I’ll probably regret writing this piece, and I apologize in advance for so overtly bringing in, not just the headlines, but an attitude about them. But if I wrote about anything other than the debt ceiling I’d feel like Nero with his fiddle.
And, two very big principles to be learned from the debt-ceiling fiasco are directly relevant to business leadership. You and (I hope) every other business executive in the United States would do well to apply both of them in your day-to-day work.
ROT
The first principle is a matter I’ve written about several times, both in this space and in Keep the Joint Running: A Manifesto for 21st Century Information Technology. The acronym is ROT and stands for “Relationships Outlive Transactions.”
It’s a principle the Tea Party and its representatives don’t appear to understand. Long before the debt ceiling became a crisis … before the last election, in fact … a prominent Republican politician (John Boehner, I think) defended Nancy Pelosi as a person at a Tea Party rally and was booed for his trouble. He wasn’t defending her politics, or her tactics. He simply pointed out that she’s a good person regardless of what you think of her politics, and that was considered horrible.
I’m not going to go into a who-started-it analysis. Doing so would be about as useful as figuring out whether the Hatfields or McCoys were to blame for their legendary feud.
Blame isn’t the point. It’s the situation as it is today that matters, because every participant in every dysfunctional relationship has a decision to make every day … whether to escalate or do their part to help dial it down.
And right now, it’s the Tea Party caucus members’ failure to understand the importance of dialing it down that matters. Eventually, they’ll face the consequences, because the most important relationships are the ones you form with your political opponents. Those are the relationships you have to be able to rely on when the situation gets thick.
Don’t make this mistake in your relationships with other players in your company. The moment you make disagreements and decisions that don’t go your way personal and acrimonious, the next time there’s a decision to be made, you won’t have much influence.
Principles
In the 7/30/2011 Star Tribune was an commentary by David Strom that spoke admiringly of the Tea Party caucus members for sticking to their principles.
Which they have, and sticking to one’s principles is, as Everyone Knows, a Good Thing.
What Strom and the people he admires fail to grasp is that those who disagree with them have principles too … principles they believe in just as strongly and passionately.
Juveniles deal with this sort of situation by demonizing whoever disagrees with them. Their opponents become bad people, which makes ignoring what they want just fine. They’re them — they’re stupid, evil, inept, smell bad, and their mothers dress them funny.
It’s this approach to disagreement that leads to brawls between fans of different British soccer teams.
A mark of personal maturity is recognizing that when two people disagree on a subject, their opinions can be equally valid. Different perspectives, experience, underlying assumptions, values, and planning horizons can lead to very different conclusions. (“Can be” isn’t “must be,” though. When I disagree with a flat-earther, I’m right.)
Which means people don’t compromise because they’re weak. They compromise because they’re mature enough to realize political opponents aren’t enemies — they’re just people who have reached a different conclusion.
Political conservatives take as a guiding principle that government is best when it governs least. Political liberals take as a guiding principle John Rawls’s idea that a fair society is one you’d choose to live in without knowing in advance where you’d be born into it. (I won’t comment on either the level of correlation or the level of consistency with which the Republican party adheres to political conservatism or the Democratic party to liberalism.)
In a calm conversation, liberals and conservatives would acknowledge the validity of the other side’s guiding principle, which means they’d agree that the challenge is finding the proper balance between the two.
Regrettably, we aren’t having a calm conversation.
In the end, the problem with Washington DC isn’t politics. It’s the absence of politics. Politics is the practice through which people who disagree with each other reach a path forward they might not agree with, but can agree to.
As a business leader, you need to excel at this practice. And you need to encourage excellence in it with everyone you work with.
The alternative? There isn’t an alternative. Businesses that fail at this fail.
Bob:
Thanks for a great column on what should be seen as reasonable views of collective government.
Bob, Bob, Bob.
How many times have you written about the importance of figuring out who the customer is? For the Tea Party, their customers that they have to keep happy are voters who don’t like the exponential rise in spending. Their mission is to reverse the trend. They could dial their rhetoric down. They could make an attempt to sympathize with the principled stance their opposition takes that led to being 14 trillion dollars in debt. It’s not their best strategy, though. Gridlock favors the Tea Party. If no bill is passed, people will see that the government closing offices when they run out of money is no big deal.
If you really wanted to help your readers in their professional lives take an example from this, perhaps a better column would have been giving advice about how to negotiate when you have no leverage. The deal was a huge win for Obama in my opinion. The “budget cuts” were reductions from the planned spending baseline. We’re not actually spending less next year than we did last year. We’re cutting $100 billion from the baseline next year and every year after than for 10 years. Then we’re taking the area under the curve and calling that a $1 trillion cut.
Contrast that to the typical IT budgeting process since the bubble burst. The CIO is told to take whatever was spent last year and cut it by 10%. If you use the same reporting strategy that the Debt Ceiling is being reported with, then a $1 million IT budget is cut by $3.5 million. Actually, I take that back. $3.5 million is assuming that the budget was going to stay the same. All IT has to do is announce that they were planning on increasing the total by 10% every year. Now cutting by 10% instead cuts the $1 million budget by $39 million. Surely your readers could learn some valuable tricks for preserving their spending budgets from the current events.
I’m not disagreeing with your thesis; devolving honest disagreement into personal acrimony in relationships (personal, business, politics, etc) is a bad thing. However, from a “political” approach your examples only cite the acrimony of the right (“Tea Party”) towards the left. In the ongoing political “debate” in Washington there has been enough acrimony from both sides. In just the last week leaders from the left have called those on the right “Nazis” and “terrorists”. Ms. Pelosi, herself, has accused the right of an intention to “destroy the planet”. I believe both sides should “dial it down”. When a reasoned commentator, such as yourself, posts an essay advocating as much, but only references examples from one side it tends to establish a prejudice in the mind of the reader biased on the prevailing viewpoint of the reader. (“Yeah, those Tea Partiers need to tone it down! Nazis!”) When that happens, your argument loses effectiveness.
-ddw
I was, in this piece, discussing the negotiations themselves. Were I to start analyzing who said what with respect to name-calling it would have been a different discussion. For the record, whether it’s Glenn Beck (who I think holds the record for Nazi-calling) or Joe Biden’s unacceptable use of “terrorist,” it certainly doesn’t help.
To bring this back to CIOs – how should a CIO deal with a negotiating situation that seems to please no one? Fiscal conservatives are upset that the federal gov’t will still be spending almost twice what they spent in FY02, just like it did this last year. Fiscal “non-conservatives” are upset because either more $ wasn’t being spent, or more taxes weren’t being imposed on wealthy folks (I’m not sure). It seems that there is no common ground between these widely divergent positions. So how does a good CIO resolve A vs. non-A?
I know, the classic answer is “Get rid of A vs. non-A thinking and find common ground.” I just don’t see how to both shrink the gov’t significantly and to keep it growing at a 4-7% pace annually.
I don’t know about the full solution. I know part of it: Establish a shared base of facts on which to base the discussion, framed so as to avoid partisan bias.
Example: “Fiscal conservatives are upset that the federal gov’t will still be spending almost twice what they spent in FY02, just like it did this last year.” That’s accurate but framed in a partisan fashion in that it creates the impression that the Obama administration is responsible for the increase. Certainly, most of the Tea Party’s anger on the subject has been directed at President Obama, Nancy Pelosi, and other Democratic leaders.
The actual history: The increase has been steady and bipartisan. Most of the increase between FY02 and FY11 took place under the Bush administration, during which conservatives were mostly silent about the increase — $2B vs either $3B or $3.5B, depending on which administration you consider responsible for the FY09 budget.
Another non-partisan fact: 88% of the federal budget goes to Social Security, Medicare, Medicaid, and the Department of Defense. There are no easy cuts to make.
And another: Federal revenue as percent of GDP is the lowest it’s been since 1950 (15%). We do, in fact, have a revenue problem, not just a spending problem.
So the facts are that both Republican and Democratic administrations have increased spending, tax revenues are down, there are no easy cuts, and we can’t continue to increase our debt indefinitely.
Seems to me that points to a solution that makes painful cuts while also increasing taxes (or closing loopholes and using the revenue increase to help fund government).
CIOs aren’t ever going to be in an equivalent situation because in business, nobody demonizes revenue as a terrible thing.
> And another: Federal revenue as percent
> of GDP is the lowest it’s been since 1950
> (15%). We do, in fact, have a revenue
> problem, not just a spending problem.
GDP includes government spending (in Y=C+I+G+(X-M), G is government spending). A lot of government spending is not taxable. (For example only 34% of Social Security beneficiaries have to pay taxes on their benefits). When there is a sharp increase in government spending, there is a sharp increase in GDP, without a corresponding increase in taxable revenue. Revenue is more closely attached to the private contribution to GDP which is falling. GDP is growing faster than revenue because the government is spending more. It looks like a revenue problem but it’s actually an artifact of the spending problem. If you are a Keynesian, it will all take care of itself when the government spending stimulates private sector growth. That is why the CBO projects the revenue as a percent of GDP returning to 18% with no changes to the tax code, or 21% if the Bush tax cuts are allowed to expire.
Hear! Hear!
Thank you for putting a positive definition to the word “politics”. So often it seems that when “politics” is used in a conversation, especially in a corporate environment, it might as well be translated “evil”.
I guess there is a difference between personal politics, which often is selfishly motivated (the opposite of R.O.T.) and the altruistic politics that you speak of here. Which makes me wonder: Is altruistic politics possible?
Bob,
I think your politic missed on this one. One thing I noticed in this debate was the extreme name calling in which the Dems indulged not the Tea Partiers. Instead, they pushed legislation.
But, there are two lessons here for business. First is taking care of the customer. Second is how to handle a dysfunctional relationship. The first was well addressed by Zach. The second is one of those things that happens in business when money moves from tight to non-existent and the parties begin to fight. In business, you can and should dismiss employees who don’t work toward the business’ goals. That doesn’t work very well for countries though voters do address the issue once in a while.
Now, how the money is or was going to be handled has some comparisons to business because budgeting is always going to be part of business life. It takes a strong, diligent CEO without allowing his/her ego to control to handle a troubled company’s finances. I didn’t see that here.
Best wishes,
D
If you didn’t hear name-calling on the part of the Tea Partiers, I don’t think you were listening very hard. And that’s even if we agree to ignore the 200+ times Glenn Beck called Obama and his administration Nazis without a single disapproving murmur from any member of the Republican leadership.
Hello again, Bob!
Y’know, there was an essay/book/article/can’t remember from a sci-fi writer Arthur C. Clarke, he proposed that with technology a government could and should be spread out over it’s country so it would be more in tune with the people being governed..
While all this debt thing was going on, I’ve kept thinking about that.. won’t happen, tho..!! 😉
Keep up the good work.
Jim Agnew
Thank you for the column. Whichever side you come down on regarding the issue, it seem clear the deal we got could have been made months ago. Sadly it seems to have offered very little in solving the economic issue. The time and energy wasted in posturing could have been spent in crafting a real solution.
Don’t worry too much about offending Bob. I’ve turned my back on the Tea Party over this issue. Their intransigent stance is not useful.
Plus, no one, literally no one, even Tea Partiers are talking about what really needs to be done. You could defund EVERY government agency except defense and you would still be unable to balance the budget. Social Security, Medicare, and Medicade are eating us alive (as is the a fore mentioned defense spending).
I am, and have always been, willing to give up every dime of my future Social Security benefits for the good of the country. I think the future of the nation is directly dependent on enough people feeling the same way, or else (after watching the current debt debacle) we’re doomed.
My challenge with the debt debate is that the debate is in the wrong place. The debate should be at the guiding principle level.
Taking John Rawls’s idea, wouldn’t the fact that people flow into this country from all over the world by legal and illegal means be an indicator that they believe that this is a “fair” society and that they will be better off no matter where they land? Mr. Rawls’s idea underestimates the level of greed and jealousy in the human heart. No matter how fair the society becomes, as long as some have more than others, there will be calls for the society to be more fair.
Correlation in the company- there will also be jealousy in about who received more budget/salary/etc within a company. Pointing out the ways to reason with people and work through this (think parable of the workers in the vineyard) would be a more apt lesson for managers.
So, the two better lessons are negotiating (as pointed out above) and dealing with then inevitable grousing as some believe they were short changed in the transaction.
Maybe we could have worked a deal where Hitler killed half as many Jews?
Sometimes, principles are more important than relationships. There is nothing in my moral code that says it’s OK to burden my children and grandchild with crippling debts that benefit my generation. We have out-of-control government spending, but compromise is the answer? Keep racking up the debt, just a little more slowly? Really?
We’re going to have to disagree on this one.
Well that didn’t take long. Usually, a thread like this runs for at least a day before someone brings Hitler into it.
Seriously? You see the other side’s principles as equivalent to Hitler killing the Jews? Perhaps this would be a good time for you to take a few minutes to acquaint yourself with the other side’s principles. Nowhere in them was there anything remotely equivalent to genocide.
Bob,
Actually, you brought the Nazis into the conversation with your comment about Glenn Beck.
I have watched Beck’s show since the beginning and I have never once heard him indulge in character asassination by calling somebody a Nazi. He DID call Pres Obama a racist once. “What Beck says” is one of those items that has so much purposeful disinformation swirling around it that one can only believe first-hand info. There are NO reliable sources beyond the transcript.
Seems to me, if you mention Hitler you’ve mentioned Nazis. And as you missed Glenn Beck’s serial Nazisms, here you go: One among many YouTube clips documenting this: http://www.youtube.com/watch?v=0YKYJ5rF-qA .
Bob,
Bless you. I saw all of the clips in the Youtube video when they originally aired. There is no personal attack on any individual in the administration in them. Talking about the policies of the Nazi movement of WW-II Germany and comparing their policies with those of the 20th century Progressive movement is not a personal attack on Obama. Where are your well known excellent critical thinking skills? If all you have seen of Beck are the edited bits taken out of their original context, I understand how you could be swayed. How are you to tell which are clips from his biting sarcastic sketches? Beck the performer has more in common with Jon Stewart than, say, a Rush Limbaugh type. It’s like trying to understand Don Rickles’ humor from only the outbursts.
Oh, okay then. Equating people to Nazis is much better than calling them Nazis.
@Bob .. Actually, there *IS* a difference between talking about behavior/policy/rhetoric and talking about people themselves.
There *is* a difference between saying that “Socialist so-and-so proposed this stupid legislation” and saying “This legislation proposed by so-and-so has these elements in common with this law from Communist China.” or saying “This legislation introduced by so-and-so takes us down the path to socialism.”
I think it is pretty clear that, generally speaking, the Right thinks the Left is misguided, whereas the Left thinks the Right is evil. You may not fall in that generalization, but it holds broadly, and explains a lot or the rancor.
Nonsense. “He’s like Stalin” isn’t different in any substantive way than “he’s doing the same things Stalin did.”
Imagine for a moment a Republican official took credit for policies that increased the on-time performance of U.S. air carriers, and his opponent pointed out, “That’s exactly the sort of thing Mussolini took credit for.”
It would be factually accurate … Mussolini claimed credit for getting the trains to run on time … but still seriously offensive.
And that’s ignoring the actual quality of debate. With respect to the Affordable Care Act, this included, you’ll recall, such thoroughly vile and completely untrue claims as “death panels” and “government take-over of health care.”
High intensity fear makes for hard lines to be drawn in the sand. When fears materialize, leaders in the past like Churchill, Patton etc. rise up to meet the challenge. Most of us have a tendency to follow at this point. Crisis leadership at one level is fairly easy in black and white (us versus the Nazis).
Lincoln went to war over slavery etc. Obama elected not to use the 14th amendment. Lincoln might have.
In business, when do things get “bad” enough to evoke the need for true leadership? Or when does benign dictatorship triumph over a consultative management style?
My view is that you go with one that gets results. In Washington or in private industry.
Bob:
From a negotiation perspective, what does “compromise” mean? To the Democrats, it means getting the Republicans to cave in once again, just like Lucy pulling the football away on Charlie Brown. For the context of this column, we wonder if we are getting the same treatment in our current negotiation. How have our “opponents” positioned themselves? Where are the goalposts, and have they moved recently? What are our principles? Can we identify bedrock or nice to have? Do we understand how the money we are asking to spend really translates to revenue or valid cost savings or is it vaporous?
@Mark
Like +1.
Bob, you’ve often talked of optimizing the whole by sub-optimizing the parts. Seems to me our government has given us a tragic example of what happens when a single group focuses instead on optimizing their part, and to heck with everything else.
Great piece, Bob. Nice to hear from somebody that’s rational.
Good try! And I agree with your points vis-a-vis the business situation.
What’s different about the government situation is that the government can/will enforce its edicts with its police power, regardless of how you feel about it. The worst a business can do is fire you or you may choose to resign – but, and this is key, the rest of your assets are unaffected. That is not true with a government edict. They can forcibly take some or all your personal assets just because a majority of those who choose to vote so vote. And the way things are today, there are far more voters on the receiving end than on the providing end, so they are incentivised to close their eyes and pretend there is an infinite Santa Claus out there.
That’s why certain principles of government are necessary to codify and follow, regardless of how one “feels” about it or the “fairness” thereof. (Recall that the 13 states insisted on codification in the first 10 Amendments certain principles they believed should not be subject to the whims of the day). Otherwise, the society will collapse and far more people will be hurt than if those principles are adhered to. So long as there is some place better (from their perspective) to go, the producers will go there – this happens in the various States within the US, and it happens globally. Even if the liberal thinks that a closed society will work, I assure you it will not. The producers are not fools and will reduce their efforts when the rewards are taken from them. This has been shown in places as large as the USSR, in Cuba, and even in the original Kibbutz in Israel. In a like manner, no business can survive if the owners or employees try to take more out of it than it earns.
A balanced budget amendment would force the US government to make really difficult choices that States have to make. One of these days, the number of people willing to lend to the US Treasury may drop to the point of forcing the equivalent of such an amendment by either refusing to lend or by charging such heavy interest rates that it cannot be afforded. Businesses are forced to make these kinds of choices or go out of business (collapse).
So Obama signs and the debt bill becomes law. Everyone breathes sighs of relief and life carries on as before – but for what time frame? There’s only so much road you can kick the can down and America is getting close to the end of it. What then?
Your analysis of the business lessons of the debt limit debate is spot on. Your references to Glenn Beck as a name caller are grossly misguided. He is loud and dramatic, but he is not a hater. Comparisons of current policy with history are fair game. In that context, speaking the correct names of the historical organizations on both sides who aggressively supported those policies for their own reasons is fair, too. It is not name calling, but the haters at both ends of the political spectrum tally it as such to suppress political speech. Bob, bless you and your checkbook.
Bravo. This and the whole notion of ROT should be required reading in MBA courses (to say nothing of Congressional orientation). Years ago, Georgetown was known for its cocktail parties and Washington had its golf outings. At both venues, relationships worked and compromises were made. Today, everyone has to focus on campaign fund raising. This nearly eliminates the social gatherings with others of different opinions and forces the focus to be self-centered.
Great article. Come to think of it, it also serves as a good guide for successful marrages, and by extension, a healthy society.
Bob,
I visited President James Buchanan’s home (Wheatland) this past week. He was president right before Lincoln. He believed in compromise and is considered one of our nation’s worst presidents. Rightly or not. I’m wondering if Obama faces the same fate. You cannot compromise with evil.
Well now …
Interestingly enough, Buchanan and Lincoln didn’t look at the situation all that differently. Both considered preserving the Union to be a higher priority than ending slavery, although on a personal level, Lincoln almost certainly saw slavery as a far fouler institution than Buchanan.
It was the Confederacy that started the Civil War, not Lincoln. We have no way of knowing how Buchanan would have responded had the South seceded during his term in office. Lincoln was, apparently, willing to compromise with the southern states. They weren’t willing to even coexist with him.
Obama doesn’t have to worry about compromising with evil because while his opponents seem willing to characterize him as evil, they aren’t evil people and aren’t proposing evil actions.
That’s the problem: They aren’t wrong, they aren’t evil, and what they want isn’t evil either. What they are is a single-issue pressure group that has managed to gain enough power to get their way on their one issue, regardless of the consequences with respect to all other issues.
The question is, do you compromise with people who aren’t willing to compromise in return, and who are willing to escalate consequences further than you are.
There’s no easy answer to that one.
There is something “bad” about the term compromise. It means something must be given up. That you lose something when you compromise.
There is another way to come to an agreement. I think you alluded to it with:
“I don’t know about the full solution. I know part of it: Establish a shared base of facts on which to base the discussion, framed so as to avoid partisan bias.”
That is to discuss something until you gain a shared perception of the problem. Once you share the perception, solutions are easier to come by.
Got this from marital counseling. Just hit me. Maybe that is what this country needs.