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The Nolan Company is pleased to bring our
readers a special series of new articles covering the surprising
opportunities and the risks of these turbulent times. In each of
the coming weeks, we will share our insights and experiences in
managing toward the upside during a time of unique market
dynamics.
Leading Through the
Crisis
Steve Callahan
Senior Consultant and Practice Development
Director
The challenge
of turbulent times brings with it an intense pressure on an
organization's leadership – pressure for performance and solutions
that can seem almost overwhelming at times. The impact of the
subprime lending crisis, credit default swaps, complex hedging
strategies, and the collapse of credit on a world scale have
combined to create a global recession estimated to last at least
fourteen months. Each day industry leaders wake up facing these
challenges. Some are filled with self doubt and many are stressed by
the need for quick decisions and action, knowing that the success –
or even survival – of their company depends upon making the right
choices.
The preceding articles in this series offered strategies for
managing during these trying times: value-based expense savings
versus broad cuts that could permanently impair; step-by-step
considerations for dealing with the acceleration in mergers and
acquisitions; and examples of the opportunities created by the
crisis that some companies are working to their advantage. Achieving
the benefits of these and other management strategies will depend
upon effective leadership, challenging even the best to rise to the
occasion.
George S. Patton, a man known for dealing with crisis
situations, once said; "It is nearly impossible to remain both aloof
and effective." Patton was a staunch advocate of avoiding the
inevitable temptation of being driven behind closed doors by a
crisis, analyzing mind–numbing data, searching for solutions, and
losing that crucial connection with those being led. Winston
Churchill showed similar leadership in his refusal to leave London
during the blitzkrieg of 1940, as did Rudy Giuliani 61 years later
when faced with the aftermath of September 11th. In all three cases,
the tenets for strong leadership during times of crisis are
effectively illustrated as:
- Staying visible, leading from the front, engaging with,
reassuring, and learning from those dealing with the issues
directly. Businesses are not turned around by reports or
statistics; they are turned around by people and actions. An
effective leader knows this and puts himself or herself among
those who can make the difference.
- Acknowledging the realities while communicating an unwavering
and clear vision of what is required to navigate through the
crisis. People need to see the big picture towards which they are
working, akin to looking at the cover of a puzzle when trying to
put together the 1,500 small pieces – it provides focus, a common
goal, and the glue that holds the organization together.
- Relying upon open debate with a diverse leadership team of
complementary skills, one willing to challenge one another, bring
a magnifying glass of honesty to each decision, and unite together
once the decisions are made. Colin Powell said it best:
"When we are debating an issue, being loyal to me
means giving me your opinion whether you think I'll like it or
not. At this point, disagreement stimulates me. But after the
decision has been made, the debate ends. At this point being loyal
means getting behind and executing the decision as if it were your
own."
Ideally, a
strong team has been built and prepared for this challenge, as it
has been shown that tough times rarely create leaders, they merely
show you what kind of leaders you have. And as John Maxwell
described in the Law of the Inner Circle from his book, The 21
Irrefutable Laws of Leadership, the leader's team will determine
the leader's success.
A second critical leadership element (particularly important
in the management transparency described above) is the
decision-making process used by the team. Evidence-based management,
a derivative of successfully developed evidence-based medicine, is a
process by which all of the facts involved in a given situation are
collected and then unemotionally validated as accurate and
contextually applicable. Strategically rational decisions arise from
these facts. The process requires being willing to face the hard
facts about what may or may not work, which in turn requires the
painful process of weeding out the anecdotal lore that often passes
for conventional wisdom. The results are decisions built upon the
foundation of fact having the permanence of strategy versus the
transience of perceptions, beliefs, and prior practice.
What does this process typically involve at a practical
level?
- Old ideas get treated for what they are – old ideas, not
necessarily the best ideas;
- Everything is subject to critique and hard review, including
"breakthrough" studies;
- Collaboration and collective effort are used in lieu of
conclusions dictated unilaterally;
- Openness, directness, honesty and non–personalized critiques
are integral to the process;
- Failures are learning opportunities, acting as starting points
for the next effort; and,
- A neutral and objective view is maintained throughout the
process.
Fact-based
decisions made with a diverse and transparent management team that
is engaged and leading from the front will drive realization of
opportunities that will improve performance and competitive
positioning. There is no doubt these turbulent times will challenge
the best in all of us. Yet within these challenges the opportunity
to excel (while the economy gradually returns to normalcy) does
exist. A real chance to establish a sustainable competitive
advantage is attainable for those willing to listen, willing to have
the tried and true folklore of their organization challenged, and
interested in finding the leverage points amid the noise of the
turmoil.
I welcome your observations and comments about leadership
during a crisis. The Nolan Company has been serving the insurance
industry for 35 years and we have assisted many clients through
times like these. We stand ready to share our experience and
insights with you. Please email me at steve_callahan@renolan.com
or call me at 800-248-3742.
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