Having had the pleasure of working in Greece for many months at a bank, I have an attachment to that lovely country. It is a great country, great food, great people, great architecture, wonderful history and just tickety boo in all respects. In fact, I was thinking at that time of retiring there but then I came to know and love Italy, but that is for another post. Therefore, when I read about Green suffering macro-economic challenges, it is obviously of interest to me.
Greece, as you might have read, is facing severe financial deficits. I do not want to go into the details of the history behind how Greece got into trouble but suffice to say that it told a few porkies to get into the Euro and then it has gone downhill ever since. Here is a good overview of the crisis. The deficit is out of control, the public finances are a disaster, growth is anemic, corruption rife and its competitiveness is very weak. Combine this with a rather dysfunctional political maturity and what you have is a full-blown national crisis.
So what do you do? Well, depends upon which side of the economic rail tracks you are, some believe that you need a bit more assistance from the other Euro zone countries or from the IMF. Cut public spending, improve statistical data collection and publication / governance, improve competitiveness, etc. etc. The new government has promised to cut the deficit and improve growth. But here is the problem which interests me. The markets simply do not believe that the government can do this.
One of my teachers once told me this. “We judge ourselves by what we think we are capable of doing while others judge us by what we have done”. This applies to us as individuals and as well way up to national governments. What about for those who are deep in the weeds doing projects? I sometimes think that we are no different from the old style prophets who through a combination of doom and gloom sticks plus a heavy dose of eternal salvation carrots come up with a project plan (10 commandments, Quranic rules, etc.) to get there.
But just like what happened to Greece, how do we make sure that people believe in the fact that we are going to get there? Everybody has different ways of doing this, but I prefer to have a good agreed scope / benefits / objectives document, clear transparent project plan, a good governance around it, clear links between the actions and the resources (responsible, accountable, informed, communicated), solid risk and issue management and the financial bits. While nobody knows the future accurately, to engender belief, one has to show that we have put in place these measures and are open and transparent on our progress, problems and issues.
I have seen projects which do not have identified risks and issues and that fill me with dread. After ruling out the presence of divinity (as only heavenly creatures do not commit mistakes, have issues and risks), one has to regretfully conclude that the project will face significant problems because risks and issues are not being identified.
Look what happened when the Greek PM announced its plans. Immediately the market said, sorry, mate, do not believe you. The cost of insuring against Greek debt is now the highest ever. In my opinion, this is because the government is not transparent with the economic data, the plans to achieve the objectives are seriously flaky, the issues and risks not laid out nor are the management actions to deal with them. Over here in the UK, Nick Clegg, the leader of the Liberal Democratic Party says that we have to do the same thing for the UK as well. Unfortunately, the political calendar dictates that transparency is a fond hope and rigorous macro-economic planning and execution has to wait. In the meantime, the market is judging us by what we have done.