We are living in tumultuous times, which is nothing new. Stock markets fluctuate regularly, firms fight to stay afloat, and the internet is slowly but steadily changing the way we do business.
Death, taxes, and a good crisis or two are the only certainties in life in these times. And when we say crisis, we don't mean in general; we're referring to your situation.
Fortunately, Bill George has created the manual for dealing with crises, based on his many years as a CEO and having faced a few himself. Here are the seven lessons to leading in a crisis in ten minutes or less.
Lesson #1: Face Reality, Starting with Yourself.
De-Nial is not a river in Egypt, as the old joke says.
Leaders frequently deny the immediacy and severity of the issues they face, as Bill discovered early in his career. So, how can you get rid of your denial disease?
First and foremost, you must admit that you are dealing with a problem. Is that one taken care of? Good. It's now up to you to persuade the rest of the world to see it as well. Only then will you be able to take action.
But what if a catastrophe is building and you, as the CEO, are completely unaware of it?
"You'll never be fired for having a problem, but you will get fired for covering one up," Bill used to warn his Medtronic workers.
Whatever causes a crisis in your company, it's critical that you, as the CEO, accept responsibility for it and confess where you went wrong.
Once you've done that, your staff will feel free to look for ways to improve, and you'll have created an ownership culture.
Lesson #2: Get the world off your shoulders.
Please tell me if this seems familiar: you have Atlas-like feelings. On your shoulders is the weight of the entire planet.
You're responsible for the whole corporation, and you're not sure you'll be able to pull it off. And it might all come crashing down at any time.
Does this ring a bell? That's great; it shows you're a leader. But, to be clear, this does not have to be the case. There is no way you can solve your crisis by yourself.
When Anne Mulcahy took over as CEO of Xerox in 2000, she was in exactly this scenario. Not only was the company on the edge of bankruptcy, but she lacked the financial know-how to fix it because she had spent her entire career in sales and marketing.
Then she accomplished something extraordinary. She was able to find an expert who could assist her with balance sheet management.
She also spoke with 100 of the firm's top executives, asking if they would continue with the company despite tough times being ahead. She was vulnerable, honest, and honest about her flaws.
She gained strength as a result of it. The first two people she approached said no. The next 98 answered yes, and have aided her in leading Xerox out of its predicament.
Lesson #3: Dig deep for the root cause.
You've accepted there's a problem, and you've taken the weight of the world off your shoulders. So, what's next?
When you start looking for the source of the problem, you'll find many different things. It's natural to think you've discovered the fundamental problem before you actually have.
Using the military slogan "trust, but verify" is one way to get to the source of the problem. Follow in the footsteps of Macy's CEO Terry Lundgren. He just walks into stores unannounced and observes what the customers see.
At the end of the day, you'll have to make a decision on whether you've found the fundamental problem or not.
Bill states that "The only way to do so is to gather all your experts to analyze the problem and give them time to reach definitive conclusions". Then it's your call.
Lesson #4: Get ready for the long haul.
Do you recall where you were when George W. Bush, dressed in a green flying suit, appeared aboard the aircraft carrier Lincoln in front of a big "Mission Accomplished" sign and announced the Iraq war to be over?
I don't think so, but it does illustrate the danger of calling a crisis resolved before it is truly done.
Whether you like it or not, predicting when a crisis will occur is even more difficult than predicting when it will finish. So strap up for a long ride.
In fact, if you feel compelled to announce that your crisis is ended, realize that it will very certainly worsen from there. Your first priority should be survival at this point. This is when the contradiction comes into play.
First and foremost, as we all know, cash reigns supreme in any crisis. Nothing else comes close to that. However, it is also the perfect moment to reinvent yourself for when you emerge out the other side.
This is precisely what Andy Grove and Intel did when he persuaded them to move away from memory chips and toward microprocessors.
Being able to do so distinguishes a leader as an "integrative thinker," according to Roger Martin, Dean of the Rotman School of Business at the University of Toronto.
Lesson #5: Never waste a good crisis.
"Never waste the opportunities offered by a good crisis," said everyone's favorite philosopher Niccolò Machiavelli in his book "The Prince."
When I think of this issue, the first person who comes to mind is Jack Welch.
As you may recall, Welch foresaw a crisis with a 10-year runway and manufactured a problem in his firm before the market could do it for him.
He famously decreed that every GE business unit had to be #1 or #2 in the marketplace, or the company would be sold.
He earned the moniker "Neutron Jack" for his efforts (which resulted in eliminating 100,000 employees). Still, he also transformed a slow-moving and mature company into a global player poised for the future.
Lesson #6: Follow True North.
When there is a crisis, your leadership role puts you in the limelight. Every word you utter is examined and might end up on the internet for all time. Here's what you'll need to do to come out on top.
1. Be open and honest. In a crisis, you can't hide or color the truth; you'll be found out eventually. This is a good philosophy to live by, by the way.
2. Establish a culture of candor. When you're in a crisis, you need to keep people informed about what's going on. The more you open up, the fewer people will rely on rumors for information. Ironically, the more information you give, the more influence you have over what information others get.
Take charge of the situation. Whether or not you started the problem, the fact is that you are responsible for whatever position you find yourself in as a leader.
There are occasions when this isn't the best professional decision, as JetBlue founder David Neelman discovered in the aftermath of Valentine's Day 2007.
He didn't buy his wife an ill-advised present. Due to an ice storm, hundreds of travelers were stuck aboard Jet Blue flights for up to 10 hours. While many other airlines encountered similar problems, Jet Blue was the only one to publicly acknowledge the issue.
He went so far as to appear on Letterman and the Today Show, and he created an extraordinary consumer bill of rights, as well as spending $30 million paying passengers stuck in the storm.
As a result of his efforts, he was fired from the firm he created by a board of directors who believed he had gone too far.
The moral of the tale, in my opinion, is that we need more people on boards of directors who regard the customer as the most important aspect of any organization.
Lesson #7: Go on offense; focus on winning now.
The final lesson is to take the initiative. Investing during downturns is the best approach to go on offense.
Of course, you'll need money to achieve this, so your first priority should be to plan for the downturn before it occurs.
Maintain an "emergency fund" with some resources. This will allow you the time and space to perform the following seven things while your competitors are figuring out how to stay alive.
- Reconsider your business approach;
- Get rid of your flaws;
- Re-shape the industry to your advantage.
- Make necessary investments
- Maintain a winning mindset among key personnel.
- Establish your company's reputation as an industry leader;
- Create detailed execution plans. What if you could spend the downturn accomplishing those things while your competitors focused on maintaining the status quo? What would that entail?