Economic Crisis: A Focus for Leadership Development

Economics and Money. The economic crisis is on everyone’s mind. In a recent conversation about financial matters, a distinction between money and economics was suggested by a colleague. I can see his point. Money and economics are interdependent and separate concepts. It’s important to be aware how we relate to both.

Economics is about how we meet each other’s needs. We enter the world as economic beings, innocent and vulnerable. How our needs are met from this time forward influences our intellectual and emotional capacity to meet the needs of others. The concept is essentially about trust: if we do for others, they will be able to do for us.


Leaders are called upon to both give and receive trust in service to others. Their relationship to economics, therefore, influences the complex dimensions of both personal and organizational leadership.

Money, my colleague argues, is an agreement. Legal tender holds a signature. The signature implies that in your hand is a contract. The tender represents value that can be exchanged for capital, goods and services.

The relationship between economics and money is a timely metaphor of the interdependent functions found in organizational structures. Consider the need for mutual support between marketing and sales, organization development and human resources, or supply chain management and manufacturing. Each plays a vital role in supporting needs and holds a space for the integrity of operational agreements between stakeholders.

Perhaps the most important, and least acknowledged distinction between economics and money in organizations, is between leadership and management. Leadership has to do with providing vision for the organization to achieve its mission through commitment, service, accountability and innovation – made possible by creating the conditions for trusted relationships to emerge. Those trusted relationships are foundational for holding all mutual agreements.

Management is about the agreements themselves. Agreements include things like the use systems and processes, delivery of value in exchange for knowledge and labor, and the authority granted by others to monitor, control and react to business conditions. Confusing one for the other, can lead to serious consequences. And as current events remind us, ignoring one or other can be nothing short of perilous.

Organizational Capital. How we are as economic beings informs how we perform as stewards for all forms of organizational money, often referred to as capital. In today’s organizations many forms of capital are needed to conceive, produce and maintain the profitable delivery of modern products and services. Organizational capital is not limited to materials, facilities and labor, but includes broader definitions, such as human capital and knowledge capital. The development of all is essential for sustained economic growth.

How leaders personally relate to economics informs how they prioritize an organ-ization’s needs for capital development. All forms of capital can be likened to a rubber band at rest – potential energy waiting to be realized. We can see clearly by the collapse of the world’s financial systems that no country, organization or individual is immune to the impacts of globalization. Developing all forms of organizational capital creates the tension needed to transform potential energy into the kinetic energy needed for adaptation in a complex global system.

Adaptation. Examining one’s relationship to economics and all forms of capital provides timely insights for leaders about what is currently needed for organizations to thrive in the future. The current chaos of global financial markets is creating only one thing we can count on: unexpected change. Everyone is affected. Expertise in adaption will be needed to deftly navigate these waters.

At no other time has the ability to lead change in organizations been more important. A single leadership style reveals inadequate understanding of the value and need for adaptation. Such leaders cannot be expected to adequately deepen the development of an organization’s human and knowledge capital. It will no longer be enough to simply establish a clear mission using technical know-how and hard work. In order to make the leap to greatness, leaders need to be able to mobilize all capital effectively through unanticipated change.

Considering the current state of ambiguity brought about by the chaos of global financial markets, now is the time to assess and strengthen change leadership capacities in organizations. Only through these competencies will leaders be prepared to release the genius of their organizations and thrive in the years ahead.