Whenever we want change too often we can’t. Everyone will agree to change, but we are so Locked-in that we we can’t seem to behave differently, even though we realize poor performance requires change and we agree we have to do things differently. That’s why Disruptions are so critical. Disruptions cause us to stop – and realize other options are possible.
As we ended the 1970s the U.S. was struggling with a host of problems, and some pretty poor performance. The 1970s had seen a huge jump in petroleum prices, runaway inflation with interest rates nearly 20% on everything including corporate debt and mortgages, job stagnation with high unemployment, and tense international relations as American diplomats were trapped in a multi-month hostage situation in Iran. The decade’s last President (Jimmy Carter) referred to America as being in a "malaise". American GDP was going nowhere as Japanese producers looked like they were quickly taking over global manufacturing as well as demonstrating superior quality in a wide range of products.
So what happened in the 1980s to turn this around? President Ronald Reagan implemented a Disruption that changed the way almost everyone thought about many issues. Unlike any other President, early in his presidency Mr. Reagan fired all the striking air traffic controllers. This was unprecedented. He risked the recently deregulated airline industry, the image of government paid jobs (air traffic controllers were FAA employees) as "untouchable", his reputation and decades of labor/management relations by simply refusing to negotiate with the striking controllers and setting up a program to replace them all. In days, everyone in America knew something very different was happening. Whether they agreed with Mr. Reagan or not, everyone knew that this was not going to be "business as usual." Right in the core of American employment, the federal government, a leader had said he was going to do things very differently. And everyone saw he meant business.
This was an enormous Disruption. Not just to airlines and the flying public. This Disrupted how the federal government worked, and how employees and legislators thought about how government would lead. The Disruption was so dramatic that it caused people to say "what else could be different? If we don’t have to negotiate with unions, what else could be changed?" Within months Mr. Reagan took to Congress, and the American public, a radical idea popularized by a fairly obscure economist named Arthur Laffer saying that lowering taxes would actually increase government revenue. To all traditionalists, and most people, this seemed absurd. But in the Disrupted environment post strike-firings Mr. Reagan said "why don’t we give this a try. What we’ve been doing hasn’t worked. Maybe this will. We need to give this a try." And Congress passed the most extensive income-tax rate reduction in American history – literally halving the rates on top taxpayers and cutting rates for everyone else.
The Disruption opened the door to White Space. And once he had White Space, Mr. Reagan used it. He offered as experiments new programs to cut taxes, new user fees to fund parks and other government facilities, and the increased use of outsourcers to cut the cost of government operations. All of these had an impact on rapidly changing what was happening in America – and all were made possible by first Disrupting and then creating White Space to try new approaches. Helped by a release of the hostages on his first day in office, dramatically falling oil prices, and a much more effective federal reserve run by monetarists that had finally gotten control of the money supply leading to much lower interest rates and inflation, Mr. Reagan was able to try a lot of new things which changed the direction of America. But without Disrupting, none of his ideas would have been tried and who knows what the outcome would have been.
America’s Labor movement has never recovered from the Disruption Mr. Reagan implemented. As the attached chart shows, strikes have almost disappeared. And average incomes in America have not kept up with basic inflation, much less core costs like health care, for 25 years. But no one can doubt that Mr. Reagan changed things. And it all started by firing the air traffic controllers – a Disruption that caused people to stop, altered how everyone thought, and created the opportunity for White Space.