Will the Fiscal Cliff Get Us the Right Resolution?

Previously on this blog, Shaun Spearmon wrote about the importance of urgency in driving transformation.  But what happens when a false sense of urgency takes hold?  In his first post for the blog, my colleague John Patrick explains how it can actually stifle change and make matters worse.

Ever stand on the brink of a canyon and ponder the depths below? From that dizzying height you would probably do whatever you could to avoid taking a fateful step over the edge.

For the past month, anyone catching the news on television, radio, in print or online could hardly have missed one of the biggest post-election news stories in the United States: the risk that the country will fall off the so-called “fiscal cliff.”

A quick explanation: In 2011, Congress agreed to a deadline — December 31 of this year — for government budget reform. The legislation mandated that if no reform is agreed on by the deadline, steep tax increases and deep spending cuts will automatically kick in.

Most pundits and the non-partisan Congressional Budget Office have noted that the shock of tumbling over the fiscal cliff could kill off a still-fragile recovery and possibly tip the U.S. economy back into recession. As they consider the fiscal cliff, few in Congress or the White House seem ready to embrace the “Thelma and Louise solution” of keeping on the same course, slamming down the accelerator and soaring off into the void. So why then place the country right at the edge of an economic precipice? It’s an age-old trick called false urgency.

In any organization, leaders know that it is very difficult to lead successful change, which is why 70 percent of initiatives fail to achieve their objectives. The most frequent reason: a lack of urgency. Without a true sense of urgency, effort is dispersed on too many “other priorities,” the right people are not involved, and it is very difficult to agree on a common vision of the future, much less make it happen. So even when leaders identify the big opportunity to accelerate change, the transformation never gets off the ground or rapidly runs out of steam.

Some leaders try to create a crisis (sometimes called a "burning platform") to motivate action, but this does not generate true urgency. Rather, this creates a false sense of urgency and a flurry of panicked, ineffective action.  Too often the end result is people throwing up their hands in frustration with nothing but modest, short-term “solutions” achieved in haste.

In 2011, Congress recognized that conflicting priorities and fundamental disagreements on the shape of the future budget were proving increasingly difficult to overcome. So, in an attempt to avoid a partisan stalemate, they took the drastic step of creating a crisis – setting a fuse which would set our fiscal house on fire - hoping that a deadline and the risk of a fiscal meltdown would force all involved to focus on implementing a solution. But will this create the true urgency required to come to the best resolution, or lead us to disaster with each side blaming the other for the results?

Recently, seasoned political operatives Karl Rove and James Carville discussed the issue with Ted Koppel at a conference.  Rove recognized that, now with everyone at the table, a resolution could be feasible if they didn't have the forced deadline looming over their heads, saying, “I don’t think they have enough time to get it done. My hope is they’ll take some things and make it status quo for some period of time, say for 6 months or 9 months,” in order to come up with a final, amicable solution. Carville concurred, noting that “it is a lot easier to talk about it than to actually do it.”

So will we continue our haphazard journey towards the cliff, or will Congress and the White House truly, urgently join forces to lead us away from the precipice and onto a path to prosperity? That’s the $1 trillion question.

John Patrick is a senior engagement leader at Kotter International a firm that helps leaders accelerate strategy implementation in their organizations. John Kotter is the chief innovation officer at Kotter International and is the Konosuke Matsushita Professor of Leadership, Emeritus, at Harvard Business School.

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For more about how organizations can develop the agility required to succeed in today’s rapidly changing world, read Dr. Kotter's new article, Accelerate!” available from the Harvard Business Review.

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