Mr. President, Time to Rein In The Chaos

By Andrew S. Grove
Wednesday, March 11, 2009

There is nothing more difficult . . . than to take the lead in the introduction of a new order of things.

-- Niccolò Machiavelli

Machiavelli's 500-year-old warning notwithstanding, we elected a president who is committed to "change." The economic meltdown in which our country finds itself at the start of his administration makes his difficult task even more daunting. In less than two months, the hopeful enthusiasm that welcomed the Obama administration has given way to growing worry and frustration. I find myself wringing my hands, not over the goals President Obama has set but over the ineffectual ways the administration has pursued them. I have no qualifications to judge how well the Obama team manages the political dynamics, but as a business executive with 40 years' experience, much of it managing change, and a part-time academic dedicated to studying why so few corporations succeed in navigating change, I feel compelled to comment not on the what of the Obama team's efforts but on the how.

I have found that to succeed, an organization must travel through two phases: first, a period of chaotic experimentation in which intense discussion is allowed, even encouraged, by those in charge. In time, when the chaos becomes unbearable, the leadership reins in chaos with a firm hand. The first phase serves to expose the needs and options, the potential and pitfalls. The organization and its leaders learn a lot going through this phase. But frustration also builds, and eventually the cry is heard: Make a decision -- any decision -- but make it now. The time comes for the leadership to end the chaos and commit to a path.

We have gone through months of chaos experimenting with ways to introduce stability in our financial system. The goals were to allow the financial institutions to do their jobs and to develop confidence in them. I believe by now, the people are eager for the administration to rein in chaos. But this is not happening.

Until the administration does this, we should not embark on attempting to fix another major part of the economy. Our health-care system may well be ripe for a major overhaul, as are our energy and environmental policies. Widespread recognition that all of these reforms are overdue contributed to Barack Obama's victory in November. But if the chaos that resulted from initiating such an overhaul were piled on top of the unresolved status of the financial system, society and government would become exhausted. Instead, the administration must adopt a discipline; not initiating a second wave of chaos before we have a chance to rein in the first.

The point is, all administrations, including this one, have a finite capacity to deal with the details of monumental problems -- and the financial system's troubles certainly are monumental. Equally important is that society has a finite capacity to understand what created the problem, what the likely solutions are going to be and, most important, what can be expected from the new order of things and when.

Leading an organization, let alone a society, out of the chaos phase and into a new order requires explicitly clear and consistent messages from the top. The leader must paint a picture of the new and fill in lots of detail so that all relevant parts of society understand what they need to do to contribute. The answers to the questions "What is wrong?" "What are we going to do?" "How are we going to do it?" and "What should we expect?" should be drummed home relentlessly. This needs to be an ongoing process, where clarity, consistency and repetition are key. It is hard work and requires a laser-like focus on the solution.

First things first. Strive to achieve stability in our financial system. When the momentum is clear enough to allow trust in the system to return, then tackle the next mega-problem. As Machiavelli said, "One change always leaves the way open for the establishment of others."

Andrew S. Grove was chief executive of Intel Corp. from 1987 to 1998 and now serves as senior adviser. Since 1990, he has taught strategy at Stanford University Graduate School of Business.

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