7 Lessons For Leading In A Crisis
by Bill George, our ActionCLASS Summary
7 Lessons For Leading In A Crisis – It is not breaking news that we are living in turbulent times. Stock markets are in flux daily, businesses struggle to survive, and at the same time, the internet is truly starting to transform the way we do business. In times like these, the only certainties in life are death, taxes, AND a good crisis or two. And when we say crisis, we don’t mean in general – we mean with you.
Luckily, Bill George, drawing from his many years as a CEO and facing a crisis or two himself, has written the guidebook for handling them. Here, in ten minutes or less, are the 7 lessons to leading in a crisis.
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Lesson #1: Face Reality, Starting with Yourself
As the old joke goes, De-Nial is not a river in Egypt. As Bill found out early in his career, leaders often go into denial about the urgency and severity of the challenges they are facing. So how do you cure yourself of the disease of denial? First, you have to personally acknowledge that you have a crisis on your hands. Got that one covered? Good. Now it’s time to convince everybody else to see it too. Only then can you take action.
But what if there is a crisis brewing, and you as the CEO don’t have visibility to it? Bill used to tell his employees at Medtronic that “You’ll never get fired for having a problem, but you will get fired for covering one up”.
No matter where a crisis originates in your organization, it’s imperative that you as the CEO take it on personally and admit where you went wrong. Once you do that, your employees will feel free to explore where they could have done better, and you create an ownership culture.
Lesson #2: Get the world off your shoulders
Tell me if this sounds familiar: you feel like Atlas. You are carrying the weight of the world on your shoulders. The whole organisation is depending on you and you aren’t sure you can pull it off. And the whole thing could collapse overnight. Sound familiar? Good – that means you are a leader. But let us be clear – it doesn’t have to be that way. Whatever your crisis is, there is absolutely no chance that you can solve it yourself.
That’s exactly the situation that Anne Mulcahy faced when she took the reigns of Xerox in 2000. Not only was the firm on the verge of bankruptcy, but she also lacked the financial expertise to solve the problem because she had spent her life in sales and marketing. Then, she did something remarkable. She found an advisor to help her with balance sheet management.
AND she met with 100 of the companies top executives and asked if they would stay with the company even though there were going to be rough times ahead. She was vulnerable, honest, and openly admitted her weaknesses. Through that she found strength. The first two she met with said no. The next 98 said yes, and have helped her lead Xerox out of the mess it found itself in.
Lesson #3: Dig deep for the root cause
You’ve admitted there’s a crisis, and you’ve got the world off your shoulders. What’s next? Well, when you start digging for the cause of the problem, you’ll uncover all sorts of things. The tendency will be to believe that you’ve found the root cause before you have.
One of the things you can do to get to the root cause is to use the military motto “trust but verify”. Be like Terry Lundgren, the CEO of Macy’s. He just pops into stores unannounced and gets to see exactly what the customer sees.
At the end of the day, you are going to have to make a judgement call about whether you’ve reached the root cause or not. Bill says 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 up to you to make the call.
Lesson #4: Get ready for the long haul
Do you remember where you were when George W Bush stood on the aircraft carrier Lincoln in a green flight suit and declared the war in Iraq was over in front of a giant “Mission Accomplished” sign? I don’t either, but it certainly highlights the danger of declaring a crisis over before it actually is. Whether you like it or not, as hard as it is to predict when a crisis will hit, it’s even harder to forecast when it will end. So, buckle in for the long haul.
In fact, the first time you feel the urge to declare that your crisis is over, remember that it will probably get worse from there, and your first and only concern at this point should be survival. Here’s where a paradox comes in.
First, as we all know, cash is king in any crisis. Nothing else even comes close. But it also happens to be the best time to reinvent yourself for when you come out the other side. This is exactly what Andy Grove and Intel did when he convinced the company that they had to get out of memory chips and into microprocessors. Being able to do this is the mark of a leader that Roger Martin, Dean of the Rotman School of Business at the University of Toronto would call an “integrative thinker”.
Lesson #5: Never waste a good crisis
In “The Prince”, everybody’s favourite philosopher Nicolo Machiavelli advised his followers, “Never waste the opportunities offered by a good crisis.”. The one name that always comes to mind when thinking about this topic is Jack Welch.
Welch, as you might remember, actually saw a crisis with a runway of about 10 years, and created a crisis in his company before the marketplace could do it for him. He made the famous decree that every GE business unit had to be #1 or #2 in the marketplace, or GE would divest the business. He earned the nickname “Neutron Jack” for his efforts (he eliminated 100,000 jobs), but he also turned a slow-moving and mature organization into a global player positioned for the future.
Lesson #6: Follow True North
If there’s ever a time that your leadership position puts you in the spotlight, it’s when there’s a crisis. Every word you say is scrutinised and potentially lives forever on the Internet. Here’s what you need to do to come out smelling of roses.
- Be transparent. You can’t hide or colour the truth in a crisis – you will most certainly be found out. By the way, this is a good principle to live by any day.
- Create a culture of candour. You need to keep people informed of what’s going on when you are in a crisis. The more you open up, the less they turn to the rumour mill for their information. So ironically, the more you share, the more you control what information people get.
- Take ownership of the crisis. Whether or not you caused the crisis, the reality of any situation you find yourself in as a leader, you are responsible for it. There are times when this might not be a great career move, as David Neelman, the founder of JetBlue found out in the aftermath of Valentine’s Day 2007.
No, he didn’t give his wife an ill-advised gift. There were hundreds of people stranded on Jet Blue aeroplanes for up to ten hours because of an ice storm. While numerous other airlines faced the same issues, Jet Blue was the only one to actually take public ownership of the problem. He went as far as to appear on Letterman and the Today Show, and took the unprecedented move of creating a customer bill of rights, and spent $30 million compensating passengers who were stranded in the storm.
For his efforts, he was shown the door from the company he founded by a board who felt he went too far. I think the lesson learned from this story is that we need more people on boards of directors who see the customer as the #1 priority in any business.
Lesson #7: Go on offence; focus on winning now
The last lesson is to go on the offence. The best way to go on offence is to invest during downturns. OF course, you need cash to be able to do this, so your first order of business is to prepare for the downturn before it hits. Keep some resources available in the “emergency fund”. While your competition will be figuring out how to survive, this will give you the time and space to do the following 7 things:
- Rethink your industry strategy;
- Shed your weaknesses;
- Reshape the industry to play to your strengths
- Make vital investments;
- Keep key people focused on winning;
- Create your company’s image as the industry leader;
- Develop rigorous execution plans. What if you could spend the downturn doing those things while your competition had to focus on keeping the status quo alive? What would that look like?
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