5 Lessons From Detroit's Bankruptcy

By Josh Linkner

Earlier this summer, Detroit’s Emergency Financial Manager filed a petition for the city’s bankruptcy proceedings. With more than $18 billion in debt, Detroit has become the largest municipality to ever file for Chapter 9 protection. This is a difficult period for my hometown and the broader region, affecting tens of thousands of people with pensions and benefits, as well as the other creditors. While challenging, I view this as a prime opportunity to reinvent and take our community to new heights, as I expressed the night of the filing. Interestingly enough, the situation in Southeastern Michigan can apply to your personal career trajectory, your company, or your community and provide valuable lessons. Let’s look a little deeper.

1. Take painful action early, before problems get too big. As Ross Perot once explained, “If you see a snake, just kill it. Don’t appoint a committee on snakes.” Detroit’s negligence in dealing with then-smaller problems only made the problems worse. Like a malignant cancer, problems spread and infect other realms, so when you find yourself in a position to do something siphoning off issues, don’t hesitate. Detroit should have filed 30 years ago; had we done so, that $18 billion would have been significantly smaller, the shrunken population would still be larger and the educational system would have had less time to deteriorate.

2. No matter how bad it gets, there’s almost always some reset button. Regardless of your situation, there’s always a way to change your course. The proverbial light at the end of the tunnel may be dim, but it’s there. Finding it may require some creativity, but it’s worth it to do some digging. If Detroit can hit that reset button, so can you.

3. Letting go of the past is one of the most powerful and cathartic things in life. Detroit had decades of decay, corruption, and hubris weighing it down. While a bankruptcy doesn’t make it go “poof” and disappear, it allows citizens, community leaders, and government officials to draw a firm line; from here on, this new Detroit doesn’t have to be defined by the same issues that plagued the city until now. What’s weighing you down? How much lighter would you feel to get rid of it?

4. Being the underdog has advantages. Sticking a finger in the eye of conventional wisdom and tradition is one of my favorite activities. In its push toward a new, brighter future, Detroit is encompassing this same penchant for carving one’s own path. Bottom line – we can only go up from here, and there are plenty of people here who are making their city one they’re proud to call “home.” Startups, coffee shops, restaurants, watch boutiques, and a whole host of other niche landmarks have cropped up, by the sheer force of grit and determination. It worked for Rocky Balboa. Developing resiliency and persistence can help conquer even the most overwhelming challenges.

5. Decisive action trumps over-analysis and delays. I’m not advocating for “footloose and fancy free,” but in your business, as a leader, you need to be quick to make choices. Your certainty in a decision mobilizes your employees and motivates them to rally behind it. Detroit languished because nobody made any swift choices, and thus, nobody rallied behind anything. Instead, leaders kicked a can down the road for decades, leaving nothing but hopelessness in its tracks.

As the municipal bankruptcy continues through its litigation cycle, there will still be a period with more questions than answers. That being said, Detroit’s leadership has made a powerful choice to move forward and bring its constituents along for the upside. As a leader in your own business, think about how much you can impact your team, your network, and your community, not just in the Motor City, but elsewhere too.

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