In his recent book, Leadership in the Era of Economic Uncertainty, bestselling author and leadership guru Ram Charan identifies key rules to follow to get the right things done in difficult times. While Charan’s is known for his outright bold advice, in this book he offers a more balanced proposal for an appropriate course of action in these times of crisis, including advice on how to carry those plans out in a positive way.
His rules and recommendations include the following:
As obvious as it may seem, pay particular attention to the contributions of your salespeople… now more than ever.
Develop (yes, again!) a better understanding of your customers.
Be sure you understand how the various business functions of your enterprise must align and work in a coordinated fashion.
Communicate candidly and frequently; be transparent, explaining how you reached your decision, why you think it is the best decision.
Respond to external pressures in realistic, yet positive, ways.
Protect cash flow vigilantly, even daily if necessary - use cash more efficiently then ever before.
Use cost cutting strategically.
Reevaluate your pricing strategy.
Use “ground intelligence” (i.e., information on competing businesses)to survive the storm and position your business to thrive in the aftermath.
Probably more critical, the author addresses the issue of which - among the many important behaviors and traits that characterize a good leader - are most essential for managing in this “mother of downturns.” In this regard, we can share the following “Essential Leadership Traits for Hard Times”, cardinalbehaviors that characterize a good leader in a downturn:
Honesty and credibility. This can prove particularly difficult given that nobody can be certain about the business environment and its direction. Can you - in mental comfort - tell your people what you believe when you lack full confidence about your appraisal of things? Under these circumstances, the most viable options are to rely on intellectual honesty and humility… no rosy forecasts, no pretense. Your authority depends on your ability to facilitate understanding and shared solutions — not from having infinite knowledge. Level with your people and tell them how you see the world, and acknowledge the limits of your understanding. Better still, ask them for their own views.
Authenticity is particularly critical. Your presence on the front line is important to energizing people and transforming their fear into confidence — but it must be authentic. Aim to combine integrity and intellectual honesty with straightforwardness and the ability to confront reality.
If you want to instill courage and optimism, is time to put reality on the table and address it decisively. Show people a credible, concrete path. If you tell half-truths, sugarcoat bad news or fail to recognize a toxic environment, you will lose the trust of your people.
Ability to inspire.These days people don’t trust what they hear, see or read. They are exceedingly anxious and distrustful. The recession has evaporated their hard-earned savings and put their jobs at risk. You and your team must inspire employees by working with them to strengthen their resolve. Start with your own team. They are the ones who will have to inspire the rest of the organization. Help them develop one or two realistically optimistic pictures of what can lie ahead. People need a vision that sparks the creativity required to develop new ideas and solutions. Inspire them to focus on the new priorities by doing so yourself, fearlessly. Inspiration will also come from making decisions that produce incremental successes. These are considered high energizers.
Real-time connection to reality. To what extent are you getting essential real-time information from your customers or business partners?... In this volatile and uncertain environment, reality is a moving target. So, strive to gather it from unconventional sources, and avoid getting locked into one view of things. You have to keep updating your picture of reality as you gather new information. Continuously monitor change with ground-level intelligence. The same applies to your team, whose members must put all concrete information on the table, however bad it may be. Looking in the rearview mirror at how things used to be serves no purpose and will distract you from the challenges ahead. Although we don’t know what the new world will look like, we can be certain it won’t look the way it did before.
Realism tempered with optimism. This is where leadership becomes a performing art, introducing that touch of optimism that taps psychological reserves to deal with bad news and to transform fear into action. Unadulterated pessimism is no more realistic than unchecked optimism. The first order of realism is to understand and accept a problem’s true magnitude. Then, and only then, you can focus your people on a vision of what’s possible and energize them to search for actions that will help them realize their aspirations.
Managing with intensity.In physics, intensity is the product of energy density (that is, energy per unit volume) multiplied by the velocity at which the energy is moving.In management it’s no different. The leader’s energetic hands-on participation and speed of action are essential in these times. Only through deep personal development can you acquire ground-level intelligence, share and discuss it with your team, and act with the speed that is required in a volatile environment. You have to be interactive, listening as well as explaining, answering as well as posing big questions.
Boldness in building for the future.Boldness is not impertinence. Boldness is the quality of standing out strongly, thewillingness to get things done despite risks. Impertinence is the quality of being rude and insulting, lacking seriousness. Building a future is a bold proposition, not an impertinent game. It will take imagination, fortitude and determination to place strategic bets - with no guaranteed payoffs - when money is scarce and uncertainty is aplenty. The assumptions supporting your plans are shaky at best. You will thus feel the pressure to shortchange the future to survive the present – and you must resist this pressure.
To meet today’s daunting challenges, the guiding principle proposed by Charan can be summarized as “Hands on, head in.” Adjust your mindset, gather your people, and tackle the problems squarely. If you’re a capable leader, you will have a stronger business after the downturn than you did before. Among other things, recognizing that the best and brightest talent will be more mobile then ever, you stand a better chance of attracting top talent as people can see that you have a plan to emerge from the crisis stronger, with better prospects for their personal growth. Not a bad fringe benefit…
