Last week, following Jacques Delors’ criticism of the flawed process behind the creation of the Euro, I looked at how solving the Eurozone Crisis was being handicapped by an absence of sound leadership and good strategy. The article (The Eurozone Crisis – The Management of the Continuation of Mediocrity by the Unaware) closed with the following paragraph:
“Where will we end up? Eventually the flawed structure will be patched up; fear or dire circumstance will eventually force it. The word strategy will continue to be employed without being fully comprehended and future strategy will be hampered by the requirement to be force fit to structure. Managers will manage resources advised by economists while leaders and strategists ponder (and write about) what might have been.”
Unfortunately, for both the Eurozone and the UK, I fear I may have been proved right far earlier than I envisaged.
After a week of frantic activity by Europe’s top politicians (read ‘managers’) have we moved on from where we were this time last week? Depending on which part of the UK media you read, listen to or watch the answer is “yes,” “no” or “maybe.” The more that media tends to the liberal the more Friday’s events were a disaster for Britain while the more right leaning are trumpeting a triumph for the Bulldog!
Of course, all these views come with political bias and/or varying degrees of nationalistic pride. Setting all of that aside, what is this strategist’s view of events which, let us not forget, had been billed as the fight to solve the Eurozone Crisis and/or the battle to protect Britain’s interests (viewpoint depending)?
Starting with the Eurozone Crisis, quite clearly what was required was an issue-based strategy which would address the mountain of national debt threatening to swamp the continent. The issue was urgent and needed addressing now as a precursor to setting a course to the future. Indeed, without addressing the current, there might not be a future.
What we have is a structural solution to a strategic problem. The issue has largely been ignored, instead ‘the management’ deciding to address the future first and then not in strategy terms but by yet again defining the structure future strategy would be forced to fit (did none of them hear Delors’ warning?).
When Europe’s current management talk of saving the future of the Euro they overlook one small but somewhat pressing matter; the Eurozone Crisis! They have forgotten to address the issue that required addressing.
Of course, why would you believe a solitary strategy consultant when 26 heads of state and the UK’s media are telling you otherwise? Good question. I might turn to the UK media for a view but, as explained above, that view is tainted by whichever set of political goggles they wear. Instead, let’s take a view from outside Europe, from the New York Times:
“At the meeting, member governments agreed to raise up to $270 billion (£173 billion) that could be used by the International Monetary Fund to aid indebted European governments, and they moved up the date that a European rescue fund would come into operation. But the sums involved fell well short of what many investors and some Obama administration officials have argued are needed to ensure the survival of the Euro. Administration officials on Friday welcomed the long-term overhaul of the Eurozone’s rules, but argued that stronger measures were needed in the short run.”
If the US administration is underwhelmed, perhaps it might prove useful to put their view and the value of that £173 billion into perspective. For that, let’s stay away from polarised European views and listen to Bloomberg News:
“What worries many is the size of the Eurozone debts that must be refinanced early next year. Eurozone governments have to repay more than €1.1 trillion, nearly $1.5 trillion (£0.94 trillion), of long- and short-term debt in 2012, with about €519 billion, or $695 billion (£443 billion), of Italian, French and German debt maturing in the first half alone.”
It appears that by overlooking current (issue-based) strategic need in the headlong rush to define a structure for the future, Europe’s managers (I can’t use the word ‘leaders’) have protected the future while forgetting the present. They have sought a fix for the future of the Euro but not for the current Eurozone Crisis.
This view must sound like we should be getting out the champagne and applauding David Cameron for saving the day for the UK. As suggested in last week’s blog, he has managed the UK’s interests but, as also suggested in last week’s blog, he has continued to overlook leadership and strategy. He has taken the opposite approach to Europe’s managers and addressed today but with little sign he has considered tomorrow.
It is not my intention to take a pro or anti Europe stance in this blog, instead I intend to look at the Prime Minister’s position and where it places us.
It has been suggested that the Prime Minister’s stance has been all about protecting the City of London; that he represents and therefore protects the interests of bankers ahead of all others. I can’t speak for Cameron’s motivation however the stark fact is that 11% of all the UK exchequer’s tax revenue is raised via the City. For the Prime Minister not to have protected that would have been foolhardy indeed.
Rightly or wrongly the UK economy currently relies on financial services to keep it afloat. For the PM to manage the UK’s best interests he had to protect that part of our economy. This is no different to France’s veto on agriculture, Spain’s on fishing and the way Germany might react had the auto trade been under threat. The managers gathered in Brussels to manage their own national interest.
But my praise for our government’s stance stops there. If the Banking Crisis of 2008 and the Eurozone Crisis of 2011 have taught us one thing and one thing only, it is that we would be foolish to believe we can rely on the financial sector to support our economy forever. And where the managers of ‘the 26’ appear to have overlooked their need for issue based strategy to address the present, ‘the 1’ (the UK) appears to have overlooked the need for any vision based strategy aimed at diversifying British industry and at reducing our over-reliance on a single sector.
Any board room worth its salt will have seats for the manager, the economist, the leader and the strategist and as long as the governments of the UK and Europe continue to ignore the latter two, their electorate have the right to wonder, “where is all this ‘management of interests’ taking us?”
I repeat my oft stated message; there are four seats at the top table and while two remain unoccupied any solution offered will only ever be political. It will continue to be the management of the continuation of mediocrity by the unaware.
© Jim Cowan, Cowan Global Limited, December 2011