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Leadership in Uncertain Times:  Creating resilience in the shadow of the fiscal cliff

When it comes to politics these days, it feels a bit like Laurel and Hardy's old line about "another fine mess".  With the fiscal cliff imminent and absolutely no clarity as to how the issues involved with it are to be resolved, I thought it would be useful to reflect on some things business leaders should bear in mind as they contemplate the end of the last quarter of 2012.

1)            Do everything you can to minimize the uncertainty your people are directly experiencing

We know this about human beings – we don’t do well at all when we are facing uncertain and ambiguous situations.  It tends to paralyze us, because there is little clarity about what the right decision might be.  As a leader, however, you have the power to lift the crippling burden of uncertainty from people’s shoulders by spelling out for your people what you think the parameters of an uncertain situation are:

•             Tell them what to assume

•             Make it clear specifically what you are trying to drive

•             Be as unambiguous as possible about your expectations. 

•             Do all this with stories, symbols and meaning in mind

if people believe they are engaged on a worthy mission with a leader who isn’t afraid to articulate a point of view, it goes a long way toward freeing up their energy to get on with things rather than act like deer in the headlights.

A great example of a leader who does this exceptionally well is Alan Mullally, the CEO of Ford Motor company.  When he took over the company in 2006, he found a firm so lacking in exciting products that there wasn’t one Ford-branded car in the company garage!  He decided to make a clean break with the past and left no ambiguity about what his intentions were.  In quick order, he decided to focus on the Ford brand and promote a full family of vehicles. He shut down brands, even iconic ones. He measured precisely what people needed to do to succeed and honored those who were candid about problems.  The company rallied behind him.  Even though he brought production down by nearly 50%, he accelerated investment in the brand and the company, even in the bad times.  He’s been so effective that a recent announcement that he is postponing his retirement caused the stock to shoot up.

2)            Fast and roughly right beats precise and slow

Other things being equal, the leader who can get to a decision faster is going to have a decisive edge over less speedy competitors.  With competitive advantages today being measured in months instead of decades, slow decision-making will cripple your competitive effectiveness.  The skill to develop is that of making faster, if not always perfectly correct, choices.  In a lot of situations, roughly right is good enough – particularly if the downside of being wrong can be contained or mitigated somehow.  Think about it – if you delay launching a new product, say, by 6 months, that’s 6 month’s worth of revenue lost, 6 months of competitors being able to enjoy their current market share and 6 months more expense for you before you get returns in the marketplace.  Consider increasing the velocity of your decision-making. 

So don’t wait around to see what happens with the fiscal cliff.  Lay out your contingencies for different scenarios, make sure your strategy is robust for whatever Washington throws at us, and get moving.  There’s absolutely no benefit to waiting around for politicians to take action. 

3)            Disavow denial

When a company has enjoyed a long run of success, the first signals that that position may be eroding are usually met with denial.  When the iPhone first came out in 2007, RIM’s co-CEO dismissed the threat, arguing that the iPhone was firstly a consumer device and secondly that all it would do is expand choice in the smart phone segment for consumers.  Since then, the iPhone has sparked a revolution in how people – yes, businesspeople too – communicate.  Identifying the early warning systems and knowing who you can trust to help you see whether what might be dismissed as a temporary setback is really the beginning of a structural change is paramount.  If you get the warnings early enough, there is often time to come roaring back.

So, how vulnerable are you really, to the consequences of politician’s failing to address the fiscal cliff?  Take the worst-case scenario for your company – are you being candid with your leadership team about how you will respond if some of the predicted consequences occur?  If the temporary cuts to payroll taxes are indeed disbanded, how will your company cope with the likely loss of demand?  Might the tax breaks your business enjoys be targeted for elimination?  How will you deal with GDP shrinkage that the Congressional Budget Office has estimated may total 4%?  Be honest, think about it now, and put contingencies in place – in particular, make sure you have early warnings of negative scenarios so that you can respond immediately to what happens next.

4)            Capitalize on all your talent – you’re going to need it

There isn’t a company I work with today who doesn’t complain about the lack of leadership talent inhibiting their ability to grow.  And yet, in many of our hiring and executive search practices we’re still living with ancient processes from another era that are holding organizations back.  Take the idea that a CEO should ideally be under the age of 50.  One effect of this is to inadvertently take out of consideration an entire cohort of extraordinarily capable women.  A woman in her late 40’s, if she has had a family, is often preoccupied by the demands of adolescents or teenagers.  That same woman, at 55, has sorted through all that, has a wealth of life experience to go on and is raring to go.  And  yet, the resume gets rejected.  The result is a huge under-utilization of top leadership and management talent.    Think about it – Ann Sweeney, President of Disney ABC TV, Virginia Rometty, CEO of IBM, Jill Abramson, first Executive Editor of the New York Times, Pat Mitchell, who is galvanizing the Paley Center for Media, Indra Nooyi, CEO of Pepsico and Nancy McKinstrey, who is successfully overseeing Wolters Kluwer’s transformation to a digital world are all powerful women over 50.  Not to mention women in the popular culture, like Oprah Winfrey and Martha Stewart. 

Organizations that can tap the full potential of all their leadership talent are far more resilient than those that replicate the executives they already have.  There is nobody better at helping your organization survive a calamity than people who have been through one before.  Executives with longer tenures will have longer perspectives and will know what mistakes to avoid this time around.  Another thing to remember is that female executives are often regarded by employees as being more empathetic in the light of disappointing events than men are, which in turn can help maintain morale. 

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