It used to be that the leaders of companies, CEOs, and of state governments, Governors, would make cuts to avoid budget problems. But in recent times, they create budget problems to make cuts.
In industry, companies spend hundreds of billions of dollars on mergers, acquisitions, share buy-backs, and dividends. State governments spend billions of dollars on corporate tax breaks and incentives. In both cases, the leaders of industry and of states then tell employees that they have crushing budget problems and must therefore layoff employees, eliminate raises, cut benefits, and so on. Other stakeholders, such as a company’s supplies must cut prices, while state agencies that provide education, social services, and towns that receive funds from the state must suffer as well in order to pay for corporate tax breaks and incentives given by the state.
In addition to contributing to wage stagnation among the middle class and reductions in retirement income, these vast expenditures result in fewer and lower quality jobs of the next generation. Young people who are lucky enough to get a job receive pay that is 20 to 30 percent below what it should be, and do work that is often well below their capabilities. This compromises the ability of the next generation to grow and prosper.
Making cuts to avoid budget problems is the result of bad management practices and poor management decisions. But, this is not the same as creating budget problems to make cuts. The former is the result of ineptitude, while the latter is the result of malice and forethought, and it is immoral. Purposefully creating budget problems to generate a crisis – a burning platform for change – reflects a failure of leadership. In addition, the changes that are made after having created an artificial burning platform are usually poorly thought out and lead to many other problems.
Making cuts to avoid budget problems or creating budget problems to make cuts are bad solutions to problems. They are zero-sum, win-lose solutions that cause harm to people, economic prosperity, and society at-large. Leaders think that these are the only two ways to bring about change. This, I believe, reflects a true failure of higher education to teach its most important lesson: critical thinking.
For decades, the Lean community has been trying to inform industry and government leaders of a better way to improve, one that is more capable of correcting fundamental problems without doing harm to people. Lean management, however requires leaders who are willing to do actual hard work, not easy work that they want you to think is hard work. They must lead efforts to improve processes via teamwork, cooperation, and collaboration – otherwise known as kaizen. We must educate leaders to understand that costs are subordinate to processes. Meaning, process define costs. Therefore, improving processes via kaizen will result in lower costs.
The group-think that says “Change is only possible if we have a burning platform” negates the reality that people’s interests are more similar than they are different. The trouble is in recognizing that people may appear to be far apart when in fact they are closer together. The appearance of such differences are the result of both conscious and subconscious biases and stereotypes which affects every human being. It is especially a problem for leaders because they possess the power to animate their biases and stereotypes in ways that do harm to others.
A burning platform is dangerous and unsafe, with unpredictable outcomes, created by leaders who are non-critical thinkers and lacking in creativity and imagination. We must demand better.