Posted: July 14, 2009
Not business as usual
10 imperatives for turnaround leadershipBy Dr. Christine Riordan
Think back to just a year ago.
Could you have imagined companies that we perceived as stable, like Lehman Brothers, would simply vanish, or that 2008 would mark the largest bank and loan failure in history? Could you have imagined the sheer scale of the automakers crisis resulting in a massive restructuring of the industry or the stock market dropping to less than half of its 2007 value? More precisely, could you have ever imagined the extent of government regulation and bailout that has occurred within the last few months?
Now, we’re facing a myriad of challenges: global instability, a need for world-wide economic recovery, the necessity of changing business models, numerous industries rapidly being altered, significant losses in business, consumer price sensitivity, companies trying to survive, intense scrutiny from investors, more regulations, nervous boards, smaller staffs, lower employee morale, a sense of fear by consumers and a feeling of urgency to fix the problems.
In today’s companies, many leaders were hired or promoted into their positions during a thriving economy. But as we’ve seen, the leadership competencies required during times of growth are much different from those needed during the times of stress and downturn that we have now.
All of us find ourselves in a turn-around situation, needing the skills to transform business and help it survive, much less thrive during these difficult times. Today requires our existing leaders engage in different behaviors and attitudes and acquire new skills and competencies. In the past, we have often seen companies purposefully hire turn-around leaders who were skilled in transforming a business when it was declining. Today, this is not a viable or desirable option for so many businesses affected by the epic plunder.
As a result, it is imperative that our current leaders determine how they need to adjust their leadership behaviors to navigate the changes surrounding them -- and do it immediately. This task sounds easy, but it is often one of the most difficult.
Leaders often do not recognize that they may need to behave differently because of the environmental changes around them. Leaders will cling to the past or continue “business as usual.” They think that past behaviors of success will again carry them into the future.
Turbulence, instability, and crisis in the business environment present challenges and opportunities for leaders. They require different behaviors and skills.
Many leaders rise to the occasion -- others do not. Looking at recent history, Rudy Giuliani’s response after 9-11 and James Burke’s response during the Tylenol crisis were exemplary bits of effective leadership behavior during difficult situations. These leaders seized the opportunity to approach their situations as turnarounds and to prepare and lead others to an unexpected and transformed future.
There are at least ten imperatives in which leaders need to engage to lead through the current turnaround situation.
Imperative 1: Understand the business environment more clearly than ever before. It is surprising how many executives do not have an in-depth understanding of the business environment. Now is the time to pay close attention and understand global, national, regional and local economic trends, market trends, consumer trends, industry trends and competitor responses. Leaders must identify and pay attention to the indicators that are most critical to their business to identify problems as well as opportunities.
Leaders should be looking at this trend data weekly and interpreting it with a fresh new lens. Additionally, leaders must especially be open to re-educating themselves, even in the basics, since they have taken them for granted for so long. Leaders need to be cautious of defensively resorting to falling back on things they know and are comfortable with rather than looking at new and/or disconfirming data and ways of doing business. Data are indicating a wide variety of new trends in today’s business environment. Using old assumptions of how business operates and assuming the trends that existed last year still hold today is dangerous. Make decisions and act based on up-to-the-minute and in-depth knowledge of what is really going on in business today.
Imperative 2: Make others understand the current situation. Not only is it important to confront the reality of the current business situation, it is also a leader’s job to help others understand it is not business as usual. If employees are continuing in the same fashion as last year, chances are that the organization has not truly confronted the new business environment. Instill a sense of urgency in all employees to be realistic in understanding the state of the business, to continue to improve and to understand that everyone will have to do more with less. Provide employees with simple explanations for what is happening in the business today and what needs to be done to improve.
Imperative 3: Be a strategic thinker and set your sights on a new future. Effective turnaround leaders are constantly identifying the challenges, threats and opportunities that exist in the environment. They understand that they need to think differently about how the environment and business operate.
The problems we encounter now are messier and much more complicated than those in the past, and they cannot be solved in the same fashion as others have been solved before. Turnaround leaders look for new ways to think about these problems and more importantly look for new ways to solve these problems. Opportunities present themselves in unexpected places and turnaround leaders are quick to identify those opportunities. Turnaround leaders also have the ability to look ahead and behind to determine the best plan for improvement and to set their sights on what the future could look like.
Imperative 4: Establish a focus and prioritize. Effective turnaround leaders don’t try to be all things. For example, it may be necessary to focus on top products, top customers or to eliminate areas that are not core to the business. Turnaround leaders focus scarce resources on those areas that are of most importance to the survival and success of the organization.
Imperative 5: Be aggressive. Now is exactly the right time to stake a claim about where you are heading. New opportunities exist. Find them and pursue them. Challenge competitors, position your company and its products. There is energy and strength behind leadership in turnaround situations and all effective leaders act with a sense of urgency.
Imperative 6: Ensure alignment. It is extremely important to ensure that everyone in the organization is working towards the same goals and that they understand any changes in direction. It is too easy for employees to keep conducting business as usual and not to recognize the need to change. Turnaround leaders recognize the need to quickly align the organization around any new directions or change in focus and make sure all employees understand this.
Imperative 7: Execute. A focus on execution is important. It is time for hands-on, action-oriented leadership. Now is not the time to delegate and hope the work is completed, rather than monitoring what is happening. Turnaround leaders are paying close attention to details, ensuring that others are executing, helping to lay out important action plans and performing themselves.
Imperative 8: Diligently monitor results. Turnaround leaders must monitor results more regularly, but more importantly use the data to make decisions about changes in actions and strategies to correct negative trends and to take further advantage of positive trends. The mistake that many leaders make is to attribute changes in results to the economy without trying to take any actions to change the results.
Imperative 9: Communicate constantly. Turnaround leaders are honest about the state of the business, acknowledge concerns, work at building morale, celebrate small wins and encourage others to be proactive about helping to improve the business. There is a need for greater communication during difficult situations.
Imperative 10: Be resilient. Turnaround leaders have a certain hardiness to endure the downs of the situation. They remain optimistic in the face of adversity and are quick to change when necessary. If something is not going well or does not turn out as expected, they remain flexible in their approach and look for new ways to solve the problem. They have a concrete resolve to make things better and are experts at figuring out ways to do more with fewer resources.
We are coming out of a deep recession and are now in a period of business instability and massive change. The economic and business realities are daunting. Business, government, and educational leaders need to be a force for positive change around the nation and around the world. It is not simply a matter of survival. It is a matter of creating new and better business models and infrastructures to benefit society.
There could not be a better time than now to think about where businesses, industries, education and government need to go. As with every challenge and opportunity, some leaders will respond proactively and effectively while others will be left behind. Strong, turnaround leadership skills are needed like never before. The challenge for leaders today is to reinvent themselves quickly in order to navigate this environment –- it is simply not business as usual and it is definitely not leadership as usual.
Dr. Christine Riordan is dean of the Daniels College of Business at the University of Denver, where she leads a global network of over 33,000 faculty, staff, students and alumni in providing business education, grounded in ethics and dedicated to transforming lives. DU's Daniels College of Business, which celebrated its 100th anniversary in 2008, is ranked among the top business schools in the world by Business Week, U.S.News & World Report, Beyond Grey Pinstripes and the Financial Times.
Over the past two decades, Dr. Riordan has built a national reputation as a leadership development and workplace diversity expert. Her research focuses on labor-force diversity issues, human resources, workplace issues, leadership development, leadership effectiveness and career success.