Inflation, economic contraction, energy crises, supply chain disruption, wage inflation, physical war, cyber attacks and a resurgence of Covid.
With much of this beyond anyone’s control, what should leaders be doing now?
These are trying times. But far from a panic, ‘knee jerk’, or wait and see response, there is a need for real leadership to take centre stage.
There are different scenarios depending on how your organisation is being affected. This article examines three of the most common and proposes a leadership approach for each.
Whatever it is, if your business operations, costs, people, markets or strategy are directly affected by the chaos, it’s about crisis management and in the worst situations, a matter of survival.
What you need is to cut out the noise and focus with a small team of trusted people that are well connected to the area of the business impacted most. Find out everything possible separating facts and truths from panic, ideas, and opinions.
There’s always an immediate reaction by the team closest to the event. if it’s physical in nature, it’s incident response and making sure everyone is safe.
Be clear on what’s been done or said to date, without filters or judgement – it’s just information gathering. Knowing what is really going on requires a culture of trust and transparency which isn’t always there.
This is the test of true leaders. Especially those normally confined to an ivory tower. Now would be good time to visit your team in the trenches to hear it straight. Remember to triangulate inputs with multiple perspectives. If you have to make tough decisions to ensure the organisation can survive, then accept short-term pain and be open with stakeholders.
If there’s one word that separates good crisis management from bad, it’s communication. But remember – there are two sides to this skill, and a reason we’re gifted with two ears and only one mouth!
Maybe you’ve hedged your energy costs but this of course will not last forever. Perhaps a key client has left and you hear rumblings that more will follow. Or possibly you’ve identified that delays in supply have depleted your reserves.
Just like in Scenario A, the time to lead is now. To make tough choices and manage your stakeholders proactively.
Use the time and external conditions to your advantage. Plan and act now before the crisis. Of course, no one has a crystal ball and things might work out okay, but if we just wait and see, then we are giving away the advantage of time and limiting our choices. This is usually not the approach of true leaders. How much liquidity do we have, what is our runway and burn rate? Can we delay spend, cut costs and preserve cash?
Your competitors will be taking these same obvious defensive measures but perhaps you can go on the offensive. Perhaps you can secure contracts and revenue earlier. Or maybe there is a window for aggressive marketing, or advising sales teams to close deals sooner even if at less favourable terms. You could be winning while others are “waiting and seeing”.
If you know 100% something bad is going to happen in a few months, what could you do now that averts it, limits the damage, or at least positions you better than competitors? Don’t knee Jerk, but stop to listen and observe, think and plan and then act decisively.
Just like Covid was pervasive in affecting everyone – even if you benefited, you still felt it, inflation and stagflation is going to be the same. Do you know where your business stands? The scenarios write themselves. Double digit inflation, global economic contraction, supply chain impacts, cost of living crisis, wage inflation. The list goes on.
As a leader, you need to take a moment and reflect upon how all this volatility impacts your business, what the key drivers are, and where will it impact most. Perhaps customers still need the goods and services you provide. Or perhaps what you do is so innovative, new and in-demand that it transcends the macro-environment, and as long as you can still create it and deliver it, then you might really be fine. If your costs go up, can you pass these to customers, or is it wiser to absorb these in the long run? Will your competitors be impacted more or less, and how are they dealing with it?
During these pivotal moments in history, there are winners and losers. Are we seeing the opportunities and do we have the courage to act? Just like the scenarios above, even if things are good, now is not the time to be complacent, or wait and see.
Are we just blissfully unaware about the perils around the corner? (a Risk Universe can help overcome any blind spots). Even if there are no direct impacts to your business, there are second and third order affects to everything. Perhaps your customers or staff are feeling the pain. With this clarity around the environment, seeing the strengths and weaknesses of your competitors as well as your own business, what bold moves will make the biggest difference? How exciting is it to lead in this situation and really leave your mark?