Bring Your Focus to Your People to Survive and Thrive
For businesses, crises come in many shapes and sizes. You lose a major client. You suffer cashflow problems. A sales team defects to a competitor. Raw material prices double overnight. War, famine, pandemics. The list of crises that could affect your business is endless, and the result could be disastrous for your business.
Right now, the crisis that we’re all talking about is the coronavirus pandemic. It’s no secret that many businesses are so far in the hole because of the pandemic that they won’t survive. Here are a couple of shocking crisis statistics for you:
- A report by the Federal Emergency Management Agency (FEMA) found that 40% of businesses don’t reopen after a natural disaster. Another 25% close within a year.
- The U.S. Small Business Administration found that 90% of companies that are struck by a disaster fail within two years.
So why do some businesses fail because of a crisis, while others survive? In this article, I look at the effect of leadership during crisis.
What Is Crisis and Adversity in Business?
Before we get into the art of leadership during crisis and adversity, let’s make sure we’re on the same page with what a crisis is. In simple terms, it’s an event or series of events that lead to a major disruption of your business. Usually, a crisis happens without warning, and you need to act fast to survive.
Often, a crisis is caused by something that you don’t control, such as a natural disaster, fuel shortages, an outbreak of infection, a terrorist attack, an increase in interest rates, and so on.
Your business may also be affected by a crisis experienced by a customer or supplier, by a technological failure (or cyberattack), a gas explosion, or power cut.
Finally, there are the crises that are caused internally – a bad business decision, or a product failure that leads to recall and loss of reputation.
Prevention Is Necessary, But Not a Cure
Even though many crises are caused by events out of your control, you can mitigate against them. For example, to reduce the effect of a power failure or natural disaster on your business you might prepare by:
- Setting up a disaster recovery site to move your operations to
- Taking insurance against natural disasters
- Putting cybersecurity measures in place
So, part of leading your business through a crisis is to think about what could happen before it does. Prepare for the worst and hope for the best.
However, you’ll still need to remain focused on the future. Preventative measures will help you survive the initial shock, but it’s how you lead your business into the future that will make the difference.
Leadership During Crisis – Do You Sink or Swim?
When you’re faced with adversity, it’s imperative to stay focused. You must figure out what went wrong, why, and then lead your people through it and to a brighter future. Here are two high-profile examples of companies that were hit by a crisis. One survived, the other didn’t.
It’s hard to believe now just how close Apple was to failure. In the mid-1990s, the tech giant was losing $1 billion dollars a year. Its leadership was performing poorly. The company weren’t innovating, and its own people had stopped believing in its products.
This turned around when Steve Jobs was recalled. He made an unpopular decision that ultimately saved the company. He accepted a $150 million investment into Apple from its rival Microsoft. Within 18 months, Apple was turning a profit again. The rest is history.
Once one of the world’s largest investment banks, the collapse of Lehman Brothers was so dramatic that it shook the global financial industry and was a major cause of the financial crisis in 2007/8.
In the early 2000s, the company acquired several mortgage lenders. Concentrating on the subprime market, Lehman’s made huge profits until February 2007. Defaults on subprime loans had squeezed to record highs. Lehman Brothers had built its revenues in the housing market, but what it really had was a house of cards, which collapsed in 2008.
In both these examples, the crises were self-made. So why did Apple survive and thrive while Lehman Brothers crashed and burned? There is no doubt that leadership played a huge part in both:
Doing a great job in leadership
Steve Jobs inspired belief and action. He gave people hope. He was open and transparent, and happy to explain his decisions.
Michael Dell (founder of Dell) had said that Jobs should shut Apple down and give shareholders their money back. Jobs had said of Microsoft’s investment, “We need all the help we can get.”
Jobs also hired people who were better than him. Tim Cook was brought on board to head up worldwide operations. He listened to people, too. He had originally wanted to call the iMac ‘MacMan’. One of his execs suggested the name iMac.
Don’t bank on old-style leadership
Lehman’s leaders were a law unto themselves. Most senior managers below director level knew nothing about the impending bankruptcy.
There was no collaboration within the management structure of the bank. The top-down leadership approach was authoritarian – ‘I say, you do’. The disconnect between junior staff, senior management, and the board was palpable. There was little to no transparency, and the board made no attempt to reassure execs when the share price started falling.
How to Stay Focused in Difficult Times
When your business is experiencing a crisis, you better be ready to be pulled in a thousand directions. But your job isn’t to micromanage teams and tasks. It isn’t to become personally involved in every detail of your business.
What you must do is ensure your teams and their people are focused, productive, and informed. It is this that will help your business remain resilient. Here are five things great leaders do to guide their businesses through adversity.
Avoid micromanaging. Your major responsibility is to get your people engaged in the big picture. You will need to develop an agile strategy and drum up enthusiasm for it.
While you must resist the temptation to become involved in everything that is going on, you must make yourself available for people to discuss their concerns and fears with you. You’ll need to answer many questions.
Being proactive will help you to manage this effectively. Hold regular meetings. Send a weekly (or daily) message to your people. Ensure that your communication is reaching down through all lines of management and that the people on the ‘shop floor’ are not left out of the loop.
Even if it’s hard, do the right thing
Sometimes it is easy to take the easy way out. This doesn’t make it right. If you must make tough choices, make them, and explain them. We all need a little help sometimes. Doing the right thing is crucial – even if it may mean harder work for you and your team.
Be open and honest
Don’t leave people in the dark. They will be worried for their jobs and their future. Repaint the big picture often, and detail all that you can. Your people should never be surprised by what happens next.
Be empathetic. Explain what you need and why. Let people have their say. If their ideas are better than yours, use them. Involve your people in their future – because their future is your future, too.
As the crisis unfolds, so should your strategy to deal with it. Here’s something that many leaders find hard to onboard – your strategy and actions through a crisis will never be perfect.
It’s a fluid situation that you’re in, and you’ve got to be agile. That means learning throughout. Be prepared to admit you are wrong and change course.
Learn from what you do wrong, and stop doing it.
Learn from what you do right, and do more of it.
Just like a project, a crisis can usually be managed in a milestone fashion. With each successive milestone, improve your leadership and how you and your teams are managing the evolving crisis.
Sink or Swim: What Will You Do?
We often think of the idea of ‘sink or swim’ as being a trait of an individual’s personality. How you react to a crisis. How resilient you are. If you have the ‘cajones’ to face adversity and plow through it.
As a leader, you must demonstrate the swim attitude. You must be the example that others will follow. More than this, you must help them realize – collectively – that there is no sink option. You have a plan, and you are all in the same boat. Together you can and will come through this.
Give people hope. Inspire belief. Inspire action. Inspire confidence. Be open, transparent, and honest. When you can package all this, then you will have mastered the art of leadership during crisis.
Would you like to hear more about leadership? To book me for entrepreneurial coaching or for a speaking event, please get in touch.