Leadership IS Making Sausage

Sure, it was pretty ugly watching the Senate Democrats lurch their way to the 60 votes necessary to pass a health care bill this week. But Paul Krugman is sooooo wrong when he self-righteously derides the process as dysfunctional in his Monday NY Times column.

Krugman's definition of a functional legislature is one that passes bills he likes.

In his rant against the filibuster, he fails to understand that if fewer than 60 votes were required, as he proposes, the last handful would have been just as tough to get, whether the necessary number was 51 or 53 or whatever.

The very visible process of horse-trading and negotiation that we have witnessed illustrates both (1) the essence of legislating in a representative democracy and (2) the agonies of adaptive leadership.

The Essence of Representative Democracy. If Krugman had spent a little more time the real world and less in academia, he would better understand that no issue, health care or climate change or Afghanistan is discrete. Everything is connected to everything else. (I am not defending the Republicans, who apparently made a conscious choice to opt out, despite the President's apparent willingness to make it worthwhile for them, at least some of them, to get in the game. I was disappointed to see that Senator Snowe did not hang in there and swallow the Rube Goldberg machine that emerged in the Senate.)

Despite Krugman's perspective, there are good, decent Members of Congress who care about other priorities more than they do about covering the uninsured. They are not sinners; they just have other, often just as noble, higher priorities. So they see their responsibility in the health care battle to let others worry about the details, while they figure out how they can use health care and their role in it to advance causes they care more deeply about, like, for example, making sure that no taxpayer funds pay for abortions or getting funding for folks who have been poisoned in Montana or even picking up points on the Republican side by voting "no" in order to keep the lines of communication open in order to get some Republican support for some issues like the climate change bill or the financial regulation reform bill, which may not have the necessary 60 Democratic votes.

The Agonies of Adaptive Leadership. Adaptation, making progress, moving forward to a new reality, is difficult because it requires people to choose between what is of the essence and must be preserved, and what is expendable and can be left behind. Every Member of the Senate cared about some potential piece of the package more than others. But all the Democrats, or the vast majority of them, cared numero uno about insuring the 30 million uninsured. For those, like Senator Nelson, who cared about making certain that no taxpayer funds were spent for abortion more than he cared about insuring the uninsured, it was easy for him to hold out until he had pushed the drafters on his numero uno as far as they could go without losing left-leaning Senators. And for those left-leaners, Senator Sanders and his ilk, they had to go through the difficult process of deciding what they cared about the most, and then sacrificing other priorities in its behalf.

It was a perfectly functional, if painful and messy journey. The final bill embodied a fair conglomeration of the most treasured values of the 60 Members needed for passage.

Prioritizing what you care about, disappointing some constituencies - no one likes to go through that process, which, if you are writing a column for the NY Times and teaching at Princeton, you rarely have to do.

Economists Meet Machiavelli on Leadership

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.

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.

Am I A Racist?

How do you answer that question?

Have been thinking a lot about it since the explosion of stories about the arrest of Henry Louis Gates, Jr. at his home in Cambridge on July 16.

So, here's my personal data.

I grew up in Massachusetts, spent my early years in politics there, a volatile combination for developing an acute sense of ethnic, racial, and tribal identities.

My hometown, Brookline, was roughly half Jewish, a quarter Catholic (overwhelmingly Irish, some Italian), and a quarter White Anglo-Saxon Protestants (aka WASPS). I can remember well as a very young child driving with my parents in the town at night during the period between Thanksgiving and Christmas and noticing "who was" and "who wasn't" by whether there was a lighted Christmas tree in the living room window. I can remember sitting with my father watching football games on tv and, as players were, being introduced asking each other whether this one or that one "might be Jewish."

I never knew a black person, except for Tom, who used to come once a week to clean our apartment (until my parents discovered that he had been raiding the liquor cabinet) and the janitor of the apartment building next door.

I went to Williams College where there were two blacks in my class, both much wealthier than me, and a dozen Jews out of a class of 250. (Surprise, surprise, two of the other 11 were assigned as my roommates.) On my first night at college, we had a party in our entry and in my beer-induced haze a I remember a fellow freshman from up state New York sitting down next to me and asking, "Are you really Jewish? The only Jew I hve ever met was a Canadian who came down to our town, opened a discount store and drove all the other stores out of business?" "Oh, that's intersting, I said."

In law school in the 1960s I decided not to spend my summer registering black voters in the South after my law school dean saw my name on the sign-up sheet and called me into his office to tell me that "it would be bad for my career."

In Brookline, after law school, I served as a tester, trying to rent apartments which had been refused to blacks to see if they had been turned down because of race. A close friend and I started a local foundation to provide initial loans and subsidies to assist blacks moving into town.

I voted for all the civil rights legislation that came before me when I was in the legislature and before that was a key staff person in the drafting of the so-called racial imbalance law which led to forced integration of the Boston schools by busing.

I took those racsim tests online, the one that came out of Project Implicit at Harvard and another by The Institute for Interracial Harmony. The former said I had a "moderate" preference for European Americans over African Americans and the latter, a much more straightforward almost self-assessment, said I was a wonderful person who loved everyone.

I have been accused in my classrooms of being sexist. And when I worked for Governor Bill Weld and fired an underperforming employee, I was accused by her and her supporters of being racist.

I am as racially and ethnically conscious a person as anyopne I know.

Am I a racist?

Are you?

Obama has not Closed the Deal on Health Care

Sorry, but for me, Obama has not closed the deal on health care.

Real health care reform means both universal coverage and cost control. More people being covered is going to put more pressure on costs. And health care costs in the US are already way out of whack with the rest of the world.

When Obama talks about reducing costs, I feel like I am on a used car lot. As my colleague Jeff Lawrence says, "There's no such thing as a dysfunctional system because every system is perfectly aligned to produce the result it is currently getting." And the current reality is working well enough for medical malpractice lawyers, for people with private coverage (like me), for drug companies, for insurance companies, and for folks on Medicare and Medicaid. None of us well-situated folks want to take any real losses.

There's no real cost reform Obamacare.

Where is the requirement for service consolidation and elimination of overlap, where are the generic substitutes, where is the cap on malpractice suits, where is the middle class tax increase, where is the employer mandate, where is the ban on unnecessary procedures, where is the effort to shift services more toward younger people and prevention and, yes, away from people my age well into their AARP years?

Obama has not distributed enough pain to have any meaningful reform on the cost side. The evidence? There aren't enough of the right people people whining.

The protesters are middle class folks who are scared that either their coverage will go down, their costs will go up, or their taxes will rise. They have good reason to be fearful. The drug companies are all for Obamacare. That's a very bad sign.

If we are going to have universal coverage, with or without a public option, someone has to pay for it. Obama's feelgood administration is falling into the leadership failure traps of, gulp, his predecessor, failing to deliver bad news, failing to take the heat from his own constituencies, failing to try inspiring all of us to take a short-term hit for some larger, longer term goal.

Pain-free health care cost reform is an oxymoron.

Do you agree?

Leadership as a Subversive Activity

When I edited a weekly alternative newspaper, called The Real Paper, I learned how hard it was to put out a single issue of a weekly publication with consistent high quality. That's why I am so in awe of how frequently The New Yorker meets that test.

The most recent example was dated May 11, and called "The Innovators Issue." I could go on and on about all the interesting stuff in there (see the pieces by Adam Gopnik on scarcity or surplus as a driver of innovation, Douglas McGray on a charter school crusader, and John Colapinto on the frontiers of neuroscience), but the piece that really grabbed me was Malcolm Gladwell's essay called "How David Beats Goliath".

Gladwell's ostensible purpose was to explore why underdogs sometimes win. He isolated two factors: (1)endurance and (2)changing the implicit rules of the game.

These are both critical elements of exercising leadership.

Look at endurance. My Kennedy School colleague and fellow part-time Italy resident Frank Hartman calls it relentlessness. Whatever the framing, the quality is about playing harder, or longer, than you are supposed to. A dear friend and mentor of mine was able to exercise leadership successfully without great authority on many matters that he cared about the tough bureaucratic infighting at the Kennedy School by making it clear to whoever was involved in the issue that he was willing to stay on the playing field as long as it took to get what he wanted. As soon as he announced his relentlessness, people started backing off, unwilling to match his effort.

Marathon runners understand this. Most of them - I used to be one, but never again - do not expect to win. The game is about finishing, completing those 26.2 miles. But if that is your goal, it is simple. All you have to do is to keep going and you will succeed. Endurance. Relentlessness.

How many times have you backed away from your purpose when you realized that you were dealing with someone or someones who were committed for the long haul, and were going to stay in the game no matter how long it went on?

Gladwell's other insight is about bending the rules, or interpreting the rules and norms in a way that also changes the game and gives you an advantage. His has several examples. There is the biblical David, perhaps history's most famous successful underdog, who eschewed armor and traditional weapons in favor of a sling shot, which would play to his strengths. And Gladwell profiles a young not-so-skilled girls basketball team who were trained for endurance and coached to incessantly press the other team trying to get the ball over the half-court in ten seconds. They generated confusion and turnovers...and unlikely victories. Both David and the girls were accused of not playing fair. They had not broken any technical rules, but they had violated the norms of play, under which they could not have hoped to be successful.

Leadership requires challenging, not meeting, the expectations of the other people in the game. That's what makes it risky. People don't like it when you fail to meet their expectations. But doing so is, pardon the cliche, a game-changer, experienced as subversive, not fair, not playing by the rules.

How many times have you sacrificed your objectives by playing by the informal and implicit rules that were designed to serve someone's interest and purpose other than your own.

Leadership requires the courage and skill to stay in the game for as long as it takes to achieve your purpose and to sustain the disapproval of those who like the game the way it is currently played, because it suits their purposes, whether or not it is in the interests of the organization or community as a whole.

So, let's hear some of your stories.

Why is it so hard to be relentless on behalf of what you care deeply about?

Why is it so hard to sustain the disdain of your colleagues when you adapt the rules to your own purposes?

And, please, send us a question for Leadership House Call, our column in the Washington Post. This week's question was about how to break down the silo mentality and get people to collaborate across boundaries.

Finally, take a look at The Stimulist. It is the best place to find out what those Gen Y Millenials are thinking (who are the world's most accomplished drunks?) and doing (rent-a-friend if you're lonely) and talking about (why you shouldn't go to law school).

Empathy in Judging and Leading

Judging is not the same as leading. They are different roles and require different sets of skills. So it has been interesting to watch the use of the word "empathy" connecting to the work of judging.

President Obama declared that empathy would be an "essential ingredient" in his choice of a successor to the retiring, in both senses of the word Supreme Court Justice David Souter. And from everything we know, his selection of Judge Sonia Sotomayor honors that commitment.

But how empathetic do we want our Supreme Court Justices to be?

Not very, is my answer, even though, as Carlos Watson has pointed out in his new blog The Stimulist, Sotomayor might be the most qualified judge ever nominated for the Court.

A little more empathy on the Court might be a good thing. David Brooks tried to thread the needle on this question in a complex column in the Times at the end of May.

The danger is that empathy easily turns into sympathy and the difference between the two is crucial. Empathetic people are able to put themselves in other people's shoes. Sympathetic people are reflexively supportive of people in pain. Sotomayor's membership in the National Council of La Raza, an important and respected Hispanic rights advocacy group, while she was on the appellate court, is evidence that she has crossed that line.

The United States has always been mostly a club for white males, the dominant and, for most of US history, the majoritarian faction in the country. The rules and norms and, yes, the laws understandably have reflected that culture. So it is a challenge for the Supreme Court to apply abstract Constitutional principles to specific laws and cases, when those cases are about the impact on people from minority factions.

The Justices, however well-intentioned they may be, cannot easily ascertain the constitutionality of those laws for people whose life experiences they do not understand. The best example of this, of course, is abortion. It is difficult to decide whether a right to privacy should apply when you have never carried a fetus and cannot remember when you were one. Having had the experience of being pregnant, or being empathetic to it, does not argue for or against the decision in Roe v. Wade, but is relevant to whether you think the principles embedded in the Constitution should be understood to protect the decision of the woman or the rights of the fetus.

Look at it this way. Sympathy is on one end of a continuum and cold-bloodedness is on the other and empathy is somewhere in the middle. We should want our judges to be more toward the cold-blooded end and our legislators to be more toward the sympathetic end, but a little bit of empathy can help them understand the impact of their decisions on people and circumstances with which they cannot identify.

But if too much empathy is dangerous in judges, empathy is a quality that is critical in exercising leadership.

What Obama has shown, most recently in his Cairo speech, is his unusual capacity for empathy, for knowing how others feel, for deeply understand how the world looks to them, even and especially if it is very different from the way it looks to him. Read his speech, if you have not already done so. He is comfortable honoring mutually exclusive views of reality.

In exercising leadership, being able to have real empathy is essential. You can never move people off a story they are comfortable with that is part of their self-identity until you can relate to that story, no matter how cock-eyed you may think it is, as if it were your own.

It is hard to be empathetic when someone else's feeling and experience are so foreign to you. I remember an uncomfortable moment early in my time in the Massachusetts Legislature, over forty years ago. I had co-sponsored and debated on behalf of a bill that would have allowed minors to buy a condom without a prescription. (Yes, this was Massachusetts in the 1960s.) We lost, but we came closer than our side ever had before, and it was pretty clear that the bill would pass in the next year or two. I was feeling pretty puffed up as I strode out of the House Chamber into the so-called Reading Room, where legislators gathered to talk and relax.

Sitting on a couch was a colleague, a strong opponent of the bill, sobbing. I assumed that he was having some personal problem so in an act of naive fellowship I went over to inquire and console him. But his tears came from the debate over the condom bill, and its near success. To him, defeating that bill meant preserving values that he believed in deeply which had guided him throughout his life: sex was only purposeful for procreation, never for recreation. And the idea that he would be a member of the legislature when that value was abandoned was almost too much for him to bear.

It was a great lesson for me. I understood that other people's reality which was sometimes so different than mine, both had its own legitimacy and needed to be deeply understood - not condoned - by me if I was to accomplish my own purposes.

There are three advantages to empathy in leadership, none of which apply to judging.

First, some people will go along simply because you do understand how they feel and acknowledge the pain you are inflicting on them.

Second, if you deeply understand their world view, you will be better equipped to distinguish what element of that picture they are most committed to and what the elements are that they may be willing to sacrifice for those priorities.

And third, if you are empathetic to those most threatened by what you are trying to do, their friends and allies, who are undecided on whether to go along, will be more likely to be with you because of the way you have treated their friends who will be suffering the losses.

How empathetic are you? How willing are you to acknowledge the legitimacy of point of view which are radically different than the truths you hold dear?

Leadership and Hard Choices: Obama and "Those" Pictures

A couple of notes:

On the personal side, check out a new website called The Stimulist. Went live last week. Subtitle is "The Optimist's Daily Brief" and the human spirit behind it is an up-and-coming rising star, journalist Carlos Watson. Watson has an original take on the news and what's happening. For us old folks, it is a way to stay in touch with the men and women who are going to be running everything soon. For Watson's age cohort of 28-45 year olds, it has the aspiration and the potential to be a touchstone and a voice for a refreshing sensibility that succeeds at walking that razor's edge, being optimistic without being naive and being realistic without being cynical. Oh, the personal part? My son, Max Linsky, is the Managing Editor.

This realism/optimism thing got a boost last Sunday when the New York Times published Adam Bryant's interview with Microsoft's CEO, Steven A. Ballmer. Here are two exchanges I don't want you to miss:

(1) Bryant: What is the most challenging part of your job?
Ballmer: Finding the right balance between optimism and realism.
(2) Bryant: How do you assess job candidates?
Ballmer: "......And I try to figure out sort of a combination of I.Q. and passion.

I like it that Ballmer sees optimism and realism as synergistic, and that he recognizes the important of passion, caring deeply about something and not being afraid to display the emotion that goes with the commitment.

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The controversy over the CIA pictures, and President Obama's flip-flop on whether to release them or to contest the ACLU lawsuit demanding their release, is a powerful example of what makes leadership difficult. Read Jeff Zeleny's piece last week in The Caucus, the New York Times' government and politics blog.

Leadership is difficult because it requires choosing among competing values, each of which has legitimate claims to be honored, each of which is treasured.

Such choices are painful. You have to re-order your loyalties. You have to put a stake in the ground. You have to disappoint those who were counting on you to put their value at the top of your list.

In the case of the detainee pictures, Obama originally decided to let the pictures be released, then changed his position. We don't want our politicians to change their positions. We call them flip-floppers, a pejorative. We would rather have them be consistent than be educated.

On the pictures, Obama weighed multiple competing values. Among the most obvious are:

(1) transparency, a value he has espoused frequently during his Presidency;

(2) moving on rather than seeking retribution for past sins;

(3) consistency;

(4) deference to technical expertise (in this case, the "technical expertise" is really just the best guess of his military advisers about the consequences of releasing the photos); and

(5) supporting the judgment of those who he has appointed to senior authority roles.

There is no analytically correct answer. News junkies like me could probably make cogent arguments for any position. What we want Obama to do depends on our own personal perspective, not only only those values but on Obama and politics.

As of today, Obama seems to have made a choice that disappointed almost everyone except the military. Combined with the rest of his national security policy he is being criticized from the left and the right. From the left there's Maureen Dowd's parody in the Wednesday New York Times picturing him as a Rumsfeld-Cheney puppet. From the right, Dick Cheney is criticizing his every move. In the center, he has challenged centrists who want to close Guantanamo, but not have any of the detainees on US soil.

As Peter Baker pointed out in his front page news analysis in today's Times, Obama's pragmatism, his unwillingness to follow a consistent ideological line, will disappoint partisans of both extremes and will ensure that the debate stays front and center.

But the reality that so many people are pushing back may also be evidence that he is doing something important, by carving out a governing path that does not fall into the usual categories.

Not all resistance is evidence of leadership. But there can be no leadership without people pushing back.

Reset, Italian Style - Essential and Expendable

First, a note about an opportunity for a New York City-based non-profit:

We have just moved the main office of our firm, Cambridge Leadership Associates (CLA), from Cambridge to New York City. As part of our commitment to the community and as a recognition of the challenging times facing nonprofit organizations right now, we are offering ADAPT New York, a year long pro-bono consulting engagement to a selected NYC area nonprofit organization.

CLA will work with the nonprofit to co-design a comprehensive leadership program that directly meets the challenges the organization is currently facing. If you know of anyone that might be interested, please pass this information along. Click here for the application. ADAPT New York is featured on the corporate social responsibility website, JustMeans. (The application deadline is June 12.)

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Having spent quite a quite a bit of time a couple of weeks ago with people at or near the top of private sector organizations in Milan and Rome, I can see how the economic crisis has spread to Italy, but also how there is enough distinctiveness in the Italian economy and society so that its manifestations are different than they are in the US.

First, there is no widespread banking crisis. The Italian banking system is heavily regulated and heavily locally-owned and operated. They are what New York Times columnist Paul Krugman called "boring banks" in a terrific piece he wrote last month.

Most Italian bankers are local businessmen and businesswomen, known in their community, and knowledgeable about the folks to whom they lend money. They are conservative and risk-averse. They are comfortable but not rich. They did not do credit default swaps.

I can remember the days of post-world War II boring banking in the US. Within a four block area in Coolidge Corner in Brookline, MA, there were four or five banks, all locally or regionally owned and run. The men (all men, as best as I can remember) who ran those banks were active in the community, involved in civic life. I watched those local banks then get gobbled up and disappear, sometime around the 1980s, replaced by huge national bank companies and equally impersonal ATM machines. Krugman thinks we need to get back to boring banks. Seems right to me. But there are a lot of folks in the banking industry who will fight for the deregulated world that made them fabulously rich until their house of cards crashed last year. But my guess is that a highly-regulated locally-driven banking system will be one of the consequences of the current turmoil. (And, further, but the subject of another post, the pattern of heavy regulation plus lots of local autonomy will be part of Reset going forward, not only in the banking industry, but in government-private sector relations generally and in individual organizations as well.)

This is not about nostalgia for the good old days. It is about the function of banks in the economy, providing capital for businesses to invest and grow and for families to buy and fix up their homes. Deregulation led to consolidation, fostering the morphing from savings and loan institutions to venture capitalists, creating incentives for the banks to feed the financial bubble. And despite James Surowiecki's characteristically insightful piece in this week's New Yorker about the need for capital to drive the economy, seems to me there will always be institutions and people with lots of money to fuel big growth, but that local banks serve a different and critical purpose for ordinary folks, as Italy illustrates.

Italy has also been somewhat insulated because the Italian economy was lagging behind most of its counterparts in the European Union. There was no consumption frenzy. Families were not inundated with debt. Houses are not under water. There was not too far to fall.

What makes Italy so appealing - and sometimes so frustrating, to both natives and expats - is that the country seems to have been determined to hold on to its definition of the good life as having more to do with family and food than money and materialism. Last time I looked, for example, Italy had the highest number of hours working per person and the lowest productivity rate in the European Union. Italian workers talk a lot, take long lunches, and generally enjoy themselves. As our contractor said to us, "We Italians like to start things, We are not so interested in finishing."

Italy is feeling the pinch in industries that rely on exports of consumption goods or imports of visitors. We have a friend who owns and rents a fabulous villa - take a look, it is really extraordinary - on the Amalfi coast whose bookings through agencies are down dramatically, although he has managed to keep his business thriving through his own contacts and repeat clients. And in my time in Italy, I talked with folks from industries like fashion and automotive parts who are seeing orders from Japan and the US plummeting. Fiat seems to be a notable exception, seeing this worldwide crisis as an opportunity not to hunker down, but to Reset and make big bets on the future, with investments in Chrysler and perhaps General Motors that, if they work and the economy recovers, will make Fiat a worldwide industry leader.

But Italy has considerable cultural constraints to moving forward in the current turmoil. Domenico Bodega, Professor of Organization Theory and Dean of the Faculty of Economics at Catholic University in Milan, was a respondent at one of the sessions I did for a group of 150 private sector corporate big-wigs in Milan. I spoke about Reset and the need for adaptive leadership in the current reality. Bodega responded that Italy is not well positioned to adapt because of deeply held norms which get in the way of an adaptive response: deference to authority, reliance on charismatic leadership, discomfort with uncertainty, a culture of alibi, and an aversion to efficiency in use of time.

Selfishly, of course, I do not want Italy to adapt too much or too quickly. I love it there in part because of those eccentricities, such as the values on food and family and relationships, which permit me to relax as soon as I land at the airport in Rome.

The challenge for Italy is the challenge that we all face in adaptation, in thriving under uncertainty: Do we have the courage, and the skill, to separate the essential from the expendable? Can we make good, tough choices about of all that we value, what to keep and what to leave behind?

Can Italy preserve what makes it so special and move away from those practices and norms which are holding it back, as it responds to the growth pressure from the European Union and from its own citizens, and its reliance on exports and tourism?

Can Italy make progress without risking what is essential in the its DNA? Can you? Can we?

Leadership: Self-righteousness and Self-doubt

I was surprised by how focused I was last week on Arlen Specter's decision to bolt the Republican Party and join the Democrats. Why should anyone care?

Part of my response was simply personal. I still cling to my identity as a liberal Republican, a choice I made fifty years ago. Specter is "nice Jewish boy" like me, who has used the Republican Party and been used and abused by it for most of his adult life. His abrupt departure makes the already thin ranks of socially-liberal, fiscally conservative Republicans even smaller. I feel lonely.

But this process has been going on for decades. Back in early 1972, when I was a three-term Massachusetts state legislator contemplating running for Congress, I received a surprising phone call from then-Congresswoman Margaret Heckler, asking me to come to her home in Wellesley for a cup of coffee. (Heckler later was US Secretary of Health and Human Services, after she was defeated for re-election in 1982 by Barney Frank.) She and I had known each other casually as fellow elected Massachusetts Republicans. Our only real engagement had come when she was on the Platform Committee for the Republican National Convention in 1968 and I had tried in several uncomfortable conversations to convince her that a Republican perspective on abortion would be to emphasize individual freedom of choice and that public policy decisions, if they are to be made, should be left to the states rather than the national government. (She didn't buy either argument.)

Over coffee that morning at her house, Heckler tried to persuade me not to run for Congress. She said, "You know me well enough, Marty, to know that I am not all that liberal in my views. But even so, I am almost a pariah in the Republican Party in Congress. My Fellow Republicans ignore me, dismiss me, and ostracize me. I feel very isolated. Are you sure you want to be a part of that environment?"

She was no more successful in persuading me not to run that I was in changing her position on abortion. I have often wondered what would have happened if I had won that race.

(I ran and lost. Some Republican stalwarts put a very conservative independent candidate into the race so that even though I held the incumbent to less than 50%, the third candidate siphoned off enough voters from me to end my electoral career. 1972 was a pretty ugly year for Republicans in Massachusetts. As fellow political junkies may recall, Massachusetts was the only state that George McGovern carried against Richard Nixon in the Presidential race and I was the only Republican candidate for Congress in the whole country who ran ahead of the national ticket and lost, and I ran 20 points ahead of the ticket!).

Despite holding onto to my Republican affiliation even as that part of my life fades deeply into obscurity, the Spector defection also raised less personal issues for me.

Specter's reasons for becoming a Democrat are pretty straightforward. His own polling showed that it would be almost impossible for him to beat former Republican Congressman Pat Toomey in the Pennsylvania Republican primary next year. By switching his allegiance, he may give the Democrats a filibuster-proof 60-vote count in the Senate, so he was probably able to extract a pretty good welcoming deal from Majority Leader Harry Reid and President Obama. Good for Specter.

But he must have made a calculation that his own political survival, keeping his Senate seat, was more important to him than fighting within the Republican Party for the values he has espoused all his political life. He was self-righteous and arrogant not to risk his own power on behalf of those values.

Survival is a wonderful instinct. Specter is a cancer survivor as well as a political survivor. But with five terms already under his belt in the US Senate, having just turned 79 years old, you would think he would be willing to go down in history fighting for what he believed in, rather than being remembered mostly for a politically expedient party switch.

Leadership is risky. Leadership involves taking risks on behalf of Purpose and not about individual aggrandizement. Leadership is about embodying enduring values, putting in jeopardy your own personal ambition.

I became a Republican in part (there are lots of reasons, but that's another blog post) because I could not identify with the smug liberals at college, who were so sure they were right about everything that they ridiculed other people's perspectives and were completely closed to learning. They were the least open, the least tolerant people I knew. I agreed with where they came down on many if not most of the issues, but I was racked with self-doubt where they had none, and I wanted to be with people who were continuing to search, rather than those who had already found the holy grail.

It is a paradox of leadership: you have to be completely committed to what you are doing in order to step out there and take the risks, but at the same time, with equal persistence, you have to hang on to self-doubt, always keeping open the possibility that there is a better idea out there. Otherwise, how can you ever learn and grow?

But, then again, I might be wrong about that.

Immelt's GE: Reset's Poster Child

Jeffrey Immelt, the CEO of General Electric, is fast becoming the poster child for Reset in the US corporate community.

My friend Jon Hoch from Connecticut was the first to point this out to me. He sees Immelt's GE (and Ford Motor Company as well) as looking at the current turmoil and uncertainty as an opportunity for adaptation and Reset, rather than hunkering down and waiting out the storm.

If you are wondering what Reset looks like in practice, look at Immelt and GE.

In February, he refused an $11.7 million bonus to which he was contractually entitled.

Then, he cut the treasured annual GE dividend, a symbol of GE's consistent growth and stability, for the first time since 1938. The next day, as the stock dipped to its lowest point since 1993, Immelt personally invested in the company buying 50,000 shares.

He has shrunk GE Capital (GE's finance unit) by 30%, both to reduce volatility in the company and in recognition of the fact that the financial industry will be much more highly regulated than it has been in the past. He has made it clear that more cuts are coming.

In his letter to shareholders, dated early February and released with the GE Annual Report in March, he took full responsibility for the bad news, but also challenged his GE colleagues to be energized, not frightened by the challenges facing them. If they are frightened, he told them, they should leave. If, however, they are energized, the opportunity to transform GE should be "thrilling." He also confirmed that the company would be pumping $10 billion into technological research and development.

Then in his mid-April speech at the annual shareholders meeting, Immelt predicted that GE would Reset, but so would capitalism with government permanently playing a more robust role as industrial policy advocate, financier,and partner.

So, let's tease out the Reset principles here.

First, Immelt has recognized that the future is unknown and unknowable, except that it will be very different from the past.

Second, he has chosen between the expendable and the essential. Reset is a time to make hard decisions about what to preserve of all that is valued and created success(i.e. manufacturing), and what to leave behind in order to survive and thrive in the new world (i.e. GE Capital and the 50 years of never cutting the dividend). All this while taking responsibility for each decision and for the pain they are causing those involved.

Third, model the behavior you are asking of others, so that people see you, too, feeling pain and taking risks (ie invest your own money).

Fourth, be simultaneously brutally realistic and unflaggingly optimistic.

Fifth, run some experiments, make some big bets, invest in the future.

Sixth, practice interdependence by challenging and inspiring own own people to take responsibility for joining you on the journey and reinventing the future.

These are ideas that can be applied to any business, non-profit, or government agency. What is required is courage and skill.

Immelt is making big bets and taking big risks. If he is right more often than he is wrong, GE will be even stronger in the future than it has been in the past. If he is wrong more often......

Obama's Leadership and the CIA memos

My favorite definition of leadership: leadership is about disappointing your own people at a rate they can absorb.

By that measure, President Barack Obama is now facing the toughest leadership test of his 100-day old Presidency. He made an Obama-like decision, looking forward and not backward, to not investigate or prosecute those responsible for carrying out the "enhanced interrogation" methods on al Queda suspects in 2002 and 2003.

Curageously, he went to the CIA and faced those most worried about the backlash from the memos and his condemnation of the techniques they authorized.

As Obama surely expected, the release of the memos generated criticism on the right and a new wave of publicly expressed angst on the left from the usual sources, such as Senator Patrick Leahy and MoveOn. And then, inevitably, they were soon followed by a self-righteous column from NYT columnist Paul Krugman.

My assumption is that Obama assumed that predictable sources on the right and left would vent for a while and then it would all blow over, as happened with his selection of Reverend Rick Warren to particpate in the Inauguration.

But then he made a tactical error. Courting trouble, but presumablky to try to calm the waters hestirrede up on the left, Obama allowed for the possibility of prosecuting the authorizers of the now-banned behavior. (Presumably he would have to include those Members of Congress from both political parties on the Senate and House Intelligence Committees who, according to Congressman Peter Hoekstra of Michigan, had been briefed on the techniques and has approved the funding them.)

Obama is walking a razor's edge here. He has given those who seek a pound of flesh from the Bushies an avenue for doing so. He had been willing to take heat from both extremes for his release-the-memos-condemn-the-methods-but-no-retribution stance, to avoid what he believed was the worst scenario, a long, divisive, partisan, ideological, and diversionary series of investigations and prosecutions. Now, under pressure, he may have opened the door just enough to get that dreaded outcome as well.

As we learned from the ridiculous Clinton impeachment process, nothing can come from such show trials except taking the attention and energy of Congress and we the people away from the tough choices the country is having to face in order to get the economy moving again.

And as we learned from Gerald Ford's pardon of Richard Nixon (and have been reminded by Gerald Seib in his recent Wall Street Journal column), the political fallout from trying to avoid a long, drawn out show trial can be considerable.

This is not South Africa where a Truth and Reconciliation Commission was needed to try to heal the great decades-long scar of apartheid that had split the country in two.

Obama was right to balance government truth-telling with no looking backward, tactically wrong to throw a bone to his critics on the left. He may be risking his other priorities being sidelined if the Justice Department or the Congress start looking for scapegoats big time.

With his re-election still 3 1/2 years away and lots of other problems facing the country, there maybe enough time for Obama to get by this one.

But from a leadership perspective, it is not yet clear that he has figured out how to disappoint his own people at a rate they can absorb.

Living Adaptive Leadership

Harder than I expected to stay focused on work while looking out over rolling farmland, gently ascending up to the town of Collevecchio here in the province of Lazio about an hour northeast of Rome.

But here I am, following the Red Sox and the Celtics, reading newspapers online, and trying to stay current and make connections, as if the world would stop if I did not know what was going on.

For example, in Tuesday's Boston Globe, Paula D. Broadwell wrote an op-ed piece extolling General David Petraeus as the embodiment of someone practicing adaptive leadership. The piece is worth reading. (Full disclosure: Broadwell, a major in the US Army, is now a pre-doctoral Research Fellow at the Center for Public Leadership (CPL) at the Harvard Kennedy School (HKS). My colleague Ron Heifetz and I teach leadership at HKS, and Ron was the founding director of CPL. But we do not know her.)

Broadwell accurately identifies some of the core assumptions of adaptive leadership. The first is that leadership is about skills that can be learned by anyone.

The issue of whether leadership can be learned, or more precisely, whether it can be taught, is the subject of this week's debate on the Washington Post's On Leadership blog. The question was stimulated by the provocative piece that Thomas Ricks, the Post's military correspondent, published on Sunday suggesting that the service academies be abolished.

Despite my making a living teaching and consulting on leadership, I am much more convinced that leadership can be learned than that it can be taught.

The resistance to that idea typically comes from two sometimes overlapping sources: (1) people who think they've "got it" and (2) people in positions of senior authority who fear loss of control and diminishing the deference of subordinates that they enjoy so much if there really were to be a culture of leadership throughout the organization, if leadership was the responsibility of everyone.

Broadwell's second core idea from adaptive leadership that Petraeus embodies is that the capacity of organizations to adapt to new realities depends on whether the culture expects leadership throughout the organization, not just at the top.

Petraeus and many others in the military have realized that in a rapidly-changing situation, where people on the ground are constantly having to adapt to new and unanticipated external and internal realities, the creativity, judgment, and experimentation that are elements of leadership must be the province of everyone in the organization.

Petraeus and the military are not alone. Last weekend I spent some time with Lee Baca, the innovative elected Sheriff of Los Angeles County. Baca, too, believes in leadership throughout the organization and has run experiments that have challenged and shocked his colleagues in the law enforcement community. For example, Baca has developed a program offering gang members education as an alternative to incarceration. And instead of being sued by advocates for fairer treatment of people in jail, he has partnered with them. Take a look at his website. Everyone of the 14,500 people who work in his Department signs on to a value statement that begins, "As a leader in the Los Angeles County Sheriff’s Department....". Not bad.

So, how is it in your organization, your family, your company, your non-profit, your community? where does the responsibility lie for leadership How prepared are your people with the skills necessary to adapt, to survive and thrive, in the face of accelerated pace of change and continuing uncertainty?

It will be interesting to see whether the challenge of coping with the current turmoil and foggy future will generate a similar commitment to adaptive and disseminated leadership in the private sector where, in my experience and observation, hierarchical responsibility for leadership usually still prevails.

This afternoon I go to Milan for meetings with senior corporate folks from Italian-based companies. I'll let you know how it goes.

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.

Reset: What to do when you don't know what to do

"What do we do to do when we are in important jobs and we really don't know what to do? Many, many people are in exactly that position this evening. Only their spouses know."
e-mail from J., a CEO of a large company in the Midwest

My friend J. is not alone. People I talk with are sensing that we are in a period of fundamental change, where the assumptions of how the world works, of how our lives work, of how we work, are shifting in ways that we can barely see, never mind comprehend and internalize so we can plan for the future.

For our family, it looks like this. I am no longer thinking about retiring, both because our finances look less certain (and just plain less) and because this is the most interesting time I have lived in since the 1960s. I don't want to miss it. And I want to have a hand, small as it may be, in shaping the future in my particular worlds: our firm, Cambridge Leadership Associates, the Kennedy School at Harvard, where I have been teaching for 28 years, and my circle of family and friends.

My wife, Lynn Staley, retired last summer after a distinguished 30-year career in publication design. She received a Lifetime Achievement Award from the Society of News Design. She always worried about what would happen if she stopped working. She couldn't picture anything between 70-hour work weeks and sitting in front of the tv eating bonbons.

Like my friend J. and the people he described, Lynn did not know what to do when she did not know what to do.

But she has found her way to things that she postponed all her adult life: returning to drawing, studying languages, and experimenting in the kitchen, most recently creating her own unique version of a Seder plate (recipe on request). And, perhaps most interesting, important, and satisfying, she's been nurturing relationships and collaborating with friends and family in ways that are just starting to evolve.

What do you do when you do not know what to do?

Professionally, our firm is caught up in this extraordinary period of potential transformation. We are trying our best to live up to the advice we are paid to give to other organizations. But we, too, do not know what to do. Like President Obama, we've never been here before. We're making guesses and trying to invent new ways.

In the past six months, we have been talking and working with organizations in the US and abroad, across all three sectors, Fortune 500 companies, public servants in Europe, philanthropists in the US, all wrestling with some version of that question.

We don't have the answer. But our assumption is that the future is yet to be invented. At no time in my life has there been so much uncertainty about what lies ahead. But that reality suggests that each of us has the opportunity, if not the responsibility, to create the wave, rather than waiting for it to come and trying to ride it forward.

This is the spirit of explorers, entrepreneurs, inventors and artists. They understand what it means to look at the future and see it as a tabula rasa waiting to be filled in. They are motivated by the uncertainty, not crippled by it. They are willing to step into the void, without a road map or a destination.

How can we emulate that spirit in our own lives?

Here are four ideas: live your purpose, run experiments, practice interdependence, and nurture conflict.

First, it all begins with purpose: clarify what is most important to you, distinguish what, of all that you value, you can leave behind in the interests of moving forward.

Here's an example of purpose. My friend Ron David says "Relationships are primary. Everything else is derivative." You may or may not agree, but if he believes what he says, and I think he does, then every little decision he makes, as well as all the big ones, can be seen through that prism.

For me, purpose becomes more relevant because time is running out. "What am I going to do with the time I have left?" When I was in law school in the early 1960's, I signed up to do voter registration in the South. The Dean called me into his office and told me not to go, that it would hurt my legal career. I regret to this day that I took his advice. Frank Rich's column in the Sunday New York Times was all about the economic meltdown giving young people an opportunity to follow their most noble purposes.

Now that the era of boundless consumption is over, what really counts for you? And what can you do to live your purpose, to make it alive for you every day?

Next, adapting to a new reality and living your purpose require running experiments rather than solving problems. Take risks. At work, try new ways of holding a meeting, of dealing with subordinates, of talking to your boss. If e-mail is driving you crazy, stop trying to answer them. Send them back an automatic response, like those answering service messages, saying that you will return their e-mail, "as soon as you can." Hold people accountable for their commitments. Hold yourself accountable for yours: take the risk of showing your kids that you love them by putting them ahead of work. If you are a male who believes in gender equity, don't accept a speaking engagement unless there are a significant portion of women no the program.

Third, after purpose and experimentation, acknowledge interdependence. Give up the illusion that you are an autonomous human being or organization. Instead of saying publicly, "It sure sucks to be Bill," when some thing goes wrong in Bill's division in the company, say "I think we've got a problem."

I spent last week as faculty chair of a one-week leadership program at the Harvard Kennedy School. A woman left the program the day before it ended. Most of the group steadfastly hung onto the belief that we as a community had no role or responsibility in her early departure; either she acted independently, autonomously, or that it was my fault, as the senior authority. But it seems irrefutable that each of us, by what we did or what we did not do, including the woman herself, created the conditions that led to her departure. Collective responsibility is a hard pill to swallow. But we all own a piece of the current reality.

Practicing interdependence means initiating conversations, alliances, partnerships, networks and collaborations that you have never tried before. Look for leadership in your organization - and in your family for that matter – from people at every level.

Fourth and finally, embrace conflict as a precondition for progress. Realize that change is difficult because it involves loss. Our colleague Ron Heifetz says that "People do not resist change. They resist change that they do not think is going to be good for them. They resist loss, or the threat of loss."

There can be no real change without resistance, loss, and conflict, generated by those who have an investment in the status quo. So celebrate conflict as a sign of real work being done. Nurture it, orchestrate it, manage it, but don’t squash it.

Obama continues to model the behavior, reaching out to people across the globe in a way that no US President has previously done. He re-surfaced the immigration issue without a plan, knowing that it would stimulate a response he could not control, but that the conversation would be good for the country. And he's not the only one who is modeling the behavior. A fellow named Joe Works in Humboldt, Kansas, makes trailer hitches. His business is down 50% this year. But instead of laying people off, he is paying his people to do projects in the community, like planting public gardens and rehabbing a church.

People who expected the future to be clear are starting all over again. In the forthcoming era of what Paul Krugman called “boring banks”, people coming into the job market are going to have to figure out what, other than money, floats their boat. The New York Times News in Review had a piece about new kinds of career choices.

Even those addicted to money as an end in itself are having to figure out what to do when they do not know what to do. The Sunday New York Times had a front page story on talented people leaving Wall Street, some of them for more purposeful lives.

Of course, in the end, there is no good answer to my friend J's question about what to do when you do not know what to do. If you are a senior authority figure like he is, you are expected to know the way. So step one is to change those expectations, so your people know you are all in this Reset business together.

Reset and Reading - Into the Mainstream

Before we start, two news bulletins: Starting Tuesday, April 13, our firm will have a regular weekly feature on the home page of the Washington Post's On Leadership website. It's called Leadership House Call. The idea is that you - and yes, I mean you, will send us a current leadership challenge, and we will comment on it and stimulate a wider conversation on the issue. PLEASE send your dilemmas to: leadership@washingtonpost.com. We will need a small framing title and a way to identify you. Thanks.

And news bulletin number two: my colleague Alexander Grashow and I published a piece on Reset on the Huffington Post last week. Here's the URL if you want to take a look: http://www.huffingtonpost.com/marty-linsky-and-alexander-grashow/obama-is-reset---are-you_b_181467.html

Did you notice the cover of the April 6 issue of Time Magazine? A big red Reset Button. And a terrific cover story by Kurt Anderson called The End of Excess. As Anderson wrote, "This is the end of the world as we've known it. But it isn't the end of the world." Read Anderson's Time essay. It is the best statement of apocalyptic optimism I have seen.

William Safire throws a little cold water on Reset in his weekly On Language essay in Sunday's New York Times Magazine. He describes it as plebeian and quotes the NY Times technology Q&A columnist as describing Reset as "the magic button" to make everything all right again.

But to me Reset is a lot scarier than that. The way we - and Anderson - have been using the word, Reset is about starting from scratch, questioning assumptions, and deep systemic change. Nothing easy about that because Reset is about risk and loss.

That is why having Joel Klein as Chancellor of the New York City School system with Michael Bloomberg as Mayor is the best chance we have for transforming public schools. Both of them have had fabulously successful careers before their current roles. Both are willing to take risks because they are well off enough financially and reputationally that they have nothing to lose. And both are willing to sacrifice other priorities, including popularity, in order to try some experiments to unlock a system that is the shame of America. It is what makes me nervous about the economic team of Larry Summers and Timothy Geithner. Summers is trying to resurrect his reputation, which floundered in the wake of a failed Harvard Presidency and in his contributions to the deregulation of the financial industry which contributed mightily to the current collapse. Geithner, of course, was presiding at the NY Fed when it all fell apart. They have too much personally at sake to take the kind of risks and heat that the present crisis requires.

Reset ideas are everywhere, in public, private and non-profit sectors. Anderson has a whole raft of them in his piece. I have seen big examples this week in education, the practice of law, medicine and philanthropy. Keep your eyes and ears open and send me what seems to fit.

Speaking of eyes and ears, Reset in reading had already set in before the economy collapsed, and the financial turmoil only has accelerated a process that has been well underway.

I remember a scene nearly a year ago at our family Sunday morning breakfast table, with my wife, Lynn Staley, our son Max, and his wonderful girlfriend Meredith Jacks. An audiotape of the conversation would have revealed nothing out of the ordinary: a family in New york City sitting around reading the New York Times and engaging in conversation about what was interesting to us. But a videotape would have told a very different story: Max and Meredith were reading the newspaper on their computers while us old folks were doing the hard copy thing.

Max and Meredith's generation is already getting most of their reading done online and I, like many of my generation, could not imagine not having the crinkle of a newspaper in my hands.....until I got my Kindle, that is.

Now, we have bookshelves in almost every room of our house. Most are overflowing. I love to read, to curl up with a book before going to bed, to plow through the carton of books I take with me on vacation, or to sit with on a lazy Sunday in our apartment or in Central Park reading and sharing the mood and the space.

In our consulting work, we often talk about how the pain has to be palpable enough for individuals and organizations to take on deep change. Well, the pain in my right leg from stenosis in my back, was sending me a signal that lugging a handful of books on my business trips - most of which I was too tired from work to read - was not so smart. My colleagues at Cambridge Leadership Associates bought me a Kindle from Amazon last summer. Better to shell out $350 than have the old man collapse, they must have reasoned.

The Kindle has changed my life. I never thought I could live without turning the pages. I can. I never thought I could live without sticking Post-its on pages, or making notes to myself on the inside cover. I can. I never thought I could live without the satisfaction of turning that last page in a book. This too, I can. It is the size and weight of a typical paperback. It can hold 1500 books. And I could get magazines and newspapers, including the New York Times, delivered to the device as well. (No, I haven't yet succumbed to reading the Times on my Kindle.)

It is less and less likely that I will ever buy another book in the traditional format. I will certainly buy a lot less of them than I have done in the past. Now, I buy the book I want on Amazon (from the 250,000 that are available) at the computer in my home office and by the time I walk across the hall to me bedroom where the Kindle is plugged in, the book is already downloaded. At $9.99 or less.

The Kindle is not perfect. But it is close. And the Kindle 2 is even closer, at least according to the New York Times guru on personal technology, David Pogue.

Since 2006, Sony has its own device, the Sony Reader. Sony has also just created a strategic alliance with Google to meet the Kindle challenge. Google has finally worked out an agreement with authors and publishers to provide access to its huge digitized inventory on line, although Microsoft and others are trying to get in the way of the agreement every being implemented. The war for our virtual book, magazine and newspaper business is in full swing.

Google "newspaper closes". You'll get 3.8 million hits. Two weeks ago, it was one of my old favorites, the Seattle Post-Intelligencer, that went web-only. And the New York times reported this weekend that it has threatened the union with closing the Boston Globe where both my wife and I were gainfully employed some time ago.

As a former newspaper journalist I am not one to mourn the loss of newspapers. I have more information, more good information, at my fingertips than I ever did before. slowly, I am getting comfortable with getting information virtually, spurred on by friends, family and colleagues for whom this is second nature. It is Reset, and it is happening right before my eyes.

Reset Partisanship and Anger.....

Lots of anger out there. In the past days, I have received missives from four good friends of different ages, backgrounds, experience and communities (although all US citizens). They are all liberal Democrats and early Obama supporters, and all four of them sent angry, even furious diatribes against right-wing politicians, commentators, and George W. Bush.

Even the always cool Barack Obama is angry.

Less surprisingly, there is anger on the right as well, labeling Obama as "socialist". Yahoo has been documenting it. And the New York Times had a front page story Monday on Glen Beck, the new post-Lou Dobbs mouthpiece of angry conservative populism.

Nearly everyone's in a bad mood. You, too? I am especially curious about anger from the left because I would have thought that my liberal friends still would be euphoric over Obama's victory and exulting in his commitment to press forward on an ambitious domestic agenda on education, energy, and health care, even in the face of the current economic turmoil. My guess is that their anger is the tip of some iceberg and I wonder what is under the surface.

I have two theories The first was triggered by a conversation with my wife, Lynn Staley, and an e-mail from my friend Z.from Toronto. Perhaps my correspondents are disappointed in Obama, because he has not lived up to all the expectations they put on him. They cannot acknowledge that he is human after all, and they will not criticize him for fear that they will further undermine his popular support. So they have focused their frustration on the old familiar targets: Rush Limbaugh, W, Dick Cheney, and their fellow travelers.

But it was inevitable that Obama would let people down. They put him on the pedestal with many mutually exclusive expectations. They assumed naively that the Congress would stop being representative and would fall in line.

This explanation fits well with my favorite definition of leadership: leadership is about disappointing your own people at a rate they can absorb. See, for example, Obama on Afghanistan, as a specific case in point.

A second and related idea is that people are anxious and worried about their own futures, their shrinking retirement accounts, their job loss, their depleted available cash supply, and the general uncertainty that we all face, and have focused their anxiety on those same old and easy targets.

Of course, those on the right have the same personal worries, but they have an easier target in Obama and his Administration, and then there's the Congress, the historical target of choice for anyone, any time.

There is nothing wrong with anger. It is a normal human emotion. Question, of course, is what to do with it. Sudhir Venkatesh's provocative op-ed in the Sunday New York Times News of the Week in Review suggested that the the populist rage has not been more focused, constructively or destructively, because we angry people are also embarrassed about our contributions to the mess, our years of overextending our debt and consumption.

So what would constructive harnessing of our anger look like? On the left, it is about supporting Obama, realizing that he is only human, that he is trying lots of experiments and that he and Geithner are only guessing, and then hoping that he will have the courage to keep trying different approaches until he gets it right. Be patient. Give him time. Forget wanting to be able to say "I told you so," a la Paul Krugman as seen on ABC's Sunday news program. With friends like Krugman in an economy that depends for its recovery on a psychological confidence, who needs enemies?

For Republicans, it is about creating and pushing alternatives, and holding Obama's feet to the fire, not calling him names and, worst of all, not hoping he fails. For a look at what that might mean substantively, read Carlos Watson's clever take-off on the AIG resignation letter published on the Huffington Post imagining Louisiana Governor Bobby Jindal's resignation letter to the Republican Party or Hendrik Hertzberg's essay advocating temporarily suspending payroll taxes (a tax cut!) in a recent Talk of the Town piece in the New Yorker.

Look, I love politics. I am a junkie. But this is no time for politics as we know it. We are in a moment of fundamental change and opportunity. Take that anger and that anxiety and channel it into activity that will help change yourself and change the world.

Barack and Harvey: Hands on the Thermostat

I just saw "Milk". Pretty good movie, I thought. But also a pretty good leadership lesson.

The good news is that for the most part, in the movie at least, Harvey Milk was able to get off the dance floor and onto the balcony, take a distanced view, and realize that the movement was not about him, but about gay rights, the value that he represented and cared about. The bad news is that in the movie, at two crucial moments he was too anchored on the dance floor and lost that perspective.

People who are out in front, like Harvey Milk thirty-one years ago, or Barack Obama today, with constituents and followers, are expected to regulate the temperature in the system and in a position to do so, as if they had a hand on the thermostat.

Of course, when you are in that role, you are never acting completely autonomously. In organizational life, your most ardent supporters usually want you to turn the heat down, keep things calm. In social movement life, your most ardent supporters usually want you to turn the heat up, on others, of course. And often, in both cases, what is required is just the opposite.

Having the expectation on you that you will control the heat is a great resource for exercising leadership. You need to know when to turn it up in order to put enough pressure into the system to get people to face up to difficult realities they would just as soon avoid, and when to turn it down because the pressure cooker you have created is about to blow up.

That's what Obama is dealing with right now, and what the movie portrays Harvey Milk having dealt with in the 1970s.

Here's where in the movie Milk failed to get on the balcony and therefore misread how close he was to blowing up the system. First, his fellow San Francisco supervisor (and soon after his assassin), Dan White, confronted him about feeling humiliated by being the lone vote against the gay rights ordinance. White represented all those people who felt at sea because the world they knew was passing them by, but Milk didn't need them to pass his ordinance so he was deaf to their concerns. Then, soon after, there is a scene where Mayor George Moscone told Milk he wanted to re-appoint White to the Board and Milk threatened Moscone with political retaliation. Moscone represented all those people, including many who agreed with Milk and, as suggested by the film, many policemen, but who did not want to see the other side humiliated.

Shortly after Moscone told White that he would not be re-appointed, White assassinated both Milk and Moscone. The system blew.

Last week, Obama faced rising populist anger and frustration. I received four e-mails from friends, left of center Democrats, full of fury, disproportionate particularly considering they had helped elect an African-American President who was trying to advance a domestic agenda they supported. I think that their fury at the bonus babies and the conservative commentators was a reflection of their frustration with Obama himself, not at his policies, but with his unwillingness to share and mirror their rage, to take revenge on the hated Bushies, and to respond viscerally to the injustices in the current situation.

Obama's uncharacteristic response last week, showing a flash of anger whether he felt it or not, and in spite of the reality that his Administration had more or less already signed off on the bonuses, was a way of calming down his own constituents, who were screaming for blood, before they did something foolish and undermined the whole mission. By railing against the bonus babies, he raised the heat, pacifying his angry constituents who were lusting for revenge and buying some time to address the substantive issues. The downside, of course, is that he legitimized and exacerbated the public humiliation of all the people who worked at AIG and other financial firms, whatever their role in the reckless risk-taking, and accelerated Congress' tendency to be easily diverted from the more troubling issues and tough choices around how to get out of this mess and focus on the outrage of the day. Not surprising that he has backed off from supporting the Congressional proposals which responded to his public anger.

Controlling the heat, keeping the temperature in a productive range, is an important tool of leadership for you as well as for Obama. My sense of Obama is that he understands the tool, but is not predisposed to use it. His coolness under fire has become, and maybe always was, part of his self-identity, and like any of one's own special gifts, it is also a vulnerability.

My sense is that this experience will reinforce his tendency default to his cerebral reflexes and he will have trouble in the future recognizing when to raise the heat when that is what is needed. I hope I'm wrong. Otherwise, he will never get us to face the trough choices we have to make to reset the system rather than live in the illusion that we can restore it to the status quo.

Crime and Punishment

Watching Madoff being taken away in handcuffs last week, I was thinking about crime and punishment, and whether those who recklessly led us into the current financial mess ought to share more of the pain, whether or not they committed a crime.

My son and my son-in-law, the former operating from his analytic side and the latter operating viscerally, have been arguing with me for months about society's need for some kind of "justice" for those people, particularly in the financial and mortgage industries who may never have broken any laws, or who never intended to hurt anyone, but who acted recklessly with other people's money and security and should have known better.

We do that already.

Remember O.J.? He was not convicted of a crime, but he received a judgment against him for $33.5 million (most of which he has not paid) to go to the families of Nicole Brown and Ron Goldman in a wrongful death civil suit.

And if you drive down a crowded downtown street at 60 mph, you can be convicted of a crime of driving to endanger, even though you technically did not intend to hurt anyone. The law says that being that reckless amounts to the same thing as having the intent to do harm.

At the very least, people in the mortgage business or the financial services business who are certified professionals ought not to be able to enjoy the fruits of their recklessness while so many of their clients are suffering. They have not only caused an enormous amount of pain, but they have undermined public confidence in two industries which are essential to economic growth and depend on a significant level of trust.

My law degree is gathering dust somewhere, but there are lots of brilliant minds out there who could be put to figuring out how society can hold these folks accountable, if not by putting them in jail, at least by taking away their ill-gotten gains.

Which brings me to two unsettling realities that cut the other way.

First, as pointed out by the ever-interesting Joe Nocera in his painful-to-read March 14 New York Times column, Madoff's victims were also his accomplices, not asking the hard questions, and taking his non-answers as satisfactory as long as the paper profits continued to roll in. Some of them actually enjoyed the benefits of Ponzi scheme, by taking some of their money out of his funds, others only by spending as if their paper profits were piled up under their pillows. But they had the power to bring him down and they did not because they were benefiting, or so they believed, by whatever he was doing. So our sympathy for them is mitigated. And we were all accomplices in some way.

Second, as pointed out by Andrew Ross Sorkin in Tuesday's New York Times, in an equally painful and unsettling column to read, there are two good reasons for the government not to squash the AIG bonuses, outrageous as the bonuses seem.

One, those bonuses were part of the employment contracts and invalidating those contracts would further erode trust in the commercial system. Second, for better or worse, we all have an interest in AIG having the best possible people in their seats helping AIG get out of the mess they helped it get into. Criminals understand the system better than those hwo have not tested it. Maybe some of those folks who are getting the big bonuses are who we need the most to be at AIG and who could most easily walk away from AIG and get other high-paying jobs? (But much of that argument was destroyed by the devastating front page story in Wednesday's Times, pointing out, among other atrocities, that many of those who got the bonuses have left AIG.)

Saying all that, it is simply not OK that those mortgage and bank folks who encouraged the risks, knowing that they would not be held accountable if the borrowers and investors lost everything, and knowing that they themselves would not be taking the same risks as they were encouraging their customers to take, can enjoy their lavish lifestyles without any pain other than the guilt they might be feeling as they have that second martini on the porch overlooking the ocean.

If nothing else, they have destroyed faith in the system which will hamper and delay the economic recovery and have negative consequences for years to come.

If the smart lawyers cannot figure out a way to get them to divest their ill-gotten gains, perhaps someone from that category will step up and start the ball rolling by voluntarily returning the bonus at AIG, or unilaterally changing the terms of some of those underwater mortgages, or in some other tangible way sharing the pain and divesting themselves. AIG CEO Ed Liddy has asked those bonus babies to give back 1/2. Too Liddle, too late?

This question came up this week on the Washington Post's On Leadership blog, where I and the rest of the panel were asked whether big-time basketball coaches and other highly paid people in organizations going through tough times should voluntarily give up some of their compensation. Take a look. This was after Connecticut basketball coach Jim Calhoun said he would give "not a dime back". Watch it on You Tube. Interesting range of views in the Post. What do you think?

Finally, a couple of people have written to suggest both that the idea of Reset is really resonating, but that they missed the earlier blogs on the subject which laid out the idea in more detail. Rather than having you scroll through them all, here are a couple of URLs that might help: the first Reset post and the second.