If you haven’t been paying much attention to the Eurozone debt crisis, now might be a pretty good time to start. A relatively small crisis that started with Greece not being able to repay its debts, has spread to Italy and Portugal and it looks like Spain and even France are at risk. It’s a complicated story but it makes a big difference because a lot of the big banks around the world hold a lot of European debt. If they have to write that debt off their books, then they have to cut back on lending. It’s a lot like the subprime mortgage meltdown of 2008 only bigger. The Eurozone could break up as a result leading to even bigger problems.
All eyes are turning to Germany as the only European economy big enough and sound enough to provide the financial assistance that could stop the bleeding. As New York Times columnist Joe Nocera eloquently explains, the Germans don’t want to do that because they feel like they’ve been prudent with their economy and should not have to bail out the countries who were partying on their credit cards. That’s understandable but will lead to a terrible outcome for everyone including Germany. Its economy is driven by exports and if its primary markets collapse, it’s going to get squeezed hard too. In a sign of how nervous people are about all of this, the Polish foreign minister said this week that for the first time in his life he was more worried about Germany not taking action than taking action.
If you take out the scary implications for the global economy, what’s happening between Germany and the rest of the Europe happens in organizations all the time. One or more parties make bad decisions that lead to bad outcomes while another party plays it by the book and is then asked to step in and fix everything. It doesn’t seem fair and it’s usually not. It’s understandable that the party that played it down the middle would like to just let the offending party fend for itself. The problem with that, as is the case in Europe right now, is that the let them fend for themselves approach can bring down the entire organization.
It takes a lot of leadership to make the moves that place effectiveness at a higher level of value than being right. Being right can feel good, but what’s the point if everything else blows up? The best leaders understand they and their teams are part of an ecosystem. Sometimes, for the good of the whole system leaders need to suck it up and help out the people who screwed up even if it doesn’t feel fair.
What are your thoughts and experience on this? Have you ever had to hold your nose and do something as a leader that just didn’t seem fair to some of the people involved? What factors and messages did you consider when you did?
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