A hole 'narrow but deep'
Q: This week's nuclear summit presents one of those difficult leadership challenge: focusing attention and resources on a low-probability problem that would be disastrous if it occurred. Global warming, 100-year floods, financial meltdowns are other examples. How can a leader fight the natural tendency among followers to put off dealing with what seem like such abstract and complicated threats?
Few leadership topics deal with my two professional passions -- nuclear arms control, and Shakespeare. Talk about strange bedfellows. Yet, on both controlling nuclear material, and learning leadership from Shakespeare masterpieces like The Merchant of Venice, the treachery of a "narrow but deep hole" figures prominently. The risk in such a situation is deemed minimal. Yet the consequences of failure are clearly maximal.
The leader should focus the group on the cataclysmic consequences, rather than the improbability of such an event happening. This is precisely what President Obama is doing with regard to protecting nuclear material. And precisely what Antonio neglected to do when agreeing to a loan from Shylock with the collateral of a "pound of flesh." This wealthy and shrewd merchant of Venice, Antonio, knew he'd be able to repay Shylock's loan. After all, he had plenty of ships at sea, full of merchandise. No need to sweat the severe penalty, as his sidekick Bassanio warned, since the chances of default were so slight.
As brilliant as Antonio were the leaders of Long-Term Capital Management a dozen years ago. Involving a former vice-chairman of the Federal Reserve, two Nobel Laureates in economics, and more Ph.D.s per square foot than in the Harvard faculty lounge, this was another classic case of succumbing to the lure of the "narrow but deep hole."
Initially a flood of money poured in, Madoff-like, which caused the managers to kick some people out of the fund, since it had too much already invested. However narrow, the hole was awfully deep. The fund lost nearly half of its capital in a single month. Fourteen major banks and brokerage houses, fearful of losing what they had already loaned, coughed up another $3.6 billion to try to keep the fund afloat.
As Antonio's savior, Portia, aptly says, "O, these deliberate fools! When they do choose, they have the wisdom by their wit to lose." Losing comes easiest in this predicament, so luring yet so treacherous.
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