The chaos in the European monetary system, and the appearance of a lack of the required backbone to address the issues has parallels in every commercial change situation I have ever seen, irrespective of the size of the oranisation:
- It takes a while to stuff up a sound system with hubris an self-interest, the decline is slow, but with hindsight, absolutely clear.
- The leadership that got into the mess is unable to clean up its own poop, and needs changing.
- Necessary changes cannot be made until it seems there is no option, and the stakeholders recognise that the status quo is simply unsustainable.
- In change, some get hurt more than others, but most suffer from some austerity. If the stakeholders clearly understand that there is simply no option, and they trust the emerging leadership to take tough, but in the long term decisions that benefit all, they will suffer the short term pain to set things right.
In Europe we are half way through this process. Most Europeans would recognise the status quo is unsustainable, and that change must happen. The leadership is changing, Italy and Greece have changed, and Spain has an election coming up at which the incumbent government will probably be decimated, Ireland made the changes a year ago, and appears to be recovering, and Portugal is just tagging along, so far so good in driving change. Next step is to ensure the measures are appropriately tough, and that they “stick” despite the opposition that will emerge from organised vested interests.
It seems to me that the whole process is being facilitated by the Germans. They do not want the EU to implode as it would see their new Deutschmark soar, removing their current competitive advantage, so they are paying the price of short term financial market instability to force the changes elsewhere in Europe, to give impetus to the general understanding that aggressive change is the only way forward.
If Europe was a company, this is exactly what we would see if a number of key subsidiaries got into trouble.
Billy Bloggs & Co, my small client undergoing some painful restructuring is showing us what will happen in Europe.