Wednesday, September 19, 2012

Great Expectations in Greece

No one expects much of Greece anymore. Markets expect it neither to repay its debts nor to stay in the Eurozone. Foreign officials doubt that the government has either the will or the capacity to change, and they now merely beg for a faint gasp of reform – any reform. The investor has closed his checkbook, while the rapidly depleting bank balance has turned into a countdown to desperation for the middle class. The unemployed do not expect to find a job, and the employed do not expect to be able to survive through whatever job they have. The infirm have given up on health, the vulnerable on the “safety net,” the parent on education, and the citizen on the police. Fighting tax evasion, selling state assets, reforming the public sector, opening up the private sector – in all, expectations are shrinking faster than the economy. We are almost at zero now. 

Such low expectations make it hard to turn the country around. People often do what you expect of them: if you treat people as if they are unlikely to achieve much, they are unlikely to achieve much. This is a lesson that J. Sterling Livingston captured well in his essay, “Pygmalion in Management,” where he wrote: “The way managers treat their subordinates is subtly influenced by what they expect of them. If managers’ expectations are high, productivity is likely to be excellent. If their expectations are low, productivity is likely to be poor. It is as though there were a law that caused subordinates’ performance to rise or fall to meet managers’ expectations.” The de-motivation of Greek society emerges from a sense that not much can be expected and so not much should be given. 

Yet there is also something refreshing about low expectations. As any underdog will tell you, exceeding expectations is easier when the expectations are low. In Greece’s case, the three main constituencies of the government are its own citizens, its official creditors, and the markets. All three expect little of Greece. They are thus ideal candidates to be surprised. Given the low starting point, it will not take much to replace the current race to the bottom, where one piece of bad news follows another, with a virtuous cycle that can change how people think of Greece. 

Imagine what good news (genuine good news, not propaganda) could do for Greece. Imagine if people believed that reforms were moving forward. Foreign governments would pledge more money and give Greece more time. Investors would sign up for more short-term Greek debt, perhaps even medium and long-term debt. If the Greek people believed in their government and were willing to allocate a share of their savings to finance state spending, the country’s financing needs would be more easily covered. Investment – foreign and domestic, direct or through sold state assets – would rejuvenate the economy and yield revenue to the treasury. And the mental health of the Greek people would rebound from a belief that this endless descent into misery is coming to an end. Good news can do a lot. 

But how to do this? In pondering this question, I have been drawn to a Walter Isaacson article called “The Real Leadership Lessons of Steve Jobs.” Based on Isaacson’s own biography of Steve Jobs, it draws on what one could learn from the founder of Apple and one of the greatest business personalities of our times. The article itself has 14 lessons, but I think five will suffice. 

Focus. “Deciding what not to do is as important as deciding what to do,” Jobs said, a lesson that most leaders will echo. It is easy for the Greek government to find one hundred things that need urgent fixing. And they are all important, politically, economically, ethically, socially. Yet no person, no organization can fix a hundred things at once. And rather than trying, the government would be better served to focus on a few big things. My list would be tax evasion, judicial reform, entrepreneurship, physical security and accountability in the public sector. These are big, broad tasks, of course. But how closer would Greece be in achieving them if it had devoted 90% of its resources to serving these five goals rather than allocating 5% each to 20 goals? Focus means discipline and it means learning to avoid distractions. It is hard work but it means asking every day, “what did I do today to achieve these goals?” 

Simplify. Together with “focus” comes “simplify.” Simplicity, Jobs understood, came from “conquering, rather than merely ignoring, complexity.” Anyone who has interacted with the Greek system knows its immense complexity. No task, however mundane, is truly simple (although I have few complaints about passport issuance). Simplicity requires a return to first principles, to look at each thing and ask “what purpose does this serve” and “do we really need it?” Imagine a serious commitment to simplicity, where the government bureaucracy is pushed to ask “how can I make this task simpler” and where simplification is rewarded by promotion and by pay. What would the Greek system look like then? 

Put Products Before Profits. Jobs said, “My passion has been to build an enduring company where people were motivated to make great products. Everything else was secondary. Sure, it was great to make a profit, because that was what allowed you to make great products. But the products, not the profits, were the motivation.” Greece is not in the profit making business. But Jobs understood that if you focus merely on profits you are no longer focusing on great products. This is the feeling one gets from the Greek government, as if the goal is to create elegant “five-year” plans in the communist style. Pour over the numbers too long and you are missing the point of what governing is about. The goal is not to produce a piece of paper, but to change the country – if the country starts to change, the debt math, the GDP math, the competitiveness math, they will all look immensely better. A country, like a company, needs its priorities straight. 

Don’t be slaves to focus groups. Jobs liked to quote Henry Ford who said “If I’d asked customers what they wanted, they would have told me, ‘A faster horse!’” One of my own favorite dictums comes from Bill Cosby: “I don't know the key to success, but the key to failure is trying to please everybody” In politics, it is hard to ignore constituencies. But with 1.2 million unemployed, with pensioners and wage-earners whose standard of living is shrinking, with the extreme left and the extreme right gaining ground, with such desperation and frustration, it is hard to see how reforms are “bad politics.” Listening to what people want is important but only to a point. There is no way to get out of this crisis while making everyone happy – and in fact, the past few years have shown this to be true. Focus on the big picture not on every constituency. 

When behind, leapfrog. When Apple missed the boat on music, “instead of merely catching up by upgrading the iMac’s CD drive, [Jobs] decided to create an integrated system that would transform the music industry. The result was the combination of iTunes, the iTunes Store, and the iPod, which allowed users to buy, share, manage, store, and play music better than they could with any other devices.” But what does it mean for Greece to leapfrog? It means that Greece is devoting enormous energy to playing catch up. It is trying to adapt, to adopt “best practices,” to close the gap. In some ways that is necessary. But crises are times for bold ideas. Countries have often leapfrogged with innovations such as flat taxes, special economic zones, or industrial clusters. What does leapfrog mean in tourism or shipping? How can the state help turn Piraeus into the premier shipping hub in the world, where owners, charterers, insurance companies, lawyers, and universities gather to shape the future of the shipping industry? Why is that beyond the capacity of the Greek state? In what other ways can Greece leapfrog? I don’t know all the answers, but no one achieved greatness by merely copying others. 

What permeated the Jobs philosophy more fundamentally was a commitment to excellence, a belief that doing great things attracts first-rate people, challenges the human mind and fulfills the human spirit. When asked whether he was rough on people, he said “Look at the results … These are all smart people I work with, and any of them could get a top job at another place if they were truly feeling brutalized. But they don’t. … And we got some amazing things done.” What Jobs brought was a sense of common purpose, a shared journey to a great destination. 

What Greece needs, above all, is someone to believe in its potential for greatness again. It needs a politician who believes that this country can be, as it was a few decades ago, one of the most dynamic and fastest growing in the developed world; who believes that Greece can offer an unmatched tourist product that blends natural beauty, history and modernity; who believes that Greece can be a center for global shipping where young professionals come to build their careers and get ahead; who believes that Greece can be a magnet not merely for refugees and economic migrants but for skilled professionals and for Greeks who no longer feel they need to cross borders and oceans to find opportunities; who believes we can do great things together by getting the little things right – little things like rewarding good work and balancing our rights with our responsibilities to one another. 

This is a paradigm shift and it is what Greece needs not merely to lift itself up, but also to believe that there is something worth lifting itself up for. The expectations are so low, it does not take much to get people thinking differently both in and out of the country. But that change has to come from the top. It can be no other way.


  1. ”How can the state help turn Piraeus into the premier shipping hub in the world, where owners, charterers, insurance companies, lawyers, and universities gather to shape the future of the shipping industry? Why is that beyond the capacity of the Greek state?"

    I agree with you on this. Pireaus can be turned into a premier shipping hub of the near east and Athens can serve as a banking sector of all the Eastern Europe.

    The answer is that it is beyond the capacity of the Greek state in its current form. So the question is how can the state be cut down in size so that private businesses can do what it needs to...only then it will attract the necessary capital and skilled labour to reposition the whole region as regional "hub" like Singapore.

    In a sense, this crisis is good. If the region can transform itself to the "Singapore" of the near east, then it might have people like you returning to live in it full time. And the onlly reason you will return here is because it offers better pay and prospect verses other areas.

  2. First of all welcome back bro, and with a nice lengthy article to boot!

    And oh, how I love articles that start out with a bleak outlook of things only to follow with a "yet" or "but" and end on a high note!

    Also the day the Greek Government asks itself 'how can i make this task simpler' will be the day my faith in mankind will be restored and I will shed a single tear of happiness for our future!

  3. A nice, clear article, as usual. Good work!

  4. Anyone who wants to get bullish on Greece's future potential should take a look at the "Greece 10 years ahead" report published by McKinsey's Athens Office over a year ago (see link below). I have since read through this several times and every time I do it, I find new aspects which are motivating.

    What I fail to understand is this: we get daily news about the Troika-negotiations, about the likelihood of a Grexit, etc. etc. We get absolutely no news about future perspectives.

    I am sure that, for a small fee, McKinsey would allow the government to use this report as its own invention. If the government came along with this type of a report, if it committed itself to implement the recommendations and, above all, if it continually talked about the major issues of this report (instead of the major issues of Troika-negotiations) --- well, then I am certain that Greeks would have more of a future perspective than they have today.

    1. "for a small fee, McKinsey would ... "

      That's an oxymoron ;)

      Do you know what they charge per man-day?

    2. Thank you for pointing out the report.

      Just skimming through it there are aspects of it is good however most of the topline seems to be what was being proposed for years.

      Also some portions of it, is probably written in a academic dreamworld. It claims that Greece can gain an extra 19 billion $ if it enacts a few policies decisions.

      Anyone who has owned an manufacturing operations knows that to increase sales by 2x you need to make some significant investments in etc....unless you are selling the next set of Apple computers to the world.

  5. Since you brought up Steve Jobs/ is unlikely that someone in the Jobs caliber will emerge within the ranks of the Greek bureaucracy. However, they can hire Apple's PR manager. They can start by giving their press conferences modeled after Apple's annual presentation ....:).

    Also, Apple is not a client of Mckinsey. If Jobs ran Greece the first thing he will probably do is to get rid of them.

    Nothing wrong with the Mckinsey report but it gives the impression that Greece needs to rely on external advice and depend on a set of elected and non-elected officials to get them on the road to growth.

    In my opinion this is one of the grand illusions. I do not know of any world class business which relied on such consultants. I don't have space to give illustrations but government reorganization work best when the government provides an environment where it is comparatively (versus other EU countries etc) easy for business to operate and offers a disproportionate incentive for working, investing and operating a business out of Greece.
    The business community does not need bureaucrats to tell them which area in which they need to grow.

    Also this incentive must be guaranteed for cannot be a set of measures that will be scrapped after the next elections.

  6. "needs a politician who believes that this country can be"
    You certainly seem to be such a person - ever thought of becoming a politician? This is the crucial test of any country's future - do skillful and uncorrupt citizens put themselves up for election? Or at least, do some serious on the ground lobbying for change?

  7. I've been eyeing to get one place in Greece like what the apartment in legaspi village that I have, but I've been analyzing the country for quite some time now, and I don't know where these speculations are coming. Perhaps, I'm not seeing Greece the way Greeks see it.

  8. I wonder if Greece is just lacking some kind of promoting strategy when it comes to economic aspects and how people would still trust and gain confidence from the country. It's a nice place, they just need better information distribution of how nice Greece is.


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