According to Albert Einstein, ‘the first sign of insanity is doing the same thing over and over again but expecting different results’. So, would it not be a fair assumption that, as a number of bailouts in Greece have not worked, neither will a bailout in Spain, Italy, Portugal or France? Yet, Eurozone politicians and financiers remain focused on this as their favoured option, to ensure the future of the Euro.
Over the last eighteen months, they have applied the same bail-out solution to various countries expecting that this time it would solve the Eurozone crisis, without explaining why they think it would work this time. However, doing the same thing on previous occasions has not resolved the problem and the credit rating agencies of Moody’s and S & P (Standard and Poor’s) just keep reducing the ratings of banks and countries that are in difficulties; increasing the borrowing rate.
Most leaders of the Eurozone seem experienced and sensible people and yet they follow this ‘insane’ process, so do their actions demonstrate insanity? No, – actually, on a micro-scale, many businesses do the same thing. This does not mean that most people in business are insane, it means they are human beings who retain traits seen in many leaders.
Once an organisation has started down the road of change, there is a reluctance to turn back or admit that you’ve headed off down the wrong road. Therefore, we become determined to make our vision succeed – and the longer the project goes on, the more determined we become. We start to rationalise our actions with comments like, “We’re too far down the road to change direction now” or “We’ve invested too much money in this project for it to fail”.
And, as we all know, the admission by a leader that they’ve made a mistake is a sign of weakness!
Actually, admitting you’ve made a mistake is a greater strength than blindly continuing with doing the same thing again and again. It is worth remembering that the practices and behaviours in banks took years to result in the 2008 financial crash and the Euro is only just over a decade old – a mere baby of an experiment.
There is another famous saying, ‘If what you’re doing isn’t working…. do something else!’
However, it is easy to say and difficult to do, because it is often not clear what else to do and the leaders within the Eurozone face another challenge; that of ‘group-think’. This is where a group of people convince each other that what they are doing is right and anyone voicing dissent is ignored, even if they have the courage to speak up in the face of their peers. This is even harder if there is a loud voice, like Angela Merkel, and others in the group need to ask what the agenda is of the person with the loud voice. To that extent, I admire one of the people involved in the introduction of the Euro in 1999, Otmar Issing, who has said that some countries may have to leave. www.bbc.co.uk/news/business-19183700 However, he still espouses the Euro to be a viable option.
So, whilst there are still people around who were involved in the process of merging the currencies from various nation states in to one common currency, instead of the mindset of ‘this must work’, what would happen if that was reframed? The brave leadership stance would be to ask, “what possibilities are there to reverse the principles of how the Eurozone was created to allow nation states to have a properly planned and dignified exit from the Euro?”
Instead of taking time to do this, various leaders, banks and governments seem intent on trying to fix a flawed concept, with Spain now asking for aid whilst it decides whether to ask for another bailout. I do not envy the position of these leaders, as they are also getting various bits of conflicting advice from other leaders and financial institutions from around the world.
However, break it down to simplicity – what you’re doing definitely isn’t working, so do something else!