If it ain't broke, DO fix it

The expression “If it ain’t broke, don’t fix it” is one of my least favourite. It is an open invitation for complacency. Often, the stable times offer the only opportunity to prepare for stormy times ahead. Once the storm breaks, the fixes often fail.

I was reminded of this maxim this week when the US government ground to a halt. No one could say they didn’t see it coming. Congress has been dysfunctional for some years now. There was a time when the threat of a deadline would lead to a last minute compromise. Then things got worse, and the compromises still happened but all they did was to push the can down the road. Finally, things got so bad that deadlines had no effect. First the sequester, now the budget, next the debt ceiling.

It is unseemly and pathetic. As someone slightly to left in European politics, I find myself almost off the scale to the left in the US, so I blame the Republicans, perhaps too easily. Holding the government to ransom over Obamacare now is like a soccer team refusing to play because they lost the previous year. They did not like the bill but it was passed, and then contested again in the presidential election last year, where it passed the test of public opinion a second time.

But there is a wider truth here beyond the posturing. We need to look at the causes not the symptoms.

Some causes come from long-term trends. The USA has a serious competitiveness problem. It spends more than it earns. So the debt gets bigger. And the fixes available get harder to swallow. Crisis follows crisis. And the debate becomes more and more strident.

This is common in business or sport too. There is a popular maxim that only in a crisis can problems be truly addressed. Some Shell managers used this as a weapon. They would publicly threaten to sell or close businesses, and hope that this would bring the local leadership around to take some tough decisions. It can work, but more often I saw it fail: the fixes were superficial and actually stored up even worse problems later.

The other cause I would highlight in the USA is the broken political system. It has been a strength to have the executive, two houses of congress and an active supreme court, providing checks and balances to reduce the risk of extreme decisions. Why does it not seem a strength now?

One fundamental cause is because most house members are not incentivized to find good solutions for the nation but only to pander to extreme positions within their own party. The reason is that most congressional districts have become uncompetitive because of boundary changes. In a two party system without adequate supervision, it is been possible for Democrats and Republicans to cluster their own voters into safe seats. Then the primary system means that the biggest risk to a sitting member comes from their own party rather than the wider population.

This may seem a geeky point to make, but in my view it is critical to understand the dysfunction. Parts of the system have radically different goals to other parts. Crisis response only works when goals are sufficiently close to resolve issues and make good decisions. The prognosis becomes scary. No matter how bad the crisis becomes, players are likely to dig their heels in deeper and deeper. Even a potential historic reconciliation with Iran could become a victim.

This leads me to propose a four-box model. On one axis plot whether things are going well or going badly, on the other whether trends are likely to make things better or worse.

Then if things are going well and trends are supportive, you are allowed to use the “don’t fix it” maxim. If things are going well but trends are negative, that is the moment to fix things, especially the fundamentals such as governance models. If things are going badly, but trends are supportive, then have the patience and courage to leave things alone. Finally, if things are going badly and trends are negative, you have the crisis. It may be too late already. Be selective in recognizing feasible fixes with staying power, or else exit or retrench.

The challenge comes in recognizing the trends. It is usually easy to see if things are going well or badly, but trends require some analysis. If a strategy department provides nothing else, this analysis is essential. Always focus there.

Then, having completed a diagnosis of which box we are in, each presents its own challenge, except the happy land of a good performance and positive trends.

Fixing things during good times requires honest analysis and brave leaders. Those few countries to have fixed their pension systems in time deserve great credit.

It can be just as tough to stay the course when good solutions are in place but results have not yet emerged. In Shell, we had just started to make our European organization a strength when we were made to go global. There was time to embed and harvest the previous change. In this box, continuity of leadership and management of expectations is critical.

The crisis box needs other skills. Pragmatism is critical, to choose winnable battles and building credibility a step at a time amid chaos.   

What we see in the USA is the crisis box. Unfortunately, as a country, exit is not an option. So we may see a slow spiral of doom. Usually, when politics reaches the crisis box, there may be a war around the corner. The key mistake in the USA was not to fix the fundamentals while the going was good. Allowing the progressive redistricting of house seats has truly come home to roost.

Other examples in politics are the UN, the EU, Britain and France. The UN has had a good 2013, but remains sadly marginal, having lost the game as early as 1951. Common goals are tough to find there, and we could conclude that the very essence of global governance, through countries, has run its course. The EU has become a scape-goat for everything that is wrong at national level. Many opportunities to address inconsistencies were missed in the early years of the Euro zone. Now it can be argued that given the scale of the crisis the EU has performed very well, following the 4-box advice to retrench feasibly, led by the wonderful Angela Merkel. In Britain, the liberals made brave attempts in this parliament to rectify anomalies in the system, but vested interests prevailed. The nation will pay. France has done nothing to address its fundamental lack of competitiveness and the crisis will surely follow.

In companies, look at poor old Blackberry and Nokia, both slow to recognize negative trends and to respond in time, then finding their space to respond effectively had vanished. Kodak remains the classic case study. Amazon and Google seem to be doing well at using the good times to evolve, while questions emerge about Apple. In the UK, Tesco became complacent, but have time to bounce back.

In sports, Manchester United were a byword under Ferguson for renewal during good times, but now may struggle as his legacy is a team that he failed to refresh, just like Liverpool twenty years ago. Lower down look at Southampton as a team that fixed the fundamentals, and may now thrive for an extended period. In other sports, the All Blacks and the New England Patriots are exemplary. You won’t hear “if it ain’t broke, don’t fix it” from Graham Henry or Bill Bellichick.

We can also use the model in our personal lives. Health, especially weight gain, is a good example. For most of us, trends are positive until we hit thirty five or so. Until then we can eat whatever we like with no consequence, but then things turn against us. Using our thirties to establish good practices is much easier than waiting for the crisis and then trying to respond. Similarly, addressing challenges with our kids is possible when then are ten. But start when they are already fifteen and the road back is long.

So think about this four-box model. Which quadrant best fits your skills? It might help you choose a company or a particular job. You can also work out where you need to develop skills, and where to rely on a partner to fill a gap in your skill set.

If only the US leaders and voters had been able to respond in time. Now it may be too late. Last week I heard another terrible slogan, this time at a company. Staring at some bad market research findings, some leaders concluded “it can’t get any worse”. When you hear that one, it usually can, and it usually will. When it comes to congress, we ain’t seen nothing yet.