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At the beginning of Juan Williams’ book on Thurgood
Marshall, he quotes from the Book of Job.
For inquire of bygone ages, and consider what the fathers have
found…will
they not teach you, and tell you, and utter words out of their
understanding?
Job 8:8-10
Beginning with this article, we will follow the advice given Job
and walk back in history to unearth leadership lessons that provide
us insights into the understanding
of leadership as a process. We will look at a textbook example of leadership
at work in Franklin Delano Roosevelt’s first administration by examining
his first Fireside Chat and one of the cornerstone pieces of legislation in the
New Deal.
But why look to the American presidency as an example of leadership for education?
Because, like political leadership, educational leadership operates in a
political and democratic environment.
Setting the Stage
To set the stage for the act of leadership we will examine,
we must turn the clock of our imagination back to 1929. Assume that
you are approaching retirement age and that you had moved most of
your financial assets out of stocks, or whatever other investments
you had, into interest-bearing bank deposits. The only significant
difference is that, unlike today’s deposits, which are insured
by the federal government, in the 1920s, no bank deposit is insured.
In other words, if your bank goes out of business, your money is
lost. This was the environment in which our parents and grandparents
banked in pre-Roosevelt days.
Now put yourself in the position of a banker. You
have large numbers of deposits on which you pay interest. They are
not stored in a
vault but have been loaned out for higher interest to farmers,
corporations,
homeowners, etc. Some depositors’ money has even been invested
in stocks.
Let’s begin our scenario from the perspective
of the banker. The stock market drops sharply, and all of a sudden
banks have lost
a significant chunk of their assets. They are short of funds. Some
500 of the nation’s weaker banks go out of business. The
surviving banks raise interest rates on their loans to create more
revenue
and begin to clamp down on corporations, farmers and homeowners
who are late on their payments. People begin withdrawing funds
from their
accounts because they are nervous about the economy. The stock
market continues falling as a new year begins, and the rate of
bank failures
begins to increase. As a banker, you keep tightening credit, but
now anxious customers continue withdrawing even more funds and
putting them under their mattresses. At this point, a very large
bank closes
its doors and goes out of business.
Now return for a moment to the
position of the depositor. Do you leave your money in the bank,
or withdraw it? You’re worried
that your bank might go under, taking your deposits with it, so
you go to the bank to withdraw your funds and find yourself in
line with
hundreds, if not thousands, of fellow depositors. The bank tries
to slow the process down and orders the tellers to pay with single
dollar bills. Panic ensues around the country, and 1,500 banks
close in a year.
This is very close to what happened to our banking
system between the Stock Market Crash of 1929 and the election
of Franklin Roosevelt
in 1932.
Defining Leadership
Although we will work with leadership as a step-by-step process,
it is clearly an art as well. These dual characteristics remind me
somewhat of the Uncertainty Principle. By the turn of the last century
scientists knew that things such as an electron or a photon could
behave like both a wave and a particle. This combination of characteristics
seemed incompatible to scientists at the time. Eventually they accepted
the fact, but realized that as a result of these dual characteristics,
it was impossible to accurately measure certain pairs of properties,
like momentum and location, at the same time. It is not the act of
measurement that makes it inexact, but the nature of the particle
itself.
Leadership is like that too. The nature of leadership itself
makes defining it inexact. We can treat leadership as a science and follow
all the steps of the process, but ultimately, leadership is also
an art, making the definition difficult and the process less than
precise. So, I do not wish to assert that leadership always boils
down to a cookbook recipe, disregarding the art of leadership,
which some people seem to display intuitively. A recipe, even my
recipe,
provides an incomplete picture. Nonetheless, understanding and
using the leadership process improves the likelihood of intended
outcomes.
This is what makes the study of the process worthwhile.
With that
preface we can get started on the study of leadership itself. I
have borrowed liberally from James Kouzes and Barry Posner, co-authors
of The Leadership Challenge, and from James MacGregor Burns, a
Pulitzer
Prize-winning author on leadership, and a biographer of Franklin
Delano Roosevelt. I define leadership as the art of mobilizing
others to want to work for shared aspirations, resulting in intended,
real
change that meets people’s enduring needs.
This definition
fits many aspects of education, from the boardroom to the classroom,
and it can be easily divided into five logical
components that are connected and circular. The leader:
• Creates broadly shared aspirations.
• Uses these shared aspirations to motivate and mobilize others.
• Enables others to work for these shared aspirations.
• Creates a solution that will result in an intended change.
• The change must meet people’s enduring needs.
From the perspective of the constituent or stakeholder, the process usually
occurs in the same order. When looking at these steps from the perspective
of the leader, however, they operate in a different sequence. The leader
usually begins by understanding the desired end. In other words, the leader
begins by understanding the enduring needs, creates a solution or plan
for change, and ends by meeting the enduring needs. The planned change
is developed in response to the needs assessment and is used to create
the shared aspirations as the sequence of leadership steps progresses.
Needs Assessment
Like the 1990s, the 1920s were a time of incredible prosperity. So
much so that Herbert Hoover, Roosevelt’s predecessor in the White
House, believed that the elimination of poverty was within our grasp as
a nation. On August 11, 1928, during his presidential campaign, Hoover
tells the American people that “We in America today are nearer to
the final triumph over poverty than ever before in the history of any land.” His
presidency would show how wrong he was.
Probably the weakest link throughout
the economic heyday of the 1920s was the banking industry. During those
booming years there were approximately
25,000 banks in the United States. They were largely unregulated, they
invested heavily in stocks, and people’s deposits were uninsured.
A failed bank meant the personal loss of whatever savings its customers
had deposited. Even during the good times of the 1920s, banks failed
at a rate of approximately 500 per year. By the end of President Hoover’s
administration over 3,000 banks had failed, including some very big ones.
Bank failure had reached epidemic proportions, and the largest failures
were tied to unprofitable speculation in the stock market. This was the
situation that Roosevelt inherited when he took office in March 1933.
The
Solution for Intended Change
Roosevelt’s solution was twofold.
He created a short term solution by insuring sound banks and then built
a long-term solution from a bill
that he inherited from President Hoover and one that was already in Congress – the
Glass-Steagall Act. Hoover had already determined that in order to strengthen
the banking industry he needed to somehow prevent future bank failures.
At the same time he needed to create confidence in the American public
that bank deposits were safe. Hoover’s failure was not in understanding
the need, or even in designing a remedy, but instead in his inability
to successfully implement a process that mobilized the American public
to
want to work for shared aspirations. Roosevelt, however, succeeded brilliantly.
How did he do it?
A Summary of the Process
Roosevelt created a story or a message that encompassed the five steps of
the leadership process. He created shared aspirations by taking the American
public to school in his first Fireside Chat. He informed them about how
the banking system operated and brought benefits to the country as a whole
and to Americans as individuals. He went on to mobilize the American
public by describing the individual’s role and responsibility in making
the nation’s banking system work. His intended change was to make
the banking system safe by certifying banks as sound. With safe banks, he
enabled the work by encouraging Americans to redeposit their funds.
Within days, Roosevelt began to fulfill his part of the promise. He had
already declared a “bank holiday”, but then he kept most of
the banks closed, and gradually reopened them as they were certified as
sound – exactly as he promised in his address. His process, however,
was incomplete. Without some kind of systemic change as an intended change,
he would probably not successfully address the public’s enduring
needs. Within months after this first radio address, the Glass-Steagall
Act was passed. It was an elegantly simple solution that created both the
systemic and intended change that met the people’s enduring needs.
Creating Shared Aspirations
Within eight days of taking office President Roosevelt was on the airwaves,
simultaneously creating shared aspirations, mobilizing the public, and
showing people the action they needed to take. On March 12, 1933, Franklin
Roosevelt stemmed the tide of bank failures and deposit withdrawals with
the announcement of three immediate steps – extending the “bank
holiday,” reopening only sound banks and issuing new currency.
The first thing Roosevelt clearly understood was how to use the radio, a
medium still in its early years. To assume that the message itself guaranteed
success was to ignore Marshall McLuhan’s adage that the “medium
is the message.” Both medium and message were critical in Roosevelt’s
address.
Today it may seem obvious that Roosevelt’s Fireside Chats
would work, but at the time there was no reason to assume they would. Herbert
Hoover
had used the radio, but with little success. He had the information to tell
the story. He even had the solution that Roosevelt would ultimately use.
But he did not understand that the medium and the message were intertwined,
and of comparable value in creating shared aspirations and mobilizing people.
Hoover viewed the radio somewhat like a megaphone. He assumed that if he
was in Washington, D.C., addressing a nationwide audience, he needed to yell.
He would scream into the microphone so that people as far away as California
could hear better. The result was that no one wanted to listen.
Roosevelt
understood the technology far better, and was more committed to a national,
interactive community of learners than was Hoover. At the time,
the radio was a large piece of living room furniture, and families would
gather around it to listen. Roosevelt wanted to be invited into the living
room for a family conversation. He wanted to be viewed as a trusted friend,
a good first step in creating shared aspirations. How did he do it? In
large part, he did it through style, the art form of leadership, and his
understanding
of the medium.
First, he asked his speech writers to use only the more common
words in the English language so that everyone could understand him. Second,
he slowed
his speech down to 100 to 120 words per minute. Third, he spoke from a
chair in front of a group of his own friends. He invited several of his
friends
to attend every Fireside Chat. He placed the microphone between himself
and his friends and began each speech with the phrase “my friends.” He
conversed with his own friends to make certain that he was, in fact, conducting
a conversation rather than making a speech. Fourth, he and his staff worked
long and hard on the script. Fifth, he made the radio interactive. Hoover
received 500 letters in a typical week. Roosevelt would receive up to 1,000
times more – a half-million in a week. His staff read the letters,
kept track of the public’s reactions to the radio addresses, and
responded to the letters. Roosevelt used the letters as a barometer of
his policies
and responded by adjusting future speeches and sometimes even his policies.
While
style was essential to his success, what about his message? How did he
accomplish the leadership steps necessary to success?
First, Roosevelt
created shared aspirations by explaining how the American banking system
worked, and making it clear that when it worked right, it
benefited all Americans. He began by acknowledging his most important audience
and introducing his subject. “My friends, I want to talk for a few
minutes with the people of the United States about banking – to talk
with the comparatively few who understand the mechanics of banking, but more
particularly with the overwhelming majority of you who use banks for the
making of deposits and the drawing of checks.”
Next, he taught a lesson,
he explaining what banks did – he took the
public to school – but he did it in a way that was designed to create
shared aspirations. “First of all, let me state the simple fact that
when you deposit money in a bank the bank does not put the money into a safe
deposit vault. It invests your money in many different forms of credit – in
bonds, in commercial paper, in mortgages and in many other kinds of loans.
In other words, the bank puts your money to work to keep the wheels of industry
and of agriculture turning round. A comparatively small part of the money
that you put into the bank is kept in currency.”
This simple set of
sentences accomplished four tasks that effective messages generally contain.
First, they created an identity for the individual as
a part of the solution: “When you deposit money…your money…keep[s]
the wheels of industry and agriculture turning round.” Second, they
defined the individual as part of a larger group – depositors across
the country. Third, they identified the enemy as perceived by the public
(the banks) and educated the public on how they operated and were motivated.
Fourth, they brought these three groups (the individual, the individual as
part of a group of depositors, and the banks) together by creating shared
value and meaning – making it clear that their success was mutually
interdependent.
By the end of his speech Roosevelt had convinced his listeners
that Americans as a group and as individuals all benefited from a healthy
banking industry.
He had turned the success of the banks – which the public had previously
viewed as the enemy – into a shared aspiration, defining the success
of each party as being dependent on the success of all parties.
Mobilizing Others to Want to Work
The creation of shared aspirations motivated the public to solve the problem,
but Roosevelt now had to mobilize them to want to work. He did this by
creating a simple task for everyone to do. He asked them to redeposit their
money in the bank. He ended this first radio address by saying “It
is up to you to support and make it [the banking recovery] work. It is
your problem, my friends, your problem no less than it is mine. Together
we cannot fail.”
Enabling Others to Work for the Shared Aspirations
Roosevelt used this Fireside Chat to reinforce one of the most significant
and recurring themes of his administration – freedom from fear. Without
fear influencing judgment, Roosevelt was convinced that most Americans
would make good decisions. He addressed it head-on in his talk: “Let
us unite in banishing fear.”
But to enable the necessary work to
be done, Roosevelt knew he must do more than merely make a rhetorical
attack on fear. He must do something to remove
the fear of bank failures. He did it with a simple promise. He said that
he would keep the banks closed and then gradually reopen them as they were
proven sound. “I do not promise you that every bank will be reopened
or that individual losses will not be suffered … but I can … promise
you salvation … [through the] reopening [of] sound banks [and] the
creation of more sound banks through reorganization.” In other words,
he promised depositors that while their individual banks might not reopen,
any bank that did reopen, and any new bank created to serve their needs,
would be a sound bank that would survive.
Achieving the Intended Change
The intended result of this radio address was two-fold. To rebuild the banking
system, Roosevelt needed people to redeposit their money, and he also needed
to eliminate the banks that were financially unsound. Both results were
achieved, in parallel, as they had to be. Roosevelt could not expect deposits
to flow back into the system unless he delivered on his promise to make
it sound. He did so by taking steps that were entirely within his control.
First, he kept the banks closed exactly as he promised, and then he reopened
them on a schedule described in his radio address. Second, during this “bank
holiday” he identified the unsound banks and prevented them from
reopening, again as promised. Third, he issued new currency (also as promised
in his address) to make certain that every reopened bank could meet any
call on its funds. The result of these actions was a system of sound banks
that attracted deposits in record amounts, thus reinforcing the system’s
strength.
Meeting People’s Enduring Needs
Roosevelt’s radio address is fascinating in many respects, but in terms
of meeting enduring needs it is particularly interesting because he did not
include actions that were outside his control. Yet his actions, as outlined
in the radio address, were not yet complete if he was to meet the public’s
enduring need for a sound banking system. For that he needed to implement
some kind of systemic change which was dependent on Congress. As mentioned
above, he inherited this change – the Glass-Steagall legislation – from
the Hoover administration.
Hoover had realized that the banking system faced
two major problems. First, it needed to restore and maintain the public’s
confidence, i.e., eliminate the fear people had of losing their savings.
Second, the system needed to
overcome the factors that made banks vulnerable to failure.
The Glass-Steagall
Act was introduced at the end of the Hoover administration and signed by
Roosevelt on June 16, 1933. It solved both of these problems
with elegant simplicity. First, it insured individuals’ deposits through
a new government institution, the Federal Deposit Insurance Corporation (FDIC).
This, in effect, created the freedom from fear that Roosevelt sought. (Interestingly,
Roosevelt initially objected to this insurance and only realized its value
over time.) I suspect that even today most of us take for granted that our
bank deposits are secure, and seldom think of the fact that within our parents’ or
grandparents’ lifetimes they were not. Second, Glass-Steagall separated
the commercial and investment banking businesses so that banks could no longer
risk depositors’ money through speculative investments.
Did Roosevelt’s
banking reform meet people’s enduring needs?
Absolutely. The bank failure rate had exceeded an average of 500 per year
even through the boom years of the 1920s. In 1929 the failure rate began
to creep up and in 1932 it exceeded 1,000. But from the passage of the Glass-Steagall
Act in 1933, until the deregulation of savings and loans in the early 1980s,
the failure rate never exceeded 10 per year. In addition, the acceleration
of deposit withdrawals was reversed and the United States has never again
experienced anything like the bank panics of the late 1920s and early 1930s.
By any standard that is enduring success.
As a footnote, in 1999 Congress
passed the Financial Services Act, repealing the Glass-Steagall separation
of commercial and investment banking. The repeal
reflects both an effort to strengthen America’s competitiveness in
the global financial industry and the deregulation movement that began under
President Carter with the airlines. The recent exposure of the conflict of
interest within investment banking houses, including those owned by banks,
indicates that the recent legislation may not have gotten it quite right.
Education
Over the next several months, I will use the leadership process described
in the example above by applying it to education, with continuing illustrations
from American presidents. I will start next month by applying the process
to
a theory of leadership pertaining to the school principal.
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