Reset Lives...and Relives

A short post today before going off to Italy for 11 days of work and relaxation.

Meeting there with several Italian companies and senior officials, through the good offices of our friends, clients and partners at Watson Wyatt. I am anxious to see if the Italian private sector is looking at the current reality differently than the US firms we have been doing business with in the past six months.

There was a fabulous piece in this week's New Yorker by James Surowiecki entitled Hanging Tough, which tells the whole Reset story, but from history, the 1930's, the last time that Reset was required.

The article tells the story of how two cereal companies, Post and Kellogg, responded to the Depression. Post hunkered down, cut expenses, and concentrated on survival. Kellogg Reset, making investments, innovating, and creating new products. The result was that Kellogg became the industry's top dog, and has remained there ever since.

Surowiecki acknowledges economist Frank Knight's useful distinction between risk and uncertainty, which is very applicable in today's world. Hunkering down is a risk calculation, assessing the odds, playing it safe, controlling what you can control. Reset is an uncertainty calculation, suggesting that when you do not know what lies ahead, you have an opportunity to make quantum leaps and quantum change, but you also risk sheer survival if none of the investments pay off. It is the difference, as Surowiecki suggests, between risking "missing the boat" and risking "sinking the boat." It is no wonder that so many firms and organizations are playing it safe.

But this is a blog about leadership, after all. And leadership is about taking smart risks smartly in service of the mission. And if you believe in the mission, have the courage to test that belief, and the skill to test is wisely there is an opportunity out there.

United States Secretary of Defense Robert Gates is doing just that.

Pressed to make severe budget cuts, he is using the moment to introduce fundamental strategic changes in defense spending and, by extension, defense policy itself. He is trying to move this country from an old and mostly successful idea about wars and how to fight them, to facing a new reality, when war will not be nation state against nation state, but international nation state coalitions against global non-state aggregations of destabilizers of one persuasion or another.

To their credit, the hunkering down Members of Congress and their allies in what President Dwight Eisenhower in his Farewell Address famously labeled the "military industrial complex" are not fooled, as the New York Times pointed out last week in Elizabeth Bumiller's coverage of Gates' budget-selling road trip.

That ferocious opposition Gates is facing is evidence that he is on to something big and important.

Sadly, in one respect, Gates is smart enough to know that he can only deliver so much bad news at any one time. Pacing the work is one of the core skills in leading adaptive change. You cannot go faster than the pace at which people can absorb the discomforting adaptations. As a consequence, as reported again by Bumiller in the Times, Gates will not take on gays in the military any time soon.

We at CLA are on to week two of our column in the Washington Post's On Leadership blog. Take a look. Send in a question.

And I am going to try an experiment in Italy, in the spirit of experimentation that needs to characterize our response to the current reality. I am going to try to blog at least every other day, short posts, and do so without sending out e-mail notification to my list. Hope you will stay connected and give me feedback.