was President Roosevelt. He chaired each meeting exhibiting a sense of urgency, but without a hint of panic as he listened to the frantic fears of others. Many of those who attended the meetings that hectic day reported that they were struck by the President’s calm demeanor and measured approach that turned what seemed to be a terrifying crisis into a problem to be systematically resolved.

Roosevelt did not get caught up in the pandemonium of confusion and fear exhibited by many when a crisis explodes on the scene. Instead, patiently and calmly, he listened to the information available, assessed it, waited for additional clarification and then began to formulate a response to the crisis. In fact, Roosevelt did not make any public statements until the following evening – 36 hours after the initial attack – when he spoke to a joint session of Congress. (although he did ask his wife, Eleanor, to give a short radio address on Sunday evening to reassure Americans that plans for victory were in the works)

When Roosevelt spoke before Congress he was resolute, strong and most of all, calm. In the end, the calm leadership exhibited by Roosevelt in the wake of the attack on Pearl Harbor shifted the reaction to the crisis from one of fear and panic to one of tenacious determination to overcome and resolve it. It was probably Roosevelt’s finest moment as a leader.

Yes, the secret weapon to success in leadership is the ability to remain calm in the face of crisis. Leaders show their worth when they can coolly work their way through a crisis, so the followers can work their way through to a solution. Despite the lack of recognition and attention to this leadership ability, remaining calm in the face of crisis is more critical than any other leadership trait, because it will always be needed.

The Real World Never Knows the Plan

No matter how much leadership talent an individual is blessed with or how the systems of leadership are applied, the real world is fraught with unpredictable challenges and unforeseen crises that can wreak havoc on even the best-laid plans. It is not the crisis that will determine the future, but how the leader responds to crises when they arise – and they surely will — that determines success or ruin.

Remaining calm when there appears to be every reason not to be

A leader should never lose sight of the truth that their emotions are infectious. Even more than words, followers are always infected and impacted by the emotions that the “body-language” of the leader signals. In times of crisis, followers always look to the leader for an indication as to the magnitude of the difficulty and how they should react to it. If the leader exhibits confusion, fear and panic, so too will the followers. When the leader remains calm and unflinching in the face of crisis, followers are inclined to do the same, freeing them to work on the solution, rather than run from the problem.

In the Revolutionary War, Washington and his army suffered defeat after defeat. His army was routed from New York, barely escaping capture and annihilation. And yet Washington acted almost as if it was all part of his plan to suck the British into a trap to defeat them.

Washington’s army had every reason, save for one, to give up and give in to the overwhelming power of the British army, but they didn’t panic because Washington was always among them exhibiting calmness and steadfastness in his message that the crisis would be overcome. The Army of the Potomac held together in the face of crisis and ultimately achieved victory, because their leader remained calm and gave them confidence. (It should also be noted that when the British approached Virginia, the governor of the state – Thomas Jefferson – panicked and fled. It was a failure of leadership in the time of crisis that would haunt him for the rest of his life.)

So how do You Keep Your Wits When all about You are Losing Theirs?

The most important thing a leader can do to stay calm in a crisis is to be prepared for it. It’s not possible to predict a specific crisis, but it is safe to expect a crisis will happen. It is possible to have a plan for how to deal with a crisis, even though the timing and type may be unknown.

Leaders must determine: How will the crisis be identified? How will the crisis be quantified as to its potential impact or threat? Who will they talk to first? What will be their initial actions? A crisis not met by a plan can quickly become a catastrophe, even if it is soluble. It is surprise that opens the door to panic; while a plan engenders calmness. Roosevelt did not know how or Quote2when war would come, but he did know it would come. When it did come, he had a plan to confront it and this allowed him to be calm in the face of it.

The desire to move quickly to nip a crisis in the bud is good, but a leader must be careful not to overreact. Frenetic activity at the instant a problem emerges can give the impression of panic. The legendary basketball coach John Wooden used to tell his players, “Be quick – but don’t hurry.” That is cogent advice for any leader confronted by a crisis.

In the midst of a crisis the tendency is to speed-up, but the most effective approach is to slow things down. The truth is that very few crises are really a crisis. They may be problems that need to be resolved, but rarely is a “crisis” a clear-cut life and death – success or failure situation. When leaders understand this perspective it becomes easy for them to remain calm and effectively assess the situation and find the best path to a solution.

In the end, the leader who understands and is prepared to employ the “secret weapon” of successful leadership is positioned to turn any crisis into opportunity. And that is the secret that defines a truly successful leader.

Create PDF    Send article as PDF   

→ No CommentsTags: ··