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Europe’s strategic choices on Brexit

Gideon Rachman in The FT



Talk to EU policymakers and you will be told that Britain has yet to make the hard choices on Brexit. The standard line is that Theresa May’s government is still trying to “have its cake and eat it” — leaving the EU, but retaining many of the benefits of membership. Britain must drop this “magical thinking” and make some crucial decisions. Once that is done, the structure of the future EU-UK relationship will be dictated by law and precedent. 

That argument has some truth to it. But what it misses is that the EU also has important choices to make. By treating Brexit as, above all, a legal process, the EU is largely ignoring the political and strategic implications of Britain leaving the EU. That is an intellectual failure that could have dangerous consequences for all sides. 

It is clearly true that the EU is a legal order. But it is also a political organisation. The EU is perfectly capable of creating new laws — or interpreting current ones with extreme flexibility — when it is politically necessary. 

There are many examples of this flexibility in action. France and Germany broke the EU’s Stability and Growth pact — rather than accept legally mandated fines for breaking its budget-deficit rules. There was a “no bailout” clause for the euro, but Greece was bailed out. Now the European Commission is pursuing Poland for breaching the rule of law, but ignoring equally egregious breaches in Hungary. 

So the EU can cherry-pick the law, when it is politically convenient. It can therefore make strategic and political choices on Brexit. And, broadly speaking, it has three options. 

Staying tough means sticking with the current line. Britain has chosen to be a third country. There can be no special deals — no “cherry-picking” in the EU’s favoured jargon. There are only two viable models for a “third country”: Norway (which involves membership of the single market) or Canada (which is a pure free trade agreement). Britain must pick one and then accept the consequences. 

The arguments for this purist stance are that it protects the integrity of the EU’s single market. If Britain keeps some benefits of EU membership, while ditching many of its obligations, then all 27 members of the EU might seek special deals, and the single market could unravel. 

By contrast, if Britain suffers economically from Brexit, that could actually benefit the EU. It would underline the negative consequences of leaving the organisation and undermine Eurosceptic parties across the continent. And jobs and tax revenues could migrate from Britain to the EU. 

Compromise on Brexit, the second option, would mean embracing the idea that there should be special arrangements between Britain and the EU. Britain is not any old third country. It has been crucial to the European balance of power for centuries. It has been a member of the EU for decades. And it is currently a major trading partner and military ally for most EU countries. So it sounds unrealistic to say that the UK must be treated exactly like Norway or Canada. 

As the EU attempts to navigate an emerging world order — with a rising China and an unpredictable and protectionist US — the strategic alignment of Brexit Britain is uncertain. So it makes sense for the EU to try to pull the UK into a new sort of “special relationship”. By contrast, a Britain that feels humiliated or impoverished by the EU could be an uncomfortable neighbour — with Russia as an extreme example of what can happen when a major European power is at odds with the EU. 

Some Europeans, particularly the French, agree that Britain should continue to play a major strategic role in European affairs. But they do not accept that this has any implications for Britain’s economic relationship with the EU. This sounds like a European version of the dreaded “cherry-picking”. 

There are plenty of areas where the EU could adopt a more flexible approach on its economic partnership with Britain — if it made the political choice to do so. These could involve the free movement of people, the role of the European Court of Justice, and the mutual recognition of product standards and financial regulations. 

The EU’s final option is to force a crisis. If it concludes that Brexit can be reversed and that this is in the EU’s interest (and those are both big “ifs”), then Europe might try to force a political crisis in Britain. This would involve hanging tough for now, hoping that the political fissures in Britain widen and that the May government collapses. 

A new administration in the UK might reconsider Brexit — particularly if there was a fresh offer from the EU, perhaps on free movement of people. That might create the impetus for a second referendum in the UK, and a vote to reverse Brexit. 

But this approach is also fraught with danger. Crises are obviously unpredictable. If the crisis happened too late in the process, Britain might simply crash out of the EU without a deal. And it is also entirely possible that a second referendum would result in a second vote to leave the EU. 

There are powerful arguments to be made for and against each of these three courses of action. But pretending that there are no strategic choices facing the EU should not be an option. That is simply an evasion of responsibility.

What is Strategic Thinking

Ron Carucci in Harvard Business Review


It’s a common complaint among top executives: “I’m spending all my time managing trivial and tactical problems, and I don’t have time to get to the big-picture stuff.” And yet when I ask my executive clients, “If I cleared your calendar for an entire day to free you up to be ‘more strategic,’ what would you actually do?” most have no idea. I often get a shrug and a blank stare in response. Some people assume that thinking strategically is a function of thinking up “big thoughts” or reading scholarly research on business trends. Others assume that watching TED talks or lectures by futurists will help them think more strategically.

How can we implement strategic thinking if we’re not even sure what it looks like?

In our 10-year longitudinal study of over 2,700 newly appointed executives, 67% of them said they struggled with letting go of work from previous roles. More than half (58%) said they were expected to know details about work and projects they believed were beneath their level, and more than half also felt they were involved in decisions that those below them should be making. This suggests that the problem of too little strategic leadership may be as much a function of doing as of thinking.

Rich Horwath, CEO of the Strategic Thinking Institute, found in his research that 44% of managers spent most of their time firefighting in cultures that rewarded reactivity and discouraged thoughtfulness. Nearly all leaders (96%) claimed they lacked time for strategic thinking, again, because they were too busy putting out fires. Both issues appear to be symptoms masking a fundamental issue. In my experience helping executives succeed at the top of companies, the best content for great strategic thinking comes right from one’s own job.

Here are three practical ways I’ve helped executives shift their roles to assume the appropriate strategic focus required by their jobs.

Identify the strategic requirements of your job. One chief operating officer I worked with was appointed to her newly created role with the expressed purpose of integrating two supply chain organizations resulting from an acquisition. Having risen through the supply chain ranks, she spent most of her time reacting to operational missteps and customer complaints. Her adept problem-solving skill had trained the organization to look to her for quick decisions to resolve issues. I asked her, “What’s the most important thing your CEO and board want you to accomplish in this role?” She answered readily, “To take out duplicate costs from redundant work and to get the organization on one technology platform to manage our supply chain.” Her succinct clarity surprised even her, though she quickly realized how little she was engaged in activities that would reach that outcome. We broke the mandate into four focus areas for her organization, realigned her team to include leaders from both organizations, and ensured all meetings and decisions she was involved in directly connected to her mandate.
 

Unfortunately, for many executives, the connection between their role and the strategic contribution they should make is not so obvious. As quoted in Horwath’s study, Harvard Business School professor David Collis says, “It’s a dirty little secret: Most executives cannot articulate the objective, scope, and advantage of their business in a simple statement. If they can’t, neither can anyone else.” He also cites Roger Martin’s research, which found that 43% of managers cannot state their own strategy. Executives with less clarity must work harder to etch out the line of sight between their role and its impact on the organization’s direction. In some cases, shedding the collection of bad habits that have consumed how they embody their role will be their greatest challenge to embodying strategic thinking.

Uncover patterns to focus resource investments. Once a clear line of sight is drawn to a leader’s strategic contribution, resources must be aligned to focus on that contribution. For many new executives, the large pile of resources they now get to direct has far greater consequence than anything they’ve allocated before. Aligning budgets and bodies around a unified direction is much harder when there’s more of them, especially when reactionary decision making has become the norm. Too often, immediate crises cause executives to whiplash people and money.

This is a common symptom of missing insights. Without a sound fact and insight base on which to prioritize resources, squeaky wheels get all the grease. Great strategic executives know how to use data to generate new insights about how they and their industries make money. Examining patterns of performance over time — financial, operational, customer, and competitive data — will reveal critical foresight about future opportunities and risks.

For some, the word insight may conjure up notions of breakthrough ideas or “aha moments.” But studying basic patterns within available data gives simple insights that pinpoint what truly sets a company apart. In the case of the supply chain executive above, rather than a blanket cost reduction, she uncovered patterns within her data that identified and protected the most competitive work of her organization: getting products to customers on time and accurately. She isolated those activities from work that added little value or was redundant, which is where she focused her cost-cutting efforts. She was able to dramatically reduce costs while improving the customer’s experience.

Such focus helps leaders allocate money and people with confidence. They know they are working on the right things without reacting to impulsive ideas or distracting minutia.


Invite dissent to build others’ commitment. Strategic insight is as much a social capability as it is an intellectual one. No executive’s strategic brilliance will ever be acted upon alone. An executive needs those she leads to translate strategic insights into choices that drive results. For people to commit to carrying out an executive’s strategic thinking, they have to both understand and believe in it.

That’s far more difficult than it sounds. One study found that only 14% of people understood their company’s strategy and only 24% felt the strategy was linked to their individual accountabilities. Most executives mistakenly assume that repeated explanations through dense PowerPoint presentations are what increases understanding and ownership of strategy.

To the contrary, people’s depth of commitment increases when they, not their leader, are talking. One executive I work with habitually takes his strategic insights to his team and intentionally asks for dueling fact bases to both support and refute his thinking. As the debate unfolds, flawed assumptions are surfaced and replaced with shared understanding, ideas are refined, and ownership for success spreads.

Sound strategic thinking doesn’t have to remain an abstract mystery only a few are able to realize. Despite the common complaint, it’s not the result of making time for it. Executives must extract themselves from day-to-day problems and do the work that aligns their job with the company’s strategy. They need to be armed with insights that predict where best to focus resources. And they need to build a coalition of support by inviting those who must execute to disagree with and improve their strategic thinking. Taking these three practical steps will raise the altitude of executives to the appropriate strategic work of the future, freeing those they lead to direct the operational activities of today.

How to argue with a non listening CEO

Priscilla Claman in Harvard Business Review

A senior vice president I know was working on a merger and had come up against a roadblock.

He pulled the merger implementation team into a room and said: “We’ve analyzed it over and over, but it really isn’t possible to complete this merger in the time frame Walter wants. Now, what do we do?”

Walter was the CEO. He had a reputation for not listening to anyone who disagreed with him. But, missing the merger deadline would be an embarrassing and very public failure. Walter had made a big deal of completing the merger in three months. Someone had to convince him that the merger wasn’t going to happen then, but no one wanted to volunteer. Everyone knew that Walter was a shoot-the-messenger kind of guy.

The team tried several things to get Walter to understand. First, they prepared a data-rich PowerPoint presentation. Walter just waved it away. Then, they hired a respected consultant, who confirmed the fact that it couldn’t be done in the time allotted. Walter just thought she was the team’s patsy. All the while, the clock was ticking, getting closer and closer to failure.

Finally, the SVP came up with something that worked. He knew one of Walter’s buddies who was within months of retirement. Walter wouldn’t fire him. Using all the data the team had prepared, the SVP convinced Walter’s buddy to get the message through to Walter, and disaster was averted.

This true story contains a lot of ideas for how to disagree successfully with a person who is senior to you. Fortunately, there aren’t that many senior managers as unapproachable as Walter out there. Still, disagreeing with someone senior isn’t something you want to do every day. Save it for important issues, even in organizations that say they encourage people to express their own opinions. If you disagree too often, you will get a reputation for negativity.



There are ways to disagree successfully with a senior person without having your head handed to you. Here are some ideas:

Don’t just blurt out your point of view; be strategic about it. Think it through. Why do you disagree? Could your disagreement be perceived as “political?” Or do you have the good of the organization at heart? You are more likely to be believed if you don’t have anything to gain from your point of view.

Make sure you’re right. Senior people usually have access to more information than the people below them. Is there something you might be missing?

Do what the SVP did, and bounce your point of view off of a few trusted peers. If you can’t convince them, you’re probably not going to convince the senior person. Ask for their feedback on how to be persuasive. But don’t ask your direct reports — they may not want to disagree with a senior person!

Prepare a presentation – no loaded words or hypotheticals; use data and charts instead. Keep it businesslike. PowerPoint can help keep your presentation brief and to the point.

Find a respected, credible expert to go over your conclusions. She doesn’t have to be an outside consultant, but she should be recognized for her expertise by your senior person.

The SVP’s buddy strategy is also a good approach. People trust people they are friends with, particularly if they are at the same level in an organization. Find someone you know who is the same rank as the more senior person you are trying to convince. Persuade him using the data you have put together. Then, ask him to share that information with his buddy.



It takes courage to disagree with someone senior to you. But it is a professional skill you need to learn. Sooner or later, like the senior vice president in the story, you will face a situation where you have to disagree. Besides, if you just agree all the time, senior people will think of you as a doormat with nothing to contribute. To gain the respect of senior people, you need to learn when it’s important to disagree, and then, how to do it in a strategic way.