Blog > Category: Leadership
By Bryce Hoffman for The Detroit News, March 27, 2014
While few CEOs have had to contend with major crises right out of the chute, there have been others.
In addition to Akio Toyoda, crisis-management expert Bill George points to Jeff Immelt, who had the misfortune of taking over another General — General Electric Co. — just four days before the terrorist attacks on New York and Washington on Sept. 11, 2001.
Those attacks cost GE’s insurance business $600 million and dealt a nearly fatal blow to its jet-engine business, as airlines around the world canceled orders for new planes.
“It had quite a devastating effect on their business,” said George, who teaches CEOs how to cope with crisis at Harvard Business School. “Jeff realized he had to do something about his consumer finance business and insurance business. Unfortunately, he was a little slow to do it. Mary Barra can’t be that slow. Mary has to face reality: How did this thing get hidden for 12 years?”
He gives Barra good marks to date.
“So far I like what I see. She’s being very forthright, very sincere and getting people around her to address the problem. But she’s got to get to the root core of how this happened and how it was allowed to go on for so long,” said the former CEO of Medtronic Inc.
“One rule I had at Medtronic was ‘You’ll never get fired for making a mistake, but you will get fired for covering one up,’ ” George said. “If I were advising her, I’d say that the most important thing is our customers. This company has to restore its trust with our customers. If we do that, we win. If we don’t do that, we lose. That’s the most important thing she has to do.”
From Harvard Business Review, Published March 10, 2014
Time Magazine recently put “The Mindfulness Revolution” on its cover, which could either be seen as hyping the latest business fad, or as signaling a major change in the thinking of executive leaders. I believe it’s the latter.
The use of mindful practices like meditation, introspection, and journaling are taking hold at such successful enterprises as Google, General Mills, Goldman Sachs, Apple, Medtronic, and Aetna, and contributing to the success of these remarkable organizations. Let’s look at a few examples:
- With support from CEO Larry Page, Google’s Chade-Meng Tan, known as Google’s Jolly Good Fellow, runs hundreds of classes on meditation and has written a best-selling book, Search Inside Yourself.
- General Mills, under the guidance of CEO Ken Powell, has made meditation a regular practice. Former executive Janice Marturano, who led the company’s internal classes, has left the company to launch the Institute for Mindful Leadership, which conducts executive courses in mindfulness meditation.
- Goldman Sachs, which moved up 48 places in Fortune Magazine’s Best Places to Work list, was recently featured in Fortune for its mindfulness classes and practices.
- At Apple, founder Steve Jobs — who was a regular meditator — used mindfulness to calm his negative energies, to focus on creating unique products, and to challenge his teams to achieve excellence.
- Thanks to the vision of founder Earl Bakken, Medtronic has a meditation room that dates back to 1974 which became a symbol of the company’s commitment to creativity.
- Under the leadership of CEO Mark Bertolini, Aetna has done rigorous studies of both meditation and yoga and their positive impact on employee healthcare costs.
These competitive companies understand the enormous pressure faced by their employees — from their top executives on down. They recognize the need to take more time to reflect on what’s most important in order to create ways to overcome difficult challenges. We all need to find ways to sort through myriad demands and distractions, but it’s especially important that leaders with great responsibilities gain focus and clarity in making their most important decisions, creativity in transforming their enterprises, compassion for their customers and employees, and the courage to go their own way.
Focus, clarity, creativity, compassion, and courage. These are the qualities of the mindful leaders I have worked with, taught, mentored, and interviewed. They are also the qualities that give today’s best leaders the resilience to cope with the many challenges coming their way and the resolve to sustain long-term success. The real point of leverage — which though it sounds simple, many executives never discover — is the ability to think clearly and to focus on the most important opportunities.
In his new book Focus, psychologist Dr. Daniel Goleman, the father of emotional intelligence (or EQ), provides data that supports the importance of mindfulness in focusing the mind’s cognitive abilities, linking them to qualities of the heart like compassion and courage. Dr. Goleman prescribes a framework for success that enables leaders to build clarity about where to direct their attention and that of their organizations by focusing on themselves, others, and the external world — in that order. Cultivating this type of focus requires establishing regular practices that allow your brain to fully relax and let go of the anxiousness, confusion, and pressures that can fill the day. (Editor’s note: here is Daniel Goleman’s related HBR article, The Focused Leader.)
I began meditating in 1975 after attending a Transcendental Meditation workshop with my wife Penny, and have continued the practice for the past 38 years. (In spite of this, I still do mindless things like leaving my laptop on an airplane, but I continue to work on staying in the present moment.) All of our family members meditate regularly. Our son Jeff, a successful executive in his own right, believes he would not be successful in his high-stress job were it not for daily meditation and jogging.
Meditation is not the only way to be a mindful leader. In the classes I teach at Harvard Business School, participating executives share a wide range of practices they use to calm their minds and gain clarity in their thinking. They report that the biggest derailer of their leadership is not lack of IQ or intensity, but the challenges they face in staying focused and healthy. To be equipped for the rapid-fire intensity of executive life, they cultivate daily practices that allow them to regularly renew their minds, bodies, and spirits. Among these are prayer, journaling, jogging and/or physical workouts, long walks, and in-depth discussions with their spouses and mentors.
The important thing is to have a regular introspective practice that takes you away from your daily routines and enables you to reflect on your work and your life — to really focus on what is truly important to you. By doing so, you will not only be more successful, you will be happier and more fulfilled in the long run.
Another well-done Wall Street Journal article by Rachel Feintzeig on Microsoft CEO, February 4, 2014:
So, you’re the new CEO of Microsoft: a sprawling tech company that critics say missed the mobile and social revolutions, losing crucial market share to Google and Apple. And your two predecessors—one of whom is Bill Gates—are hovering over your shoulder.
Where to start? Former executives and management gurus have a few ideas for incoming chief Satya Nadella.
Sydney Finkelstein, a management professor at Dartmouth College’s Tuck School of Business, said departing CEO Steve Ballmer, who will now sit on the board, represents Nadella’s greatest challenge.
“I think that’s the single biggest problem with respect to change. [Nadella’s] got to be able to manage a very, very strong personality who’s just stepped aside, who’s even on record [saying] he wish he could have been the one to make the changes,” Mr. Finkelstein said.
“Be aware that anything you’re going to do, it’s almost like there’s an implicit veto by Ballmer,” he said. “I think Ballmer is the third rail in any sort of change effort.”
Winning over Microsoft’s board members should be another priority for Nadella. “They’re beholden very much to Ballmer and Gates,” Mr. Finkelstein said.
He recommends Nadella focus his energy on gaining allies internally and demonstrating his own track record as CEO for a year or two before he makes any big changes.
“With things going in the right direction, you gain more power,” he said.
Michael Useem, a management professor at the University of Pennsylvania’s Wharton school, disagrees. As a Microsoft veteran, Nadella needs to move fast, he said. New executives typically have a honeymoon period of 90 to 100 days to get to know the organization and develop their approach. But Nadella should only take 50 days to get up to speed.
“He knows the personalities. He knows the issues. He knows where value’s being created and destroyed and he knows where are all the skeletons are,” he said. “He will not be allowed to have that luxury of a full year to take charge.”
Nilofer Merchant, a Silicon-valley based former technology executive who now advises companies like Yahoo and Logitech, said Nadella should lead by collaboration.
“What’s going to happen in the next 90 days is people throughout the organization and the industry are going to come to him with their proverbial ball of problems and ask him to solve that problem,” she said. “He’s got to not buy into that framework, because his job is to figure out how to get other people to solve problems.”
“So instead of telling, controlling, directing, he’s got to…figure out how to get them to know how to solve the problems themselves,” she said. “It’s all about getting the team at Microsoft to understand what to do, not that he tells everyone what to do.”
And if Nadella wants to take cues from other tech companies, he should look to IBM, not HP, she said. The latter company’s chief, Meg Whitman, is intent on protecting core businesses, Ms. Merchant said, while IBM has devoted itself to reinvention every few years.
William George, the former chief executive of medical device company Medtronic Inc. and a professor at Harvard Business School, said Nadella’s first course of action must be to establish a team that’s his own. Veterans – including those who wanted the job Nadella won – have to make a choice, he said.
“They’re either going to be loyal and committed to Nadella or they should move on,” he said.
Nadella should promote his internal favorites or bring in outside talent to fill out his inner circle. Then he has to turn his sights to the board of directors.
“The next step is to work with John Thompson,” the new chairman, George said. “Nadella’s got to work with him to upgrade the board. They need a newer board, a fresher board. [They] need to bring in sitting CEOs, recently retired CEOs, to add wisdom and insight.”
After a lengthy and public search process, Nadella also has to set forth his vision for the business more quickly than most.
He should lay out his full strategic plan in about six months – or at longest, a year – George said. If Nadella wants to make dramatic changes, it will take five to seven years to make that transformation. And George, for one, hopes Nadella thinks big.
“They really have to go from becoming the fast follower to being a leader in innovation,” he said of Microsoft. “That’s where I think the vision should be.”
Great Wall Street Journal article by Rachel Feintzeig, February 4, 2014:
With the announcement of Satya Nadella as its new chief executive, Microsoft’s global search for a new leader ended in its own backyard.
During the five month long search, the board was said to have courted candidates including Ford Motor Co. chief Alan Mulally and former Nokia Corp. leader Stephen Elop before tapping Nadella, a popular executive who started at Microsoft in 1992 and leads the division that makes technology to run corporate computer servers and other back-end technology.
When Nadella’s predecessor, Steve Ballmer, announced he was stepping down last year, he told The Wall Street Journal that the company needed profound changes, and he was not the executive to make them. Although companies often go outside for transformative leaders, by picking Nadella, board members are signaling that they believe an insider is up to the job.
More often than not, a company’s next CEO is already working there. In 2012, the last full year for which data is available, 73% of S&P 500 companies with outgoing CEOs selected an internal candidate as successor. This continued a slight downward trend – as recently as 2008, according to the research, 83% of companies chose to promote from within.
A high-profile search process is “not a very healthy time” for a company, said William George, a management professor at Harvard Business School and former chief executive of medical device company Medtronic Inc. Morale problems can spring up as workers grow uneasy about where their employer is headed; an internal pick, said George, may reassure staff.
Nonethless, the search process suggests that Microsoft failed to effectively plan for Ballmer’s successor, management experts said. The former CEO held his post for 14 years–plenty of time to have a replacement groomed and ready, George said.
Succession planning should start as soon as a chief executive starts his or her job, with three or four potential candidates on the board’s radar, according to Michael Useem, a management professor at the University of Pennsylvania’s Wharton school. The practice gives board members ample time to know the up-and comers, he said. Granted, Microsoft isn’t alone in having thin succession plans, and the company’s reorganization last year left it unclear who, exactly, was Ballmer’s number two.
And companies should move fast if they have internal favorites, George added.
“If you liked internal candidates, choose them. You know the internal candidates and you should step up to it,” he said.
Microsoft would not comment on the specifics of the search, but spokesman Peter Wootton said “it’s not uncommon for a search of this magnitude to require four to six months.”
For now, Microsoft must “build up the bona fides” of Nadella and clearly explain its choice, said Paul Argenti, a professor at Dartmouth University’s Tuck School of Business and a corporate communications expert who’s worked with companies like Novartis and Goldman Sachs Group Inc. Leaders should also note that the company needed to proceed carefully at a crucial time in the history of the business.
“Externally, it’s going to be a very tough sell. I think people are going, ‘This a very disappointing, boring, ho hum announcement,’” he said.
Target CEO Gregg Steinhafel and his leadership team are experiencing every company’s worst nightmare. This problem is as bad as it can get. As a retailer, the loss of private customer data hurts consumer trust. The timing of the crisis—the biggest shopping month of the year—was doubly unfortunate.
Yet, in response, Steinhafel and his team seem to be doing everything right. Steinhafel is wise enough to know that the most important thing here is Target’s ability to maintain the confidence of its customers. Every decision he has made since the crisis began is based on that clear objective. Steinhafel and his colleagues have been fully transparent with their “guests,” as they refer to customers. They have offered to reimburse them for any losses incurred. They have not only reissued their Target credit cards, but any other credit cards used in their stores, and paid for the cost of reissuing them.
The good news here, if there is any, is that the actual losses incurred by Target customers pale in comparison to the enormous number of accounts breeched. In part, this is because Target moved so quickly to cancel and reissue credit cards.
Steinhafel seems to be following the well-known playbook of the 1982 Tylenol crisis, when CEO Jim Burke distinguished himself with his openness, authenticity, and transparency. At the time, many so-called experts predicted that Tylenol could never recover. As a result of Burke’s aggressive actions to protect consumers, Tylenol quickly regained its leading position in the consumer market.
Some pundits have criticized Target for additional revelations that expanded the number of customers who may have been impacted. If you understand even a little about cyber-security, you know that you often don’t have all the information initially. Firms like British Petroleum have tried to buy time by withholding information until they knew the full story. This only made the situation worse and caused them to lose control over the public messages.
Target has gone in the opposite direction, providing all the information it had at its disposal as quickly as possible. The problem is that you don’t know what you don’t know. As its team of experts dug deeper into its computer files, Target learned additional information that it immediately shared with its customers and the media. Since the crisis broke, transparency has been the company’s motto.
In 2009 shortly after the peak of the global financial crisis, I wrote the book 7 Lessons for Leading in Crisis, which provides a framework for handling this type of urgent, important, highly visible situation. I’ll use it to check in against how Steinhafel’s actions follow it:
- Lesson #1: Face Reality: Steinhafel immediately recognized the potential impact of the data theft on its customers and did everything within its power to inform them and protect them from further harm. While this hurt Target’s pre-Christmas sales, it may have salvaged trust with its customers.
- Lesson #2: Use Your Teammates: Steinhafel has formed a strong working team of his top executives, his board, and external advisors—they are working actively and diligently together.
- Lesson #3: Dig Deep for the Root Cause: Supported by outside experts, Target’s information technology team has continued to dig deeper into its computer files, enabling it to get to the root cause of the problem. They still have not figured out who invaded their systems. (And they may not; the terrorist who laced Tylenol capsules with cyanide was never identified.)
- Lesson #4: Get Ready for the Long Haul: Target’s leadership has recognized that this crisis won’t go away easily, so it has focused on restoring the confidence of its shoppers as well as the general public.
- Lesson #5: Never Waste a Good Crisis: Steinhafel recognizes that he can use this crisis to strengthen his ties to Target’s guests by being open and offering to reimburse them, whatever the cost.
- Lesson #6: You’re in the Spotlight: Follow True North: Throughout the crisis Steinhafel has maintained his integrity and his openness. He has been visible to his customers, including his appearance on CNBC on Monday, January 13.
- Lesson #7: Go on Offense, Focus on Winning Now: It’s too soon in the crisis to think about winning in the marketplace, as Target is currently trying to hold its position with customers after the December shortfall. Looking ahead, I have no doubt that Target management will attempt to turn its handling of this crisis into expanding its business with its customers.
I have known Steinhafel for nearly twenty years. Between 1995 and 2005, I served on the Target board when he was Executive Vice President, Merchandising and later President. He has also been a participant in the courses we run at Harvard Business School for new CEOs. He is a person of absolute integrity. I have never seen him prevaricate or dissemble, even under extreme pressure. For him, everything revolves around satisfying his guests. He is a brilliant merchant, arguably the finest in the retail field. He can anticipate customer needs and fulfill them.
This isn’t the first crisis Steinhafel has faced as CEO. Shortly after taking over the reins from former CEO Bob Ulrich, he faced an aggressive attack from activist hedge fund manager Bill Ackman, who wanted to break up the actual company. Ackman’s plan proposed spinning off Target’s credit cards and its real estate holdings—destroying the company’s integrated strategy of retail merchandising, credit cards that offered customers the opportunity to contribute 1% of their Target expenditures to their favorite K-12 school, and real estate tailored to its merchandising strategy. Target management and its board rejected Ackman’s demands and won a proxy fight with 80% of shareholder votes cast.
As an executive, you would never wish for a major crisis, but as I have learned in crises at Medtronic, Goldman Sachs and Exxon, they can make your company more effective and your organization more unified and committed to its True North in the long-run. Ultimately, I predict the same thing will happen at Target.
As 2014 approaches, many of us are looking for ways to live more mindfully. Many of us want to be more mindful, but few of us know how. Below I have compiled a sampling of eight exceptional books on mindful living that will help you become a better leader and a more fulfilled human being.
Focus by Dan Goleman: The breakthrough book of 2013. Goleman writes from his vast experience and understanding of the mind about living more mindfully to focus your life and your work on what is truly important in your life. After a treatise on neuroscience discoveries of how the brain can be remodeled through meditation and other calming techniques, Goleman brings great clarity to the subject at hand: finding inner focus (focus on self), focus on others, and focus on the world around you. If you adopt his approaches, your life will not only be more productive, it will be more fulfilling. For $27.95 minus the amazon.com discount, that’s a bargain.
Why Meditate? by Matthieu Ricard: As a molecular geneticist turned Buddhist monk, Matthieu Ricard is one of the world’s leading experts on meditation. As the Dalai Lama’s scientific advisor, he has been a pioneer in demonstrating scientifically the benefits of meditation in calming and focusing the mind. A frequent lecturer and panelist on mindfulness, he has helped open up meditation to non-Buddhists. He not only demystifies meditation in this book, but he also gives the reader practical instructions on how to do succeed at it.
Lean In by Sheryl Sandburg: The best leadership book of 2013. Guys, don’t be fooled! This is not a book solely for women. Leaders of both genders can learn a great deal about how to be successful in the workplace from Facebook COO Sandburg’s wisdom, candor and experience. Sandburg’s advice to be deeply engaged, passionate, and committed applies to all of us. She has deep thoughts on how we can all contribute more in the workplace, inspire those around us, and thus be more effective as leaders. She shares many personal stories. In so doing, she comes across as a humble leader who has gained much from her mistakes and learned from her challenges.
Wonder Women by Deborah Spar: If you resonate with “Lean In,” then you’ll like “Wonder Women” even more. Spar, who is president of Barnard College, is a former HBS colleague of mine whom I with on the board of Goldman Sachs. She is a superb writer, whose writing is deeply authentic and candid. She is genuinely honest about the challenges she and many other women face in trying to juggle their careers, marriages, mothering, and roles in the community. She acknowledges the barriers but also the self-imposed limitations many women create. You will come away inspired to open the doors and bring more women into the upper echelons of all organizations.
Becoming a Genuine Leader by Marilyn Mason: Mason delves deeply into the impact of one’s family of origin to discover the secrets required to become a genuine leader. As author Gail Sheehy writes on the cover, “She takes you home again, to discover how you learned to negotiate in the first organization to which you belonged, your family. Her psychological insights are stunning. She illuminates the passage to authentic leadership.” (For the record, I consider that authentic leadership and genuine leadership are synonymous.) Mason has a deep understanding of family systems and how we carry the rules and the wounds from our families of origin into our families of choice and even find our families at work. In better understanding the families we grew up in, we can build better relations in our own families and in our chosen place of work.
Finding the Space to Lead, by Janice Marturano: Marturano is the former associate general counsel of General Mills. She began her work in mindfulness-based stress reduction (MBSR) by attending one of guru Jon Kabat-Zinn’s programs. Then she began teaching classes in MBSR at General Mills. Eventually, she morphed her work into mindful leadership and began running weekend seminars on that subject for executives. They were so popular that she had the courage to run these seminars as a full-time business. Her book provides a very practical guide to meditation (I prefer calling it by its real name rather than the “safe” euphemism MBSR) with numerous exercises that help the reader become more mindful and, thus, a better leader.
Daring Greatly, by Brene Brown: You may be acquainted with Brown from her exceptional TED talk, but her book takes you much deeper into how your willingness to be vulnerable can transform your leadership and your life. As she says, being vulnerable takes courage and the willingness to look deep inside yourself, confront your demons and your shame, and emerge a whole person. When you try to hide your vulnerabilities, others sense your weaknesses and they have the power. When you share them openly, then you have the power.
Conscious Capitalism by John Mackey and Raj Sisodia: Mackey, the founder and co-CEO of Whole Foods, teams with Sisodia to write the finest treatise of my adult lifetime on what genuine capitalism is all about. As I said in the Foreword that Mackey asked me to contribute, “This is the book that I wish I had written.” I said that because I believe that the authors have discovered how to build and sustain a successful enterprise. Their ideal company is driven by purpose and values, provides unique value for customers, inspires employees to peak performance, serves society and communities simultaneously, and ultimately creates lasting value for shareholders. They avoid the common trap of responding to short-term shareholders by staying focused on Whole Foods’ mission and greater purpose. Mackey’s idealism is truly inspiring – and he has backed it up by demonstrating conclusively that his approach creates superior results for the long term – not just for Whole Foods, but for many other companies as well.
Here is my video from the McKinsey website on the need for long-term investing in order to create superior value for their customers and why boards of directors must be prepared to stand up to activist investors urging short-term actions.
Late this evening Nelson Mandela died at the age of 95. He was the greatest leader of our lifetime. His Long Walk to Freedom included 27 years in prison on Robben Island, hard labor, and cruel treatment for a political crime he did not commit.
Yet he emerged from prison on February 11, 1990, unbowed and unbroken, a proud man determined to save his nation from the civil war that had long been anticipated. His goal was to restore harmony between blacks, whites, colored and Indian.
That evening in Cape Town, in his first public appearance in 27 years, he began by saying:
I stand here before you not as a prophet but as a humble servant of you, the people.
Your tireless and heroic sacrifices have made it possible for me to be here today.
I therefore place the remaining years of my life in your hands.
He concluded by telling the assembled masses:
It is only through disciplined mass action that our victory can be assured.
We call upon our white combatants to join us in the shaping of a new South Africa.
Our march to freedom is irreversible.
We must not allow fear to stand in our way.
Universal suffrage in a non-racial, democratic South Africa
Is the only way to peace and racial harmony.
It is an idea for which I am prepared to live for and fight for.
If needs be, it is an idea for which I am prepared to die.
Nelson Mandela indeed was able to achieve his dream and was elected president of the democratic South Africa, stepping down after five years.
How was this man, himself the victim of so much injustice, able to forgive his captors and work tirelessly for harmony between all the people of South Africa? He rose above his feelings of anger to recognize his greater calling to become the man of peace who could unite all his country’s people and put his country ahead of himself, his race, or his party.
For his vision, his passion for his cause, his compassion for his fellow people, and his courage to put his life on the line to achieve his goal, Nelson Mandela is the greatest leader of our lifetime. His life stands as a symbol of human capacity to set aside differences, ancient hatreds, and historic injustice to achieve peace and harmony.
On a personal note, although I have been to South Africa many times, I met Nelson Mandela only once, when he was in Minneapolis on a 2001 trip to raise funds for a museum at Robben Island. Penny and I had fifteen minutes alone with him to hear his stories from his time in prison and his vision for the future of South Africa. He was so inspired about developing a new generation of leaders in South Africa and throughout the continent of Africa that we decided to fund the leadership development program he had created from this purpose. In an unrelated incident, in early 1997 when our son Jon - then a junior at Amherst College - decided to spend a semester in Soweto working as an orderly at Baraguawanth Hospital, he had trouble clearing customs as he did not have a work permit. A call from Winnie Mandela, at the time Nelson's wife, to the customs inspectors enabled him to clear customs and have a transformational experience that semester.
The Franklin Institute awarded Bill George its 2014 Bower Award for Business Leadership. The Awards program, founded in 1824, is among the oldest and most prestigious honors bestowed in the United States.
Gayle M. Ober, Executive Director of the George Family Foundation, said: “This recognition of Bill George is well-deserved. The Franklin Institute prize recognizes extraordinary business leadership, and Bill’s selection reflects the contributions he has made in the business, academic, philanthropic, and community realms.”
The awarded citation recognizes Bill George:
“For his visionary leadership of Medtronic Corporation, his promotion and writings on corporate social responsibility and leadership, as well as his extraordinary philanthropic contributions to education and health care through The George Family Foundation.”
Bill George’s business career was characterized by a mission focus. As CEO of Medtronic for ten years, he measured success by the number of new patients the company was able to help each year “be restored to full health”—a number which grew from 300,000 to 10 million today. As a professor at Harvard Business School, he has pursued a mission of building ethical leaders with equal vigor. Bill has written five books on leadership, informally advised numerous CEOs and emerging leaders, and contributed to the advancement of society through leadership on a variety of corporate and nonprofit boards. In addition, Bill has been instrumental in shaping the leadership funding focus of the George Family Foundation. Influenced by his personal involvement, the Foundation has supported national and global leadership programs that train and nurture authentic leaders in all sectors
Past honorees of The Franklin Institute’s Bower Award for Business Leadership include Bill Gates, Gordon Moore, David Packard, James Burke, Roy Vagelos and Michael Dell. Past scientific laureates include Thomas Edison and Albert Einstein.
About The Franklin Institute
Founded in honor of America’s first scientist, Benjamin Franklin, The Franklin Institute is one of America’s oldest and premier centers of science education and development in the country. Today, the Institute continues its dedication to public education and creating a passion for science by offering new and exciting access to science and technology in ways that would dazzle and delight its namesake. Recognizing outstanding achievements in science throughout the world is one important way that the Institute honors its commitment to Benjamin Franklin’s legacy. For more information, please go to www.fi.edu/awards.
About the George Family Foundation
This mission of the George Family Foundation is to foster wholeness in mind, body, spirit and community by developing authentic leaders and supporting transformative programs serving the common good. Founded in 1994 by Bill and Penny George, the Foundation supports innovative ideas in integrative health, leadership development, social justice, and spirituality in everyday life.
Unlike our counterparts in Southern Europe, the United States is blessed to have a fairly steady economy these days. While economic growth is not as robust as it has been in years past, it is at least solid and jobs are steadily returning in the private sector. Financial markets reflect the solid outlook for leading U.S. industries like information technology, health care, energy, automobiles, and basic manufacturing industries. The U.S. has become the world's leading energy producer, helping to ameliorate our long-standing dependence on foreign oil that has led to unfavorable trade balances. Even the enormous government deficits of the last decade are starting to decline, thanks in part to the involuntary sequestration of spending.
A Manufactured Crisis with No Easy Way Out
So why are we flirting with a historic default on U.S. government bonds that will harm the U.S. credit and credibility for decades to come? Simply stated, our political leaders have manufactured a crisis. They know they are playing with fire, but no one seems to know how to put it out.
At this weekend's meetings of the World Bank and International Monetary Fund, world financial leaders like Christine Lagarde, head of the IMF, and Jim Kim, president of the World Bank, were almost apoplectic in their dire warnings about the impact of a U.S. default on the global economy. Even the threat of a default risks “massive disruption the world over,” said Lagarde on Sunday. U.S. leaders like Jacob Lew, Secretary of the Treasury, and Jamie Dimon, chair and CEO of JP Morgan, echoed similar concerns but offered no viable solutions.
In the past two years many U.S. political leaders seemed to enjoy beating up on the Europeans for the fiscal crisis in Greece that threatened to spread to Italy, Spain and Portugal. While Germany's Angela Merkel steadily worked to solve the problems through austerity and restraint, U.S. leaders and commentators like Paul Krugman took potshots at the Germans for not bailing out the Greeks with greater deficits and expanded borrowing.
The big difference here is that Greece's fiscal crisis is real, while the U.S. problems are entirely the result of a dysfunctional political system. The blame can be squarely placed on leaders who fail to put their country ahead of personal political gain. Sadly, there is no easy way to overcome this political crisis, as the sides are so polarized. They are likely to remain so due to the gerrymandered Congressional districts that created the split in the first place.
I feel confident we will find a way to muddle through the artificial debt ceiling, even if President Obama has to violate the law to do so, but the damage being done will stay with us for years to come. The Chinese and other big lenders will eventually find alternative currencies or a reserve currency basket where they can park their funds. Interest rates will rise, giving an upward nudge to inflation.
But what about Washington? When a power vacuum is created in a democracy like ours, other forces take over. Under the leadership of Chairman Ben Bernanke, the Fed has been offsetting the lack of fiscal policy during the last four years by making ever greater uses of monetary tools like quantitative easing. Bernanke's successor, vice chair Janet Yellen, is likely to continue these policies until Congress and the administration get their respective acts together, which could be a long time.
A Solution for this Manufactured Crisis: "Think Local"
The solution, I predict, is that states and municipalities will steadily assume more power. As federal entitlement programs assume an ever-larger share of the federal budget, they will squeeze out spending for most domestic programs. At present no one in Washington seems to have the political will to solve the looming fiscal crises of Social Security, which could actual be resolved quite easily, and Medicare/Medicaid, which will become an increasing sinkhole for funds for the foreseeable future until we get serious about healthcare costs.
This puts the burden for quality of life on the backs of the governors and big city mayors. Given the diversity of the country across 50 states, this may be a good thing. Locally-elected officials are that much closer to the people who vote for them and thus more responsive to their needs. By returning power to states and municipalities, we empower local people and their elected leaders to tailor solutions to their local problems.
Health care and education are essentially local issues. The complexities of health care and education, coupled with the growing diversity of our states, are so great that they defy "one-size-fits-all" national solutions. Ultimately, local leaders will come up with sounder, more practical solutions that fit the needs of their unique populations. They will be more effective at engaging the business community and non-profit organizations to partner with them in seeking these solutions. Instead of spending money and time lobbying in DC for little gain, business and non-profit leaders can focus on making things work locally and on contributing their own resources to enhance quality of life for their employees, dependents and communities.
My bottom line: because of the dysfunctions in the federal government and the growing diversity of the country, we are witnessing nothing less than a historic shift of power to states and municipalities. In the end this will prove healthy for our country as we generate higher levels of commitment and collaboration among the government, business and non-profit leaders that lead to higher quality of life for all Americans.