“Facts do not cease to exist because they are ignored.” — Aldous Huxley
In 1981, Romania could no longer service its external debt.
Poland had already defaulted, and Western banks were growing nervous about Eastern Europe. They began withdrawing their short-term deposits from the Romanian Bank for Foreign Trade. By the end of the year, Romania had accumulated more than $3 billion in arrears.
The financial problem was serious. But another problem made it harder to solve: nobody wanted to say openly what the situation required.
The bank’s leadership and officials at the Ministry of Finance understood that Romania would have to reschedule its debt. This meant negotiating with the London Club of commercial banks and the Paris Club of government creditors — and accepting economic policy conditions.
Nobody wanted to be the one to tell Nicolae Ceaușescu.
So we delayed.
I had been following Poland’s difficulties and reading about its negotiations with foreign creditors. I suggested to my CEO that we invite several of our correspondent banks to Bucharest and ask for a frank assessment.
They came in January 1982.
Our senior officials presented Romania’s economic plans and explained why they believed the country’s prospects would improve. The visiting bankers listened politely. Then they delivered a simpler message: Romania needed to begin negotiations with the London Club and the Paris Club immediately.
Foreign bankers had said in the room what Romanian officials had been unable to say within the system.
Reality had entered the conversation.
When the old assumptions fail
I have remembered that meeting ever since because it changed the way I think about disruption.
A disruption is more than a difficult event. Difficult events occur within familiar rules. We understand the problem and have some idea of what recovery would look like.
Disruption begins when those assumptions are no longer reliable.
A new technology makes an established business model obsolete. A competitor behaves unexpectedly. Political alliances shift. Credit disappears. A crisis reveals weaknesses that success had concealed for years.
Yet people rarely abandon their assumptions as soon as the evidence changes. We defend our plans, explain away unwelcome facts, and wait for normality to return.
Sometimes it does. Sometimes, while we are waiting, the ground moves beneath us.
That is when leadership becomes indispensable.
Leadership begins with accepting reality
Leaders cannot prevent every disruption or predict every crisis. Their first responsibility is more immediate: to help people recognize when the world they are acting in has changed.
This is harder than it sounds.
Bad news does not travel easily through an organization. As it moves upwards, people soften or delay it. Employees hesitate to question assumptions in which senior colleagues have invested money, authority and reputation.
Past success deepens the problem. If a formula worked for twenty years, those who created it naturally trust it. What once demonstrated sound judgment can become a reason to disregard new evidence.
Under communism, I saw an extreme form of this behavior. Speaking an inconvenient truth could damage a career or bring more serious personal consequences. Silence was often self-protection.
But the instinct is not confined to authoritarian systems. I have also encountered it in companies full of intelligent, experienced people. Organizations can become remarkably skillful at explaining why a danger is temporary, why this time is different, or why one more year will vindicate the existing plan.
Leadership must interrupt that process before events do it for us.
Someone has to voice the doubt that others discuss only in private. Leaders must ask what evidence would prove the current plan wrong — and make it safe for people to provide that evidence.
Disruption tests leadership
In the previous Plays, I argued that we need leadership for survival, purpose, and achievement. Disruption puts all three under pressure.
What protected us yesterday may leave us exposed tomorrow. Our purpose may remain valid while the way we pursue it becomes obsolete. Past achievements may become a handicap when they lead us to believe the formula behind them will work indefinitely.
Disruption forces us to distinguish between what we value and what we are merely accustomed to.
A company may need to protect its purpose while abandoning a product that once defined it. A public institution may need to preserve its responsibilities while changing how it fulfills them. A leader may need to acknowledge that a decision once justified by the evidence no longer makes sense.
Without such distinctions, adaptation becomes either reckless destruction or timid adjustment.
The task is not always to restore normality
When something goes badly wrong, people naturally want life to return to normal. Often, restoration is the right objective.
But genuine disruption poses a more difficult question: what if the old normal no longer exists?
Then leadership is not about taking people back. It is about helping them move forward without pretending to know exactly where the path will lead.
What remains valuable? What has become obsolete? What must we stop doing? Which capabilities will we need next? How much time do we have before events decide for us?
No leader answers such questions with certainty. During disruption, judgment matters more than displays of confidence. Leaders must make consequential decisions before all the evidence is available, give people enough direction to act, and stay willing to adjust as new facts emerge.
Changing course in response to reality is not weakness. Continuing along the same course to preserve an image of decisiveness is.
What I carried from 1981
Romania eventually negotiated with its creditors and rescheduled its debt. But the lesson I carried with me was not primarily about sovereign finance. It concerned the cost of recognizing change too late.
Disruption seldom announces that one world has ended and another has begun. It starts with weak signals that are easy to dismiss. Then come uncomfortable facts and contradictions that our old explanations can no longer contain. If we still refuse to respond, disruption becomes crisis.
Leadership gives us a chance to intervene earlier: to notice what is changing, speak about it honestly, and act while choices remain.
We need leadership for survival, purpose and achievement. We also need it when the conditions beneath all three begin to shift.
Because during disruption, the greatest danger is often not the change itself.
It is continuing to behave as though nothing has changed.
Questions for Reflection
- What change are you or your organisation still treating as temporary, even though it may have altered the rules?
- Which assumption behind your current plans has not been tested recently?
- What weak signal have you noticed but not yet examined seriously?
Download the Chairman”s Playbook Worksheet — Play 56: When Disruption Knocks, We Need Leadership
📚Further Reading
- Andrew S. Grove — Only the Paranoid Survive
Grove explains “strategic inflection points”: moments when the assumptions underpinning a successful organisation cease to hold. Like your post, it is grounded in a senior executive’s lived experience. - Ronald Heifetz, Alexander Grashow and Marty Linsky — The Practice of Adaptive Leadership
Distinguishes technical problems, which existing expertise can solve, from adaptive challenges, which require people to change assumptions, habits and capabilities. Harvard Kennedy School - Peter F. Drucker — Managing in Turbulent Times
Drucker examines how leaders protect an organisation’s ability to act when economic conditions and established certainties are breaking down. Drucker Institute - Dietrich Dörner — The Logic of Failure
Explores why intelligent, experienced people make poor decisions in complex and rapidly changing situations. Especially relevant to delay, denial, incomplete information and interventions that create unintended consequences. Book details - Donald Sull — The Upside of Turbulence
Focuses on recognising unexpected opportunities during periods of disruption and avoiding the organisational inertia created by successful formulas.
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