Turmoil. That’s the state of the financial industry right now. Just a few months after the collapse of Bear Stearns, and a few weeks after we were told that the “crisis” was not as widespread as we thought, Merril Lynch was sold to Bank of America, Lehman Brothers went bankrupt, AIG was bailed out by the U.S. government, and Washington Mutual and Morgan Stanley are struggling to stay afloat. Needless to say, this is not your average week on Wall Street.
I had a conversation with a friend about the kind of leadership that huge corporations need in times like these, and the kind of leadership both inside and outside of the company that allowed this to happen. We had mixed thoughts on the matter but what came out of this discussion was an interesting debate on government as well as corporate CEO’s.
Let’s start with Government and Industry Leaders. The current situation did not just pop up out of nowhere. It is the coming together of years of decisions, good and bad, that have shaped the financial industry in our country. It is the result of self-regulation, meaning no regulation, of an industry perhaps most responsible for the wealth of this country. It is the result of risky moves by companies that are supposed to be safe and secure. It is the result of pushing too hard affordable loans to people we knew would never be able to pay them back. And it is a direct correlation to the mindset we have taken in this country when it comes to money and debt, that we can buy today with the hope of tomorrow’s fortune.
In America, we have a history of being far too nearsighted, seemingly ignoring the future implications of our decisions today. It’s a flaw of the system in which the leaders lead. Election and appointment to government positions are temporary, and temporary positions lead to short term solutions. Even when long term solutions are put in place, there is nothing forcing the next in line to maintain those initiatives. So they usually get changed, or cancelled, or replaced with new solutions. The market crisis has been a long time coming.
As for the question of leadership within the companies at this time, there were two points argued. I will always argue that companies need innovative CEOs, or at least CEOs that empower innovators around them. In a time like this, it seems that innovation may be less important as compared to a steadfast determination and calmness, someone who possesses the power to ease fears and show us the light.
Why can’t that be both? Isn’t that a part of innovation? When you think of innovation in a leadership role, you have to consider things outside of product and service innovation. CEOs must be able to motivate and inspire in times of utter chaos through innovative thinking and new ways of communicating old ideas. The CEO who stands in the face of conflict and struggle and leads his team through it must have the insight and courage to think differently. Good luck.