Leading through the Storm: Four Things Leaders need to do
The year was 1929, it was towards the end of the third quarter and everything seemed fine. The promise of economic prosperity beckoned and optimism was at an all time high, especially in the United States. The steady building wave of optimism had led to an orgy of speculation and the belief that the beast that is economic crisis had been caged and mastered once and for all. The proliferated through numerous books and articles on the wisdom of the science of business management was offered as the Master of the beast.” We are apparently finished and done with economic cycles as we have known them” said the president of the New York Stock Exchange in September of that year.
By October everything had changed as an economic tsunami swept through Wall Street and on into the infant global economy. Wisdom is an easy thing with hindsight.
Warren Buffet once said, “When the tide of economic growth goes out, you will see who has been swimming naked”. As we now know the tide has irrevocably gone out and as we can see, many have been caught naked. Such is the nature of tides, they go out but they also ‘come in’. That is part of the reality of economic life cycles which we would be foolish to deny, ignore or think we have mastered. For beyond economic cycles, life itself offers rhythms and cycles that best we seek to understand and befriend.
These are tough times and being left naked is no fun at all. But there are important lessons to be learnt, lessons that might mean that when next the tide retreats, and it will, we will not be left as exposed as we are right now. This is also not the time to be tailoring a costume; it is a time to do what we have to in order to survive. When the tide returns, and it will, with the lessons of being exposed still fresh, we need to begin the tailoring process.
But what then are some of the things we need to be doing now that will ensure our survival and position us stronger and more resilience for once the storm has passed?
We need to work at understanding the global forces at work. There is no doubt that the seemingly unstoppable march of globalization has been knocked back by the economic melt-down. The irony at play is that it is precisely due to globalization and the resulting inter-twined economic dependencies and connectivity that the reach and impact of the credit crunch has been what it has been. As local and regional economies re-emerge from the worse of the recession, global ties will again be negotiated, initiated and strengthened. That is the nature of things. Some of the resultant bruising from the storm will ensure that things will be reconfigured differently and perhaps cautiously, but they will be reconfigured with new dependencies and inter-dependencies emerging. Leaders of multi-national organizations will need to take to heart the global forces of paradox, diversity and uncertainty and learn the lessons each of these forces invite. Much of the prevailing corporate wisdom and learning has paid superficial attention to these realities and the results are there for all to see. How we formulate and implement leadership development and learning will need to change; How we spend on conferences and the motivation, expectations and outcomes surrounding such events will need re-examination; How we understand the ‘organization’: how it works, how it thinks, how it feels and how it grows will all need to be rethought and re-taught; How we configure and implement strategy and our own leadership philosophy and behavior will need exploration and reinvention; how we regard, filter and use information and the inherent technology that delivers such information, will need overhauling. And so we could go on, but suffice to say that our work is cut-out for us and we need to operate from the reality that the wisdom that has got us to this point, cannot be the wisdom that will get us to where it is we need to go.
Revise your strategic ‘plan’ as well as your projected profits. Jamie Dimon, CEO of J.P. Morgan Chase was quoted in Fortune magazine (January 19th, 2009 No1, p68) as saying, “I am shocked at the number of people who are still worrying about their strategic plan for 2009. We cancelled all that stuff – all of it”. It is true to say that we are yet to see to full impact of the current melt-down. With several Eastern European economies tottering the brink of the abyss and the implications of their collapse on central European banking, especially that of Sweden; The fact that inventories are building; the reliance in South Africa on foreign funding; and the fact that we are still some way off seeing the bottom of the downward spiral are all starkly sobering realities. In the light of all this, facing the coming realities before your competitors do can make a significant difference in who survives – or perhaps, who thrives, in these conditions. For this to happen, strategies and projections that were shaped in different climatic conditions are worth little. Bold leadership will invite an aggressive review of both the strategy and profit forecasts and then courageously communicate the process and findings to anxious stakeholders. Priorities need to be reset and communicated in an empathetic manner. Plotting your future journey based on old, outdated forecasts is a sure recipe for dissatisfaction and outright failure.
Search for the ‘New Thing’. There will always be new opportunities but these will not be based on extrapolation of the past. The current conditions will form the basis for the ‘new thing’. There will be opportunities to capture space as competitors retract; to capture some ‘good people’; to review your structures and processes; there will also be opportunities to build deeper client relationships that will auger well for the long term, for when the storm abates and calmer waters are rediscovered. The best performers will be those who understand their customers business best and who offer their customers renewed value and help them make the most of what they have got. This might mean redefining your value-offering but it doesn’t necessarily mean cutting your prices but you will need to be price sensitive to your market like never before.
Tell your employees the truth. In such times your people are your most important asset. It is important that leadership provides and articulates a clear vision as to what is happening and how they see the immediate future. Employees need to know that you care. They just want the truth. There are a lot of scary stories out there and a leadership style that plays its cards close to their chest will prove fatal in these anxious times. Employees need to be brought onside for any game-plan and their commitment to any initiatives will be what determines whether or not those initiatives succeed or not. It is hard to be upbeat in a recession but what you do now will determine how and in what shape you emerge when the storm abates.
These are testing times for leaders. But so too are they great times for leaders to stand-up and be counted. The current storm does offer opportunity in spite of its threatening nature. It has been said that there is no such thing as ‘an atheist in a storm at sea’. Well we might just discover truths beyond ourselves in such times, truths that also might keep us humble, empathetic and open to new and better ways. That can’t be a bad thing if you are a leader.
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