Leadership requires relentless optimism that you can change the world and hard-nosed realism about who and what you are dealing with and what it will take to make progress.
The brilliant economists who never saw the economic crisis coming have been appropriately humbled by their failure to understand how people really behave. They weave their elegant theories based on how they think people should behave rather than how they do. They assume we are always thoughtful and rational in making decisions.
Finally, the economists are acknowledging that their elegant theories and proofs miss human realism, the role emotions play in decision making and the extent to which individual situations and circumstances affect how we understand the options before us. See Paul Krugman's somewhat inscrutable mea culpa in the New York Times. For a less dense version, read Ross Gittins' piece in the Sydney Morning Herald.
Those politicians the economists are so quick to disdain have taught them something about human behavior. We humans are not robots or efficiency machines. We do not always make decisions that some outside observer thinks are the "right" decisions.
The political literature, starting with Machiavelli (perhaps the godfather of today's new school of behavioral economists), has long recognized human realism. One of my all-time favorite books is "The Art of Political Manipulation" written by political scientist William Riker and published back in 1986. Buy it on Amazon. It's a great read. Riker understood, as most politicians do and most people who exercise leadership successfully do, that understanding human nature with all its quirks, ALL its quirks, is essential to success in mobilizing people on behalf of purpose.
These new behavioral economists are trying to apply their formidable intellects and analytic skills to better understanding human nature as it is, not as they wished it were. Their work may help you exercise leadership more effectively by systematizing what we might call non-rational human tendencies.
If you want a good introduction to the practical aspects of what the behavioral economists are learning, here are two easy to digest books that I have read on my "working" vacation: Predictable Irrationality by Dan Ariely and Nudge by Richard Thaler and Cass Sunstein.
Sunstein, not so incidentally, was just appointed Obama's regulatory czar, endorsed by Forbes Magazine, and attacked by the rightwing bloggers, so you will soon see some of the insights from the book turned into real White House policy proposals.
Obama's recent recommendations to stimulate more savings were right out of the Thaler-Sunstein playbook, acknowledging that most human beings fear loss more than they value gain and prefer the status quo to an uncertain future.
If you want to get the gist of their insights without wading through less accessible literature check out the entry under behavioral economists in Wikipedia. You might also check out the work being done by Jennifer Lerner, a psychologist and professor at the Harvard Kennedy School, and her Emotion and Decision Making Group at Harvard.
In our work helping people exercise leadership more successfully than they have in the past, we often encounter well-intentioned people who are not successful because they find it hard to embrace human realism, choosing instead to operate from naivete or cynicism.
What a wonderful consequence of the economic crisis it would be if those behavioral economists could redeem themselves by generating some systematic insights that would help all of us exercise more leadership on behalf of what we care most deeply about.
Saturday, September 12, 2009
Monday, September 7, 2009
Leadership as the Distribution of Loss
This is a big week for Obama. Vacation's over and so is the honeymoon. A lot is riding on his big health care speech to the Congress this week, not just about health care, but about the kind of President Obama will be.
He promised to be different, to deliver hard truths as well as inspirational homilies. On health care he's been heavy on the inspiration, not so on the perspiration. It is as if he has forgotten about the hard truths, or worse, has assumed that the righteousness of the cause would be enough to carry the day and that health care reform, whatever its shape, would somehow be good for everybody.
Naivete? Lack of courage? Anyone's guess.
He has failed to be convincing because his rhetoric doesn't sound real.
Intuitively, you and I know that there should not be health care reform on coverage without health care reform on costs, and there cannot be health care reform on costs without a lot of pain. That pain will have to come from some combination of: lower profits, different value propositions, and new ways of doing business for health care providers, medical equipment manufacturers, and drug companies; less lucrative practices for medical malpractice lawyers; higher taxes for the middle class; more personal responsibility for individual and family health; loss of individual freedom in the wake of governmental regulations influencing diet and exercise; and, yes, less access to free or nearly free high end medical services than many people, particularly the very ill and very elderly, now "enjoy", if that's the proper word when you are dying of cancer.
The inspiration part is easy and right in Obama's wheelhouse. What makes leadership on health care difficult (what makes leadership for any purpose difficult), is the distribution of loss. The opposition to change in the current health care system comes from people, organizations, interests and industries for whom the current reality, flawed as is, seems to them (and they may be right for themselves)a lot better than an unknown future.
The AARP is a good example of the link between leadership and loss. Sixty thousand AARP members have quit because of AARP's support for health care reform. To its credit, AARP understands that in the long term, the current realities, including particularly the costs of end-of-life care, are not sustainable for senior citizens or for the country, and will be even less so as the baby boomers, now in their 50s and early 60s start to face the inevitable breakdown of their bodies.
Read Jane Brody's column on the subject and ponder the statistics she cites. No more than 10% of those over 70 who are resuscitated survive. Thirty percent of all Medicare dollars are spent in the last year of life, 15% in the last 60 days.
This is getting to be a very personal issue for me. I am writing this as my 95-year old mother is going to he airport to fly to Italy to be with us. I have had more fun with her in the past fifteen years than in the 30 before that. I don't want her to die, of course, but she maintains that she has hidden away something to end her life during that window of time when she is aware enough to know the end is near but still capable of self-administering whatever it is she has hidden away. I hope she uses it.
And I am 69, loving my wonderful wife, three children, and friends and other family, working as hard and enjoying professional challenges as much as I ever have, feeling very lucky to be able to go for a 50-minute run this morning and cope with the pain in my leg from the stenosis in my back, tolerating the (I hope) temporary loss of hearing in one ear as well as various other aches that come and go. I love my life and don't want it to end. I want to stay around long enough to see my kids grow into their 50s, to enjoy our house in Italy, to make sure that we have socked away enough resources for my wife to continue to live her life well for whatever time she has left after I go, and, political junkie that I am, to see something of the other side of the global sea change we are now experiencing. But I know in my gut, that if the United States is going to catch up to the rest of the industrialized world and provide universal health care that I am not going to be able to be kept alive with very expensive, highly advanced medical care unless I am willing to pay for it all myself and erode our family savings. I need our President to inspire me to sacrifice some of what I might have had in terms of late in life health care, by acknowledging my loss, empathizing with it, and then but only then, moving me to do this for a greater good.
He promised to be different, to deliver hard truths as well as inspirational homilies. On health care he's been heavy on the inspiration, not so on the perspiration. It is as if he has forgotten about the hard truths, or worse, has assumed that the righteousness of the cause would be enough to carry the day and that health care reform, whatever its shape, would somehow be good for everybody.
Naivete? Lack of courage? Anyone's guess.
He has failed to be convincing because his rhetoric doesn't sound real.
Intuitively, you and I know that there should not be health care reform on coverage without health care reform on costs, and there cannot be health care reform on costs without a lot of pain. That pain will have to come from some combination of: lower profits, different value propositions, and new ways of doing business for health care providers, medical equipment manufacturers, and drug companies; less lucrative practices for medical malpractice lawyers; higher taxes for the middle class; more personal responsibility for individual and family health; loss of individual freedom in the wake of governmental regulations influencing diet and exercise; and, yes, less access to free or nearly free high end medical services than many people, particularly the very ill and very elderly, now "enjoy", if that's the proper word when you are dying of cancer.
The inspiration part is easy and right in Obama's wheelhouse. What makes leadership on health care difficult (what makes leadership for any purpose difficult), is the distribution of loss. The opposition to change in the current health care system comes from people, organizations, interests and industries for whom the current reality, flawed as is, seems to them (and they may be right for themselves)a lot better than an unknown future.
The AARP is a good example of the link between leadership and loss. Sixty thousand AARP members have quit because of AARP's support for health care reform. To its credit, AARP understands that in the long term, the current realities, including particularly the costs of end-of-life care, are not sustainable for senior citizens or for the country, and will be even less so as the baby boomers, now in their 50s and early 60s start to face the inevitable breakdown of their bodies.
Read Jane Brody's column on the subject and ponder the statistics she cites. No more than 10% of those over 70 who are resuscitated survive. Thirty percent of all Medicare dollars are spent in the last year of life, 15% in the last 60 days.
This is getting to be a very personal issue for me. I am writing this as my 95-year old mother is going to he airport to fly to Italy to be with us. I have had more fun with her in the past fifteen years than in the 30 before that. I don't want her to die, of course, but she maintains that she has hidden away something to end her life during that window of time when she is aware enough to know the end is near but still capable of self-administering whatever it is she has hidden away. I hope she uses it.
And I am 69, loving my wonderful wife, three children, and friends and other family, working as hard and enjoying professional challenges as much as I ever have, feeling very lucky to be able to go for a 50-minute run this morning and cope with the pain in my leg from the stenosis in my back, tolerating the (I hope) temporary loss of hearing in one ear as well as various other aches that come and go. I love my life and don't want it to end. I want to stay around long enough to see my kids grow into their 50s, to enjoy our house in Italy, to make sure that we have socked away enough resources for my wife to continue to live her life well for whatever time she has left after I go, and, political junkie that I am, to see something of the other side of the global sea change we are now experiencing. But I know in my gut, that if the United States is going to catch up to the rest of the industrialized world and provide universal health care that I am not going to be able to be kept alive with very expensive, highly advanced medical care unless I am willing to pay for it all myself and erode our family savings. I need our President to inspire me to sacrifice some of what I might have had in terms of late in life health care, by acknowledging my loss, empathizing with it, and then but only then, moving me to do this for a greater good.
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