Brexit Redux– Doomsday, Panic, Armageddon, End-Of-World: Or, Overblown–Non-Panic, Panic; Non-Crisis, Crisis…

BREXIT Wins: Government Resigns, EU Convulses, Gold Soars, Markets Panic, Rivers of Blood! Fire from Sky! Plagues of Locust! Collapse of Civilization! Triggering of Super Shemitah! Or, Not: Now that everyone has come out of their bunkers– everything is still the same, nothing has changed…

At this point, all that has happened is a non-binding, advisory referendum won by over 1 million votes… The UK vote was largely an opinion polls where; 51.9% (17,410,742) voted to ‘Leave’ the European Union (EU), and; 48.1% (16,141,241) voted to ‘Remain’… Since it’s a non-binding referendum, economic experts are urging people to take deep breath, and using the famous British saying; ‘Keep Calm and Carry On’

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According to Chris Gaffney; this is more of political crisis than financial, and that makes this much different from Lehman Brothers going under in 2008– It’s not a liquidity crisis; but it’s still a big deal… The claims about ‘end of Western civilization’ and the worst crisis since the Cuban Missile crisis, are obviously absurd… However, if the UK actually beings the exit process by invoking Article 50 of the Lisbon Treaty to formally leave the EU, then it’s more than a non-binding referendum– it’s for real and it will probably rattle markets all over again… In the interim, British pound will probably continue to trade at discount rate until there is more clarity about whether or not Brexit will actually take place…

In the article Brexit Effect: Signals Amidst the Noise by Aswath Damodaran writes: It’s easy to get caught up in the crisis of the moment but there are general lessons from Brexit, e.g.: No one should listen to the experts: There probably has never been an event where experts were all so collectively wrong in their predictions and so completely ignored by the public… Economists, policy experts, and central banks all inveighed against exiting EU, arguing that is would be catastrophic but their warnings fell on deaf years as voters tuned them out… Furthermore, it’s painfully clear that many of the so-called economic experts have lost creditability due to their insufferably pompous behavior, and head-in-the-sand prognostications…

Narrative beats numbers: In the Brexit debate it seemed to many that the ‘Leave’ side had the more compelling narrative (i.e., return to old Britain, which voters found appealing), whereas the ‘Remain’ side argued that this narrative was not plausible in today’s world, and its counter consisted mostly of numbers (i.e., the costs that Britain would face from Brexit)… Looking ahead to similar referendums in other EU countries, it’s highly likely that the same dynamic will be repeated, since few politicians in most EU countries seem to want to make a full-throated defense of being Europeans first…

Democracy can disappoint: The parallels between political and  business governance are plentiful, and Brexit has  brought  to surface the age-old debate about merits of direct democracy… While some (mostly on the winning side) celebrate the power of free will, and others (mostly on the losing side) confirm that general population should never be trusted to make reasoned judgments on the future, and the vote is vindication of their fears.

In business governance, this tussle is being continuously played-out, between those who believe that shareholders, as the owners of public businesses, should control outcomes; at one-end… and those who argue that incumbent managers and/or insiders are more knowledgeable, hence they should be allowed to operate unencumbered; at the other-end…

There are many in the business world who will look at the Brexit results and cheer for the Facebook/Google model of business governance, where shares with different voting rights give insiders control in perpetuity… While others argue strongly for business democracy and against entrenching incumbent managers… and hence it’s inconsistent to find fault with the British public for voting for Brexit.

In democracy, people will get outcomes they might not like and throw a tantrum (as some in the Remain camp are doing) or threaten to move to Canada, or Switzerland… which is crazy… You may not like the outcome but as a political consultant said after his candidate lost an election; ‘people have spoken– the bastards’…

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In the article What Lessons Can Business Learn from Brexit? by Dawna Jones writes: Business can learn a lot from Brexit, and so can political decision-makers. While analysts and forecasters weigh-in on what happens next, now is a good time to reflect and learn from the Brexit experience… The decision to stay or leave the EU is a very complex mash-up of politics, geopolitic, economic, social entanglement.  Voting made the decision look simple; but it’s complicated, e.g.; some experts say media failed to communicate what was really at stake, which opened process for political campaign style politics… And be as it may, there are lessons that business can learn from Brexit, e.g:

Business Lesson: Choose the Best Tool for the Task… By definition, voting is binary: ‘Leave’ or ‘Remain’… Binary decisions attract emotional responses, and information isn’t always necessary for strong opinions to be form… And when cognitive bias, any one of a hundred and fifty distorting perception of reality, are added to the mix; the effect is that the decision, using voting, isn’t based on information but on emotion. Brexit became a vehicle for the emotionally disenfranchised to declare their feelings– as one 92 year old blind senior did when asking; Which box is OUT (Leave)?

To avoid dividing nations internally, requires use of collaborative decision processes better suited for complex issues… While it’s hard to imagine any business using a company-wide vote to make strategic decisions, it’s easy to imagine a decision being treated as a binary choice or, worse, to forge ahead using only one option… Hence, unless integrated into the decision-making mindset is the discipline to step back and reflect and see a wider view… then decision-making is working with only narrow field of view, and that is very risky…

Business Lesson: Fear Vs. Hope and Aspiration… Fear, anger, and isolation forged the Brexit outcome; emotions are powerful… Many who voted ‘Leave’ feel disenfranchised by current economic conditions (much larger systemic issue), and the lack of trust is a key undercurrent… and without broader perspective, impact of real choice is beyond view…

Business has, for the sake of keeping it simple, largely operated under the assumption that emotions have no place in the workplace. Oddly, managers who lack trust in their own abilities confuse– fear as a management style to control performance, behavior of ‘subordinates’. In contrast, where trust is instilled it becomes the emotional engine for initiating, sustaining a culture of innovation. Without trust, failure is punished; without failure, learning is impossible…

Business Lesson: Shifting from Duality to Unified Thinking… Voting when applied to an intense emotional issue results in duality: ‘We’ Vs. ‘They’. Then the discussion is focused on; who is ‘right’ and who is ‘wrong’… In the end, everyone loses because the collective health of a community is not factored in. Triggered by the binary nature, Brexit reeked of duality thinking... Early on before vote results were out, one ‘Leave’ proponent pointed to rally of the pound as evidence that the ‘Leave’ were ‘right’; it was a short-lived celebration before the pound tanked…

In Brexit, blame is stronger than vision by far; the real vote was for what was or wasn’t wanted, not for a future that supports the economic and social health of Britain. The ‘We Vs. They’ dynamic should ring some bells in business where executives, management have become distanced from what is going on in their business, otherwise known as ‘the gap’ between management and employees…

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According to David Jones; there is reason not to panic about Brexit– just do the very British thing and put– the kettle on/make a cuppa/ brew/have a paned… There seems to be an ongoing social media frenzy which sadly will only increase the divides and incites further fear, hatred… Brexit is unchartered territory so you might as well make the most of the ride and grasp opportunity where you can…

Whether or not EU is the right vehicle for Britain to achieve a future-minded form of governance is not the question. The question is: How can outcome of Brexit (what ever it might be) create– better economic, political, social future for all people– British, Europeans…