Dramatic stock market swings, Corona Virus, election year…we are currently in an uncertain time. During these moments, I return to the question; what can I, as a business owner and leader in my organization, do to better manage/lead during this time of ambiguity? I find great comfort in the following quotation as I attempt to answer this question.
“A chicken doesn’t stop scratching just because worms are scarce.” (Grandma’s Axiom)
A chicken’s persistence is admirable. We must continue scratching and taking action. This is not a time to take a page from the ostrich and put our heads in the sand.
During these times, it is natural to find it difficult to summon the motivation to react. Resources are restricted, budgets must be cut, the business environment is in a general malaise, investors and customers are unhappy, we are under the pressure of the RIF (reduction in force), ethical scandals scream from the headlines, how do we manage cash flow…all add up to an overwhelming ruckus. One wants to scream, “WHERE DO I SCRATCH?”
In my own experience and while coaching executives, I have used the following model to help focus our leadership tasks (in some cases formulate an initial response!) and take considered, incremental steps as we lead during this time.
* These steps do not have to be completed in a sequential order.
Deliver the Business
At the World Economic Forum’s Annual Meeting in February 2002, leaders from American Express Company, The Boeing Company, Goldman Sachs & Co, Dell Computer Corporation and Nestlé concluded that,
“Communicating a clear and persuasive strategic vision is important for any company. But in today’s troubled economic climate, it’s absolutely essential.”
In other words, deliver your business! I have suggested three practical methods to my clients.
- Consider all options (scenario or contingency plan) then mobilize your resources
- Focus the resources/Carefully review all your costs
- Meet regularly to fine-tune the strategies. Stay connected
Ironically, a positive aspect of our current ambiguity, is that organizations have an opportunity to strategize and implement initiatives that deliver the business in more effective ways (reduced costs, increased customer services, etc.). Keeping a close watch on your long-term strategic vision and values provides the laser beam focus needed to direct your enterprise.
The underlying theme of this side of the triangle is to focus on what you do best and continue to find ways to deliver. This is not a time for wholesale change or severe reactions. The crucial element is to keep refining what you do and deliver it better. Darrell Rigby, in his HBR Article, “Moving Upward in a Downturn,” describes this as,
“Play to win where you are strongest: reinforce your core.”
Prepare for the Upturn
- Identify what will pull you ahead of the competition
- Visualize the upturn and align resources toward it
- Formulate incremental steps/Plan small wins
One of my clients stated that he enjoyed this side because it was, “forward-focused and much more positive than looking for ways to continue cutting costs.” He went on to say, “we can’t cost cut our way to prosperity!” He would escape the short-term doom and gloom and focus on what future success will look like.
For many of us, we will scrutinize costs and look for ways to reduce. Indeed, this is a crucial task even during times of plenty. However, it is important to remember that focused acquisitions may be a good strategy. Rigby eloquently wrote,
“Clear winners in a downturn don’t lock their purses; they spend on bargain acquisitions.”
The winners are wisely aligning resources toward the future.
Another benefit during this step is that you increase your understanding of your competitors and your own organization. I often suggest clients, and their executive teams, conduct a SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis to structure their information gathering and action planning.
A theme that you probably see developing is having patience. I caution clients that this is not the best time to “boil the oceans.” It is a time to carefully plan small wins and incremental steps that will, eventually, lead to larger successes. Look to the long-term.
Support the People
Rusty Weston, in his article “Managing in a Downturn; Even in times like these, innovation is crucial,” states,
“…chief executives have to exhibit greater leadership capabilities to motivate employees and at the same time keep valuable customers from bolting to the competition.”
In my experience, this is the trickiest area for executives to navigate. Again, here are several suggestions I have made to my clients.
- Communicate! Communicate! If you don’t have anything to say, communicate that!
- Listen and look for psychological needs
- Break barriers to make others successful
- Provide encouragement, “can do” support to the troops
Leaders should address process issues in addition to the task issues of the first two steps. This side of the triangle is about “how we do things.” In my experience, organizations take on the personality of its leader. As a leader, your job is to project the attitudinal compass. It can be one of progress and action or one of despair. More often then not, I see organizations that successfully weather uncertainty focus on progress and action.
A question I am frequently asked by clients is “how much information should I share?” My suggestion is always to be honest and, more importantly, to take time to listen and ask questions. Solicit input on cost reductions, better methods for delivering the business and find out what concerns others. This serves two purposes,
- Pulls your internal team together (you will fight the fight together) and unleashes their creativity
- You truly partner with your customers/suppliers which will pay dividends over the long-term
One of the most damaging things that leaders do is “going into a shell” and feeling that they cannot disclose bad news. I figure that the bad news will come out sooner or later and most people like to know sooner.
To continue with the theme of patience and creating small wins, be careful when considering a reduction in force (RIF). While the cost savings may be attractive and a quick fix, what is the toll on morale, the pressure on the remaining employees and your ability to ramp-up when the upswing occurs? I suggest that clients look for more flexible work schedules and models to weather the short-term crisis while preparing for long-term success.
Stick with the Triangle
Managing in this environment not easy. This model has been applied successfully because it replaces “knee-jerk/panic” reactions. It provides business owners and leaders an example to reflect upon and focus their energy and attention for both the short-term and the long-term success of their organizations.
Hopefully, the suggestions that have been forwarded in this article, and the articles listed below, provide a simple model/framework that reduces some of the complexity we encounter during this economic time. After all, we need to keep scratching because the worms are still out there!
Here is the completed model.
ExecutivEdge of Silicon Valley, LLC. Principal Partners, John W. Baird, Ph.D. and Michele K. Bolton, Ph.D. www.executivedge.com.
Rigby, Darrell. “Moving Upward in a Downturn.” Harvard Business Review, June 2001.
Weston, Rusty. “Managing In a Downturn: Even in times like these, innovation is crucial.” Optimize Magazine, November 2001.
World Economic Forum. “Strategic Vision Key to Managing Downturn, Leaders Say.” February 11, 2002. www.weforum.org