The Government announces its intention to take Northern Rock into temporary care. The story has been told as an outcome of poor leadership. Is it really a tale of all-round incompetence? Or has the crisis blocked out any thought of positive thinking about leadership or positive outcomes?
On Sunday February 17th 2008, Alistair Darling announced that Northern Rock was to be taken into public ownership. In many quarters, the decision is deplored as evidence of poor leadership.
The ubiquity of incompetence
As head of the Treasury, AD is taking much of the leadership pain. His political opponents have been quick to continue their attacks on the competence of The Chancellor and of The Prime Minister.
Gordon Brown stands accused of an old weakness, of appearing to be leaving someone else to shoulder the blame, when problems crop up.
Mervyn King, as Governor of the Bank of England has also been widely criticised for his performance. Although he came under serious fire, he has survived press and parliamentary scrutiny and retained his job.
Northern Rock executives CEO Adam Applegarth and Chairman Matt Ridley were also found wanting. Their fates was sealed as the enormity of the problems at Northern Rock became clear. Initial offers to stay on to stabilize things were no more than could be hoped for. Exit Applegarth and Ridley, seriously damaged.
Interim CEO Andy Kuipers who replaced Applegarth is seen very much as a stopgap. He seems to have done all that could be expected, and came up with a rescue plan that won support from institutional shareholders. Yet I have seen no positive commentaries on his leadership.
The Financial Services Authority (FSA) have also been found wanting and criticized for “systematic failure of duty“. Its relationships with The Treasury and Bank of England are now being re-examined.
Are these various individuals really such incompetents as they are being portrayed? I offered a different view in an earlier post, which suggested that Alistair Darling, for one, could be seen as having a coherent strategy which he was playing pretty well. He signalled that nationalization was an undesired option, but one that he would not hesitate to use. Furthermore, the position was made to appear more convincing with a timely placing of information about the fall-back plan and the appointment of a very able leader (Ron Sandler) to run any new nationalized outfit.
Unlike many political commentators I argued that Darling has been playing a very solid game under tough circumstances. Among the complications are concerns to avoid breaking EU regulations about State Aid.
The merits of creative thinking
Serious problems can produce a deepening sense of doom and gloom. The difficult becomes assumed to be the impossible. At such times creative thinking is called for.
Creative leaders have their own ways of encouraging the faint-hearted. There are general purpose techniques advocated that help discussions break out of the bleak mindset that is captured by the ‘automatic no men’ and their killer phrases.
Edward de Bono suggests the benefits of putting on a positive thinking hat, and exploring unexpected options, before subjecting ideas to critical evaluation.
There are emerging psychological theories which suggest why personal development can be enhanced through such a positive approach.
When a group has become bogged down, and is unable to find any constructive answer to its problems, I recommend it starts with an attempt to put on a positive face (or De Bono’s sunny yellow thinking hat) and address the question ‘what’s good about it’.
As team leader, or someone brought in to support its creative thinking, I would not imply that I had an immediate answer, and invite a response for others.
Here’s how it might work, from the starting position that Northern Rock is a basket-case, whose troubles have been brought on by ineptitude of leaders in a tough global financial market-place.
What’s good about it?
The company has escaped the worse-case scenario of going bust, and triggering off a wider national (and perhaps international) reaction, in which the mortgages, savings, and jobs of many thousands of people would have been destroyed.
A first class leader has been put in place for the interim nationalised institution. He is likely to be granted more powers from the Government who will try to avoid accusations of interference in its management.
The action offers the best chance that funds sunk into the rescue (some £50 billion) will be recovered. (These are increasingly referred to as tax-payers money, but that’s another story).
Even the shareholders will get more than they would have if the shares were evaluated at their technical value (something close to nothing).
We could apply a similar approach to re-evaluate the leadership performance of those classed as dummies. I leave that exercise for another time.