Leadership requires balance and dexterity, and the ability to cut through the noise to focus on the signals that matter most. When a crisis hits, it’s important to manage urgent challenges by embracing ambiguity with a steady hand, while also leading your team in search of transformational opportunities created by the crisis. Leaders must be ambidextrous as they navigate the tension between managing and leading. Sometimes this means resisting the inertial pull of crisis management that can make leaders feel productive but also steal too much energy from strategic thinking, analysis, planning and action.
The heavy lifting required to survive a crisis such as COVID-19 can sap an organization, leaving little attention and energy for strategy. Yet strategy matters more now than ever.
During a severe economic disruption, old sources of competitive advantage can weaken, and new sources emerge. Upstarts can leap ahead of seemingly entrenched players, and dominant players can solidify their leadership position if they leverage their scale to seize newly created opportunities.
The human brain is programmed to narrow its focus in the face of a threat. It’s an evolutionary survival mechanism designed for self-protection. The trap is that your field of vision becomes restricted to the immediate foreground. Leaders must avoid the trap because the future is planned now not later, and the path forward can be illuminated by learnings from the past. Those who hunker down and wait will fall behind.
Learn from the Past
In the face of a crisis such as the Covid-19 crisis, leaders need to be resilient, agile and take action with the appropriate sense of urgency needed to keep their workforce safe, preserve cash and survive financially. We also know from history how important it is to anticipate marketplace changes caused by structural breaks in the way we do business.
For example, the depression of 1893-97 spawned a more consumer-oriented economy in which several entrepreneurs such as Milton Hershey built lasting empires. General Electric was also born during this time as several innovations triggered a new economy fueled by electricity.
Later, during and shortly after the Great Depression of the 1930s, many industries such as railroads, rubber, steel and glass suffered. But several new companies and brands flourished during these hard times as consumer behavior changed dramatically. Airline travel grew exponentially, and campgrounds and motels blossomed along highways. The radio and movie industries exploded during what became known as the Golden Age of Hollywood. Those leaders who astutely read and anticipated changing consumer behavior and preferences benefited mightily.
IBM, Uber, General Motors, Slack, Procter & Gamble, Square, HP, Hyatt, CNN, MTV, Instagram, Sports Illustrated, Microsoft and United Technologies were all created during hard times and economic disruptions.
Create the Future
We have to survive to thrive long-term, but leaders can’t be so obsessed with survival that they miss opportunities to re-engineer or disintermediate their business model and plan.
“Everybody has a plan until they get punched in the mouth.”
– Mike Tyson
Many military leaders are fond of saying no plan survives first contact with the enemy. What matters is how quickly the leader is able to adapt. Here are some tips for striking the balance:
1. Lean into your vision, purpose and core values as guiding forces, and double down on culture. If constructed authentically, these statements should provide a road map for tough choices. Just as character is defined by what you do when nobody is looking, your future culture will be defined by how you and your team traverse this crisis. Whatever the changes your organization are encountering, pay attention to the impact on your culture. In times of crisis, people are stressed, and relationships often become frayed. Communication breaks down, collaboration deteriorates, and productivity may be adversely impacted. Anticipate and act on these changes before they become the new norm for your organization. Sales and profits will come later if you make the right moves now. Focus on coming out of this crisis with a higher performing team that is grounded in trust engendered by the way you led throughout this crisis.
2. Don’t get so consumed with surviving that you completely abandon strategic planning. In times of crisis, it’s easy to bias toward our comfort zone and tasks we can complete quickly. It feels good to be productive. But sustained long-term prosperity demands both strategy and entrepreneurship, not simply managing what’s in front of us. The problem with strategic planning at many large companies is that their plans are not very focused. Oftentimes, they are not as pressed to make tough choices because they have a plethora of resources that are too often spread wastefully like peanut butter.
The problem with many smaller, more nimble and innovative companies is that they have a lot of ideas, but they suffer from a lack of focus, scale and the strategic discipline required to make the smart choices needed to consistently turn the bigger ideas into sustainable growth. Regardless of your size and financial health, use this crisis to be even more strategically focused on how your strengths can be leveraged to address changing market dynamics and customer needs, and reduce or even eliminate lower value work unrelated to the highest ROI initiatives.
3. Challenge every aspect of your business model. Assess the ramifications of this economic disruption on long-term strategic plans and pressure test whether, and how, the major assumptions and building blocks fundamental to the plan have shifted. For example, most supply chains have been disrupted significantly and will likely encounter lasting structural changes going forward. For each of your objectives, goals and strategies in your strategic plan, work with your team to ensure focus on the initiatives that matter most across the organization in three phases: during the crisis, recovery, and once we enter a “new normal.” To achieve thrust, debate and decide what should be stopped, postponed, continued or started during all three phases depending on a range of scenarios, and agree to the milestones that will trigger strategic actions.
Importantly, the alignment of resources across the organization is critical to accelerate the highest priorities, and this coordination must be orchestrated by the leadership team. Otherwise, the organization will flail in silos with uncoordinated fits and starts. Use this crisis to accelerate needed improvements harmoniously within clearly defined riverbanks that balances your workforces’ need for strategic direction and your need to enable leadership at all levels of the organization.
4. Get even closer to consumers and customers. Go beyond relationship management to understand how the crisis is impacting consumer and customer preferences and behavior, and how their world might evolve as we progress toward a new normal. What need gaps might be created that your company can fulfill faster and better than anybody else? How can you help them in ways that will build your brand equity even if it is not profitable short-term?
5. Simplify and clean house like a Marie Kondo warrior. In normal times, most wise efforts to reduce complexity are met with corporate inertia and resistance to change. Keep in mind that people don’t fear change, they fear loss, and most change involves some level of loss. The uncertainty caused by an economic disruption lowers those barriers because people are more risk taking in losses than they are in gains. Take advantage of it to repair inefficiencies and focus resources where they add the most economic value.
Many companies tolerate inefficiencies or looming problems with their operations and/or go-to-market approach in good times. For example, one of my clients manufactures cleaning products and turned a blind eye to a weak link in their supply chain because of legacy relationships and other sacred cows. This economic disruption broke the link, and we quickly marshalled a cross-functional team to fix it much faster than would have happened absent the crisis. They will emerge stronger.
6. Pay more attention than ever to your people. Most of my clients are surveying their people to stay in touch and adjust as needed. Smart. But measuring engagement right now isn’t just about identifying low scores or pain points. It’s safe to assume everyone at your company is struggling on some level with this crisis. People aren’t adjusting solely to remote work, but also close quarters and a mixed bag of emotions. Social isolation is a growing mental health issue. Make sure your people know you care, and make sure they ALL have the contact information of their supervisor and your leadership team. Ensure that everyone is receiving 1:1s with their supervisor on a regular basis. This is important in regular times for talent development, and it’s even more critical now as the need for support skyrockets. Maintain career pathing and succession planning. Are there any difference-makers worthy of promotion that you could announce over the next month to give people hope? They need genuinely good news to balance the bad. Be generous with well-deserved accolades to reinforce your values and culture, and to put success models on a pedestal to reinforce the behaviors you desire.
7. Go shopping. It’s often a buyer’s market when a crisis strikes. It’s is a great time to seek complementary assets and talent. Are there competitors or suppliers who possess a strength that complements your organization’s weaknesses and could be acquired for pennies on the dollar because they have been severely wounded by the crisis? It’s also a great time to strengthen your talent quotient by ramping up recruiting efforts for key needed positions.
8. Communicate relentlessly. Crises such as the Covid-19 pandemic are in many ways even more challenging than the 2008 financial recession for several reasons, not the least of which is social distancing. Remember, the farther you get from the top of an organization, the less your people know about what is going on. Most of your workforce cares about the future of your organization, and they want to know how they can help. You cannot over-communicate in these situations. Just make sure it’s focused and delivered in a way that meets your workforce where they are, not where you wish they were, and enables them to step up and contribute to winning. Arne Sorenson’s message to Marriott associates early in the Covid-19 crisis is transparent, honest, strong, hopeful and vulnerable, all in one address. This is a prime example of communicating at its best.
Crises such as a global pandemic can present leaders with challenges they’ve never encountered before. Often times the social impact of the decisions leaders make in these moments is under the spotlight as they try to balance the needs of all key stakeholders—owners, shareholders, customers, partners, suppliers, and society in general. It’s quite a juggling act fraught with uncertainty and pitfalls. The good news is that most business owners and long-term shareholders believe that doing the right thing for all stakeholders in the near term will benefit investors in the longer term. It’s critical that leaders balance the need to survive this crisis with the need to build for long-term value and ultimately emerge from the crisis in a stronger position relative to competitors.
