What is Leadership?

What is Leadership?

I was on an interesting call this week where the question of “What is leadership?” arose.

Today, there are many definitions, and the concept of leadership has changed over the last seventy years. However, I think the adage that “Great leaders are forged through adversity” still holds. In adversity, great leaders come to the fore as they can get their teams to outperform others during that period when everyone is struggling to achieve their goals and leave a lasting legacy. To me, the “adversity” qualifier is like Warren Buffett’s saying about you don’t know who is swimming naked until the tide goes out; well, adversity is the tide going out.

So, what defines a great leader? Let’s start with the things that don’t.

  • Leadership has nothing to do with seniority or one’s position in the hierarchy of a company. In most cases, people are promoted to leadership positions because of tenure or technical skills; leadership ability is rarely considered.
  • Leadership has nothing to do with titles. Just because you have a C-level title doesn’t automatically make you a “leader,” and you don’t need a title to lead. A great example is Greta Thunberg who has become a leader but without title or seniority.
  • Leadership has nothing to do with personal attributes. While people often associate “leader” with a domineering, take-charge charismatic individual, leadership isn’t an adjective.
  • Leadership isn’t management.  This is the big one. Leadership and management are not synonymous; managers manage things. Leaders lead people. Given the above qualifiers for what leadership is not, some definitions try to capture it but fail.

“The only definition of a leader is someone who has followers.”

This definition, while simple, fails because it is similar to titles. In the video above, the first one dancing is the leader, but I doubt he is still leading once the followers start.

“Leadership is influence – nothing more, nothing less.” This sounds good, but what is the source of influence? If it the leader’s position, e.g., the CEO or the power to cause harm, e.g., your kidnapper, I wouldn’t define it as leadership.

“Leadership is the capacity to translate vision into reality.” Many can translate a vision into reality. An architect or a builder? A painter or sculptor? But I wouldn’t define them as leaders because there are no “others” that they are leading.

Maybe looking at the traits of great, leaders we can better come to a definition. What are the traits of great leaders?

 

Acknowledge people’s fears, then encourage resolve.

The first part is empathy. While this is a personal attribute, which is excluded under the definitions above, I believe without it, you cannot be a great leader because it enables so many of the key attributes. By acknowledging people’s fears, we don’t cover up the crisis and deny its existence. But with the fears on the table, we can then address them and encourage resolve to overcome them. In a crisis, everyone knows that things are bad, but much of the energy and fear exists because of the unknown. Being honest about the situation and facing it allows people to come to grips with the unknown, which enables them to move forward.

 

Give people a role and purpose.

Real leaders charge individuals to act in service of the broader community. They give people jobs to do. But I would add to that; they frame everything within the outcome being sought so that the jobs are not mindless but have a purpose which they can see. It is not about the leader but the great community. I think Shackleton was a great example of this, but I always fall back to David Marquette’s Turn the Ship around.

Inspire others to see opportunities in everything.

There is no playbook in a crisis, so it is up to the leader to be open-minded enough to find possibilities that will help serve their community through their discussions with their team and their data.

 

Be flexible to anticipate the unexpected.

As said above, there is no playbook in a crisis, and leaders must quickly get comfortable with widespread ambiguity and chaos. To get out in front of the crisis they cannot be fixed on any one route but need to see around, beneath, and beyond what they seek. To fully succeed here, they need to get their followers to be flexible, which requires them to understand the greater goal and their role in it and use its core values as their guidelines.

 

Manage everyone’s energy and emotion, including their own.

Crises are exhausting, taking a toll on all of us and possibly leading to burnout. A critical function of leadership is to keep your finger on the pulse of your people’s energy and emotions and respond as needed.

 

Unleash their team’s passionate pursuits.

Passion is what drives experimentation and learning. If everyone is passionate about the outcome, they will seek new ways of addressing the crisis, and great discoveries will be made. Not only will passion drive greater discovery, but it creates more energy. The best example I can think of Apollo 13.

 The Respect to Lead to Leave a Legacy.

Legacies are born during crises. While leaders are most respected based on how well they reacted and responded to all the chaos and uncertainty around them, I believe the key measure is how much of a legacy they leave. Does the organization continue to thrive when they are gone? Do the others in the organization go on to greater and better things? Are the behaviors that enabled it to survive and thrive now part of the company’s DNA. There are many leaders who get the organization through a crisis but leave no lasting mark. I would argue, that they are not great leaders.

So, in conclusion, I would define Leadership as, “A process of social influence, which maximizes the efforts of others, towards the achievement of a goal, and leaves a lasting legacy.”

The key things about this definition are:

  • Leadership stems from social influence, not authority or power
  • Leadership requires others, and that implies they don’t need to be “direct reports”
  • No mention of personality traits, attributes, or even a title; there are many styles, many paths, to effective leadership
  • It identifies the maximization of “efforts”
  • It includes a goal, not influence with no intended outcome
  • Finally, it ties in with a lasting legacy.

Not everyone will become a great leader, but everyone can become a better leader and your organization will thank you. So, start your journey today and if you need help, call me.

 

Copyright (c) 2020, Marc A. Borrelli

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As someone who didn’t grow up in the U.S., I have a different view of time and certainty. When I arrived, I was always amazed at how people planned for longer and longer events that were way out into the future, but with a certainty that everything would go to plan, e.g., in estate planning, using generation-skipping trusts.

For me, the U.S.’s long-term view reminded me of Issac Asimov’s trilogy, the Foundation, when the Mule appears, unforeseen, and topples the Foundation contrary to expectations. In the U.S. I see the overwhelming belief that everything will fine in the long term, and while there are outlining events, everything reverts to the mean. However, there are always unforeseen events that can disrupt the trend and cause it never to return to the prior norm.

I grew up in South Africa, and many of my parent friends had done the long constant migration south. They lived in the Republic of the Congo, today the Democratic Republic of the Congo. With independence in 1960, the military revolt, the succession of Kantaga, and the influx of mercenaries and paramilitary troops to protect mining interests, they fled, many moving to Zambia where their mining skills were in demand. Zambian independence in 1964 and the fears over privatization starting in 1968, they moved onto Rhodesia, now Zimbabwe. With Rhodesia’s Unilateral Declaration of Independence “UDI” from the United Kingdom in 1965, the civil war began, which lasted until 1980 with free elections.

Many decided to move further south to South Africa, a country bound to be stable and prosperous. These moves were often made in a rush, as power structures changed, and in most cases, they lost everything they had during each relocation. Unfortunately, in South Africa, the 1976 Soweto uprising was the beginning of the end for the minority white government; it would take nearly twenty years for that to occur. My parents knew many of these people were too old to move once more and stayed on, seeing wealth evaporate with a declining economy, currency, and sanctions.

I know of a family in Zimbabwe where the patriarch was a multi-millionaire. On his death, he left everything in trust for seven beneficiaries – each receiving over a million, with the trustee’s stipulation to invest the funds in Zimbabwe. As Zimbabwe’s economy collapsed in the 2000s, with hyperinflation hitting its peak of at an estimated 79.6 billion percent month-on-month in November 2008, the value of the trust’s assets declined. The trustee, a corporation, could not move the funds overseas due to currency restrictions and would not disburse the funds to the beneficiaries because of the terms of the trust. Today each beneficiary’s interest will buy them less than a tank of gas for their car.

Finally, I attended boarding school in Switzerland in 1973. A Lebanese friend of mine’s father had interests in Lebanon and started a new business in Iran because he thought diversification was a good idea. In 1975 the Lebanese Civil war started, which was to continue to 1990, but the troubles continue. That war cost them nearly everything they had in Lebanon; however, the Iranian business did well. Having seen what had happened, he bought properties in New York, London, and Cayman as further diversification and protection. January 1979, his father was in New York watching the Shah leave and the riots and saw the bank, which held his accounts, burn. They never returned to Iran, but thankfully the portfolio of properties kept them financially afloat.

Why these stories, well, we have seen in the six months with COVID, how the world has changed. What we took for granted is no longer sure. When will return to “normality,” who knows, but according to Dr. Fauci, sometime in late 2021? As I have said in this newsletter many times, your old business plans, strategy, and financial models need to go out the window, and new ones prepared in light of what is happening.

I would add to that, as you consider the long-term outlook and your business and investment portfolio, I would look for hedges to protect for large unforeseen events. Following Nassim Taleb’s barbell strategy – you avoid the middle in favor of a linear combination of extremes across all domains from politics to economics to one’s personal life.

There is talk of the dollar falling in value and possibly losing its reserve country status. How long it takes the U.S. to recover from COVID is another uncertainty as we have yet to find a strategy. Will the U.S. and China go to war over Taiwan? What will these events do to your business? Thus, I would consider other parts of the country, other countries in supply chain protection, concerning investments, international assets as a hedge.

As for looking outside the U.S., I would not claim the authority to recommend any particular country. I definitely would not follow the Englishman’s steps in 1980; deciding the world was unsafe, moved to the Faulkland Islands as he determined the safest place to be. Less than two years later, the Argentine invaded, and the Falklands War got going.

However, realize nothing is certain! Trends don’t last forever, and while things revert to the mean, there will be a new mean after massive disruptions. Take the lesson from COVID to reexamine everything and do it regularly. Complacency has enormous costs. As David Mitchell put it so well in Cloud Atlas, when two people are discussing revolutions,
“Fantasy. Lunacy.”
“All revolutions are until they happen, then they are historical inevitabilities.”

I am not saying revolution is coming, but large, unpredictable things are, and like revolutions, most will all be historical inevitabilities, as COVID was!

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COVID has disrupted everything and is bringing about unprecedented changes. However, while many say that we could not have expected COVID, that is not the case. Many people raised the alarm over or planning for a pandemic, from Bill Gates to George W. Bush and Obama administrations. And this is not the first time.

If we look back at the Financial Recession, that was not entirely unexpected. Several people saw the problem and were either raising the alarm or trying to profit from it. As Nassim Nicholas Taleb has stated on several occasions, these are not actual Black Swan events, they were predictable, and the probability of them happening was far more extensive than we recognized.

Finally, even when these calamities are bearing down on us, we tend to do little to avoid them until it is too late. The Administration’s response was lacking in preparing for COVID, even though we knew about it coming out of China. How many times do we see a hurricane bearing down on the coast, and even though there is a mandatory evacuation, people refuse to leave, often paying for such decisions with their lives?

It seems there are some reasons.

 

Economic Behavior

Why we prepare so badly is basic economics. In our continual pursuit to improve efficiencies and be either more profitable or less wasteful, it becomes harder to justify spending money on events that we are uncertain will occur. Thus companies moved to just in time systems with no redundancies or excess inventory, which failed them when COVID hit and disrupted shipping. Companies had moved production to lower-cost centers overseas, which caused huge issues when COVID shut down operations in those countries. Finally, I think we have seen the failings of our economic priorities in the U.S. healthcare system, which is not designed for dealing with a public health care crisis, but rather for making a return to investors.

Former Governor Arnold Schwarzenegger invested $200 million in three mobile 200-bed hospitals deployable to the scene of a crisis within 72 hours. Each hospital would be the size of a football field, with a surgery ward, intensive care unit, and X-ray equipment. Medical response teams would also have access to a massive stockpile of emergency supplies: 50 million N95 respirators, 2,400 portable ventilators, and kits to set up 21,000 additional patient beds wherever they were needed. As Schwarzenegger told a news conference, “In light of the pandemic flu risk, it is absolutely a critical investment, I’m not willing to gamble with the people’s safety.” However, in 2011 facing a recession and budget deficit of $26 billion, Former Governor Jerry Brown cut funding for the program.

Thus in our continual drive to be efficient, investments in backup systems and redundancies quickly get cut. For governments, there is always the demand of current situations that take priority over planning. Thus, our economic behavior leaves us vulnerable to the crisis when it arises.

However, once a crisis hits, we are terrible at dealing with it, and that is due to three psychological issues: normalcy bias, optimism bias, and our herd instinct. 

 

Normalcy Bias

Normalcy bias is a cognitive bias that leads people to disbelieve or minimize threat warnings until we are overwhelmed and cannot respond. Thus, individuals underestimate the likelihood of a disaster, when it might affect them, and its potential adverse effects. Normalcy bias causes many people to inadequately prepare for natural disasters, pandemics, war, and calamities caused by human error. During a disaster, about 70% of people reportedly display normalcy bias. Normalcy bias is also called analysis paralysis, the ostrich effect, and by first responders, the negative panic. 

Throughout history, there plenty of examples of normalcy bias.

  • When Vesuvius erupted, the residents of Pompeii watched for hours without evacuating. Thousands of people refused to leave New Orleans as Hurricane Katrina approached.
  • At least 70% of the 9/11 survivors spoke with others before leaving. 
  • Officials at the White Star Line made insufficient preparations to evacuate passengers on the Titanic.
  • Passengers on the Titanic refused evacuation orders because they underestimated the odds of a worst-case scenario and minimized its potential impact.
  • Experts at the Fukushima nuclear power plant believed that a multiple reactor meltdown could never occur.

So how do we overcome Normalcy bias? Amanda Ripley, author of The Unthinkable: Who Survives When Disaster Strikes – and Why explains that there are three phases of response:

  1. Denial. People are likely to deny that a disaster is happening. It takes time for the brain to process information and recognize that a disaster is a threat.
  2. Deliberation. In this phase, people have to decide what to do. If the individual has no plan, the problem is serious. The effects of life-threatening stress on the body (e.g., tunnel vision, audio exclusion, time dilations, out-of-body experiences, or reduced motor skills) limit an individual’s ability to perceive information and make plans.
  3. Decisive Moment. Here a person must act quickly and decisively. Failure to do so can result in injury or death.

According to Ripley, the faster we can get through the Denial and Deliberation phases, the quicker we will reach the Decisive Moment and begin to take action. 

 

Optimism Bias

Optimism bias is a cognitive bias that causes someone to believe that even though bad things are happening around me, I will do better than everyone else. It is also known as unrealistic optimism or comparative optimism. Optimism bias is “Even if bad things are happening around me, I will do better than everyone else.” Optimism bias is common and transcends gender, ethnicity, nationality, and age. Four factors cause optimism bias in people:

  1. their desired end state,
  2. their cognitive mechanisms,
  3. the information they have about themselves versus others, and
  4. overall mood. 

A typical example would someone diagnosed with aggressive cancer, and ten specialists tell them they have little chance of survival. However, an eleventh tells them they will be ok, so they believe the 11th. Other examples are:

  • smokers feeling that they are less likely to contract lung cancer or disease than other smokers,
  • first-time bungee jumpers believing that they are less at risk of an injury than other jumpers, or
  • traders who think they are less exposed to potential losses in the markets.

 

Herd Instinct

We are social animals, and we take our clues from those around us. If we know a tsunami is coming, but no else is leaving, we figure it is safe to stay, even though we understand a tsunami will cause a calamity.

 

So what to do?

From an economic behavior point of view, we will have to bear additional costs and waste to maintain preparation. I would expect that for a while, at least a decade or more, we will ensure we have back up lines of supply and more inventory than we need. However, once all memory of COVID has passed, and there is another generation making decisions which did not experience it, costs cuts will return with our move to efficiency.

Concerning our biases, we need to understand them and be prepared. With normalcy bias, we need to have plans on what to do in the case of an emergency. Luckily for the economy, the experience of the Great Recession was still fresh enough that governments knew that had to provide financial support in large amount to stop the economy collapsing, which they did. However, for a lot of emergencies, we will not have the benefit of a recent crisis to fall back on as a guiding example.

Unfortunately, like the generals, in planning for crises, we tend to “fight the last war.” However, each situation is different. What will out next problem be, A.I. went amuck, climate change? Who knows, but it may be something we have not experienced yet, or even if it is, e.g., a public health crisis, the disease may be very different, requiring a different response.

A great example of our failure is Climate Change. We know that climate change is coming, and a recent report by the U.S. Commodity Futures Trading Commission (CFTC) starts by saying climate change “poses a major risk to the stability of the U.S. financial system and to its ability to sustain the American economy.” The report, “Managing Climate Risk in the U.S. Financial System,” was written by a group of 35 advisors from major banks such as Morgan Stanley and JPMorgan Chase, environmental groups such as The Nature Conservancy and Ceres, energy firms such as B.P. and ConocoPhillips, several investment firms, and experts from several universities. According to it, regulators “must recognize that climate change poses serious emerging risks to the U.S. financial system, and they should move urgently and decisively to measure, understand, and address these risks.”

However, our economic behavior justifies us doing nothing since the costs of prevention are so high. The vested interests of doing nothing spend an enormous amount to ensure nothing changes. Of course, the price of prevention is high compared to what? We always underestimate the expense of the crisis, as COVID has dramatically shown. The annual costs of climate change continue to grow, as we experience more significant fires, hurricanes, and damage to crops. 

Concerning normalcy bias, we have one denial and not enough deliberation. Concerning decisive movement, the Republican chairman of the CFTC, Heath Tarbert, acknowledged the risk of climate change. Still, he said, “The subcommittee’s report acknowledges that ‘transition risks’ of a green economy could be just as disruptive to our financial system as the possible physical manifestations of climate change, and that moving too fast, too soon could be just as disorderly as doing too little, too late.” Basically, we don’t have a plan!

Concerning optimism bias, we have a situation where 97 percent of actively publishing scientists believe human activity is causing global warming and climate change. However, we cling to the three percent who are deniers.

Finally, herd instinct, we don’t want to be the first or do something that we are not sure others will do.

However, if you wish to protect your business, it would be worth investing time in understanding the effects of climate change on it and developing a plan to protect yourself. Start follow Nassim Taleb’s advice and build “antifragility” into your systems, which provide robustness to black swan events. An application of the least fragile risk management approach, according to Taleb, is the “barbell strategy,” which seeks to avoid the middle in favor of a combination of extremes. How that applies to your business will be different, but planning should start now.

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When a company is in a crisis, you need to make sure you have a board that can meet the task. Some crises develop over time due to shifting markets, deteriorating profitability or lack of access to capital.  As we are seeing today, the other form of crisis can be characterized as a Black Swan Event (low-probability, high-impact).  In either event, the crisis threatens the survival of the organization and is characterized by obscure causes, effects and a lack of apparent solution.  There will be a demand for fast track decision making as a crisis creates moments of truth for an organization and is often existential.  It is important that the C-Suite and the Board acknowledge that the company is in crisis, which threatens the company’s viability, and have a plan for dealing with the challenge.

Boards often fail to have the right complement of directors with crisis expertise for fear of sending stakeholders the wrong message: that there is something wrong.  However, a crisis is the ultimate test of resilience for any institution, its board, and its top executives. Senior executives and directors have exposure to continuous external scrutiny from the media, the legal profession, regulators, and other stakeholders for months or even years during and after a crisis. These compounding pressures force boards and senior management to act quickly to appease anxious or angry stakeholders. However, uncertainty compromises the ability to respond promptly due to the lack of information regarding the cause and the effects of any action.

If a board does not have directors with the right skills to address a crisis or there are conflicts of interest that may interfere with addressing a crisis, it becomes critical to add independent directors with those skills and who are free of conflicts.

McKinsey identified four critical fault lines that pose a severe threat to a board’s effective crisis response.

  1. Overreliance by the board on the CEO or senior management. A board that is unwilling to check or challenge senior management for fear of crossing the line into operational activities is failing in its governance. Candid, or as some call “Carefrontational,” conversations enable the directors to avoid poor judgment calls by management and better able to take an independent stance when a crisis comes.
  2. Micromanagement by the board. An equally significant and opposite problem is micromanagement by the board. Board members seeking a direct say in the management process because of their prior executive positions can cause chaos in the organization. While there is pressure to act quickly and decisively, a board’s role is one of oversight and not management. If it is apparent that the leaders are not up to the task, the board members must reserve the right to step in and steer the organization. In such circumstances, boards will take on some operational responsibilities and make decisions that would otherwise fall within management’s purview.
  3. Complicated dynamics within the board. Crises are an accelerant to all relationships. Thus, a crisis can expose an existing board dysfunction or lack of clear leadership. Boards tend to spend too little time addressing such issues before a crisis hitting. Given the few times that directors meet, there may be a lack of trust and questions of everyone’s different strengths and weaknesses. If the CEO is the leader of the board, rather than one of the directors, it worsens board dynamics.
  4. Imperfect information flows between management and board. 
    During a crisis, there is a conflict between the board and management. The board wants more data to meet their fiduciary duty of staying informed to make decisions and demonstrate a duty of care. Management, who are seeking to fix the problem and minimize distractions, don’t to commit the time and energy to meet the board’s demands. Too many board demands stop management performing, and too little information for the board damages trust.

Assuming that your board doesn’t have any of the above potential fault lines, the next issue is dealing with the crisis.

While many boards and C-Suites have crisis plans in place, the problem with Black Swan events is that by their nature, they are unpredictable, and as Mike Tyson said, “Everybody has a plan until they get punched in the mouth.” Crises fundamentally change the terms of engagement between boards and senior management, forcing both groups to make difficult decisions, including whether the senior-executive team or the board itself requires significant changes.

In a crisis, some of the tough calls that the board needs to make are:

  • Who should lead the nuclear crisis response team?

  • What decision authority should the crisis-response team have to ensure the right balance of speed and oversight?

  • Is the senior management team up to the task, or are significant changes necessary?

  • Is the board’s broader composition right? Should members who can’t add value leave? Are additional, independent member(s) to help the company respond and recover required?

  • What are the immediate shifts required within the board’s composition and roles?

  • Does the board need to establish the principles to guide the organization’s response and recovery?

To manage these calls and other tasks, Boards need to consider the following.

  • The Buck Stops with You. Responsibility for proper crisis response rests squarely on the shoulders of the board and the management. If heads roll, not only will management heads roll, but the board’s will as well.

  • Does each director understand their fiduciary duties?  The primary duties here are Duty of Care and Duty of Loyalty.  Legal counsel should be consulted if only to remind directors and help avoid problems down the road.

  • Proactivity is needed. The board must get out in front of the problems on their own. It looks and is terrible when the board is only reactive.  Reactive boards are failing to exercise their proper governance function. To be proactive, board members need experience in dealing with a crisis similar to the one the organization is facing. A PR crisis is not the same as dealing with a financial crisis. Thus, the board needs to ensure that among its members, it has supply chain, HR, turnaround and restructuring expertise.

  • Determine levels of intrusiveness vs. hands-off governance. The old governance mantra used to be “noses in, thumbs out,” no longer applies. Every board must find its new balance with management on how to increase its oversight to appropriate levels and provide expertise where needed.

  • Risk committees are insufficient. Boards need to look not only at-risk metrics but include room for anecdotal data and information that percolates up through the org
    anization. The committee must be open to all these data sources, rather than be guided only by management’s statistical reports and data.

  • Monitor emerging risks. Reporting on emerging risks is essential not to be caught flat-footed, and thus appropriate expertise is critical. A CFO that has not experienced a financial crisis can better respond with input from a “restructuring” expert on the board.

  • Timing: Immediacy is the rule. In this new world, boards and management aren’t allowed the luxury of time to make decisions. Responses have to quick, even if only “We don’t know yet, but are doing everything in our power to find out immediately. We will stay in close communication with you as we do.” Besides, direct experience is essential during a crisis, as the time element is now critical. Having resources that have real-world experience can make the difference in executing plans and knowing what is time-critical and what is deferrable.

  • Provide a firm moral center for the organization. The board can inspire the right kind of action and attitude throughout the organization, and help the organization recover from the crisis not only with its reputation intact, but more robust than ever. Laying off employees and not paying suppliers raises issues. The manner with which the organization handles this is critical for the firm’s reputation. Mishandling it may result in the inability to attract start talent in the future, or obtain exclusive deals from critical suppliers.

  • Expertise. The board is not to step into managements’ role but to: carefully question management regarding the reliability of known facts and its plans, assess and advise management on its handling of the crisis, and provide assistive feedback to management as appropriate. If the board lacks experience in dealing with the impact of the crisis, it cannot fulfill these functions. Only with experience can the board probe management to discover hubris and blind spots.

So, does your board have these qualities? If not, consider adding independent directors with the right skills and experience.

 

Copyright (c) 2020, Marc A. Borrelli

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In a crisis, effective leaders need to communicate facts, layout a plan and lift morale.

 

Communicate Facts

Before you can deliver the circumstances, you need to figure out the situation. Once that is done, you can define reality for the team and manage expectations.

  •  Figure Out the Situation. Listening to Commander Kirk Lippold speak about the attack on the USS Cole, it was evident that while his crew knew how to perform in a crisis, this was something no one had expected. It was critical to figure out the actual situation on the ship. The key to figuring out the response was to get status reports for his officers. The same applies to business when a crisis hits; it often best to assign the responsibilities of determining the actual and expected situation to key employees and then calling a subsequent meeting to update everyone. Doing this helps impose order on a chaotic situation and creates greater clarity.

  • Define Reality. Your employees are amazingly able to deal with reality even if it has a significant downside. It’s the unknown that is paralyzing. A leader’s job is to bring the facts about “exactly where we are” to their organization and teams. However, in communicating, it is best to be honest and humble. Failing to be accurate leads to a credibility gap between official reports and the truth, as was reflected in the “Five O’Clock Follies” and what is and current White House briefings.

  • Manage expectations. When a crisis hits, people want it to be over immediately! However, there is seldom a quick resolution, especially when faced with a situation like Covid-19. It falls to the leader to address the size and scope of the crisis. You don’t want to alarm people, yet do not be afraid to speak to the magnitude of the situation. If you don’ t know the full extent, be honest but present what is known. As Winston Churchill said in 1940, “You ask, what is our aim? I can answer in one word. It is victory; victory at all costs; victory in spite of all terror; victory, however long and hard the road may be, for without victory there is no survival.”

  • Provide Continual Updates. People want to know, “How we are doing.” Thus, provide regular updates to the team on where the company is, the gains that it has made, the challenges that it faces. With more knowledge, your employees will feel more comfortable and better able to help you.

  • Demonstrate Control. During a crisis, control is hard to gain, but a leader must assume it. While the leader cannot control the disaster, they can control the response. A leader brings the people and resources to bear that will deal with the crisis. While the situation may seem uncontrollable, showing leadership with a great team creates control.

 

Lay Out a Plan

  • Keep loose. Not only does this apply to your demeanor, but a leader also can never afford to lose composure, it refers to the leader’s ability to adapt rapidly. All great leaders have shown this trait. In crises, things change quickly; thus, success is the ability to change quickly in response to the environment. Your first response may not be your final response, and the leader cannot be tied to a single strategy. In the immortal words of Mike Tyson, “Everybody has a plan until they get punched in the mouth.” Leaders must absorb new information, listen carefully, and consult with the frontline experts who know what’s happening and determine the appropriate strategy. Shackleton’s great trait was adjusting his plan as things changed.

  • Focus on Strategy. Many senior leaders believe this is a time to pitch in and help with the heavy lifting. However, not necessarily, the leader’s primary role is setting the strategy. If they are engaged in the front lines, then who is setting the vision? If you, as the leader, enjoy doing that hands-on work and the adrenaline rush that comes from direct action, Sorry! That is not your job anymore.

  • Delegate. In a crisis, there are just too many decisions for the leader to make all of them. If the leader has to make all the decisions, reaction times slow, and by the time the decision has made its way up and down the organization, the environment has changed. Instead, leaders define the challenge and strategy and then delegate decisions down the organization. As David Marquet says, “take the authority for making decisions and push it down to the people with the information.”

  • Provide Perspective. Generals and battle commanders are rarely in the front line because they need to see the bigger picture of the entire battlefield and the conditions that can affect each area so resources can are deployed more effectively. Those leaders who can engage directly, but still maintain their sense of perspective, are the ones that will help the organization survive.

  • You need a new baseline. During times of crisis, people at all levels of an organization can become fixated on what we lose, bonuses, jobs, promotions, etc. Now all bets are off. Focusing too much on what people have lost prevents concentrating their energy on the “new normal.” During these times, it is not the time for “woulda, coulda, shoulda.” Letting go of what could have been is a crucial first step to being focused on success in the new environment. Shackleton continuously had to do this as conditions changed for his team.

  • Use urgency as an ally. Gravity tends to focus the mind, thus use it accelerate your efforts to analyze and act on problems instead of wandering around them. Appropriately used, urgency, can frame challenges better, get people engaged in a deeper understanding of the issues, and equip them with the responses necessary to be successful. It is a powerful unifying force.

  • Check-in routines. Now, most employees are working virtually, staying in touch with your people is more important than ever. Set a routine of 15-30-minute check-ins every day is essential crucial than ever. Since no one is commuting, this time is now available. These interactions provide opportunities to share updates, highlight the latest critical information, and identify adjustments that are required. These check-ins reinforce that we are responding together to the challenges the organization faces.

  • Celebrate all victories. Give recognition of the adaptive actions that get positive results, especially when people are adjusting on the fly. Don’t over-hype the small gains but use them to show how each gain gets the organization closer to the goal.

  • Opportunities. The Chinese word for crisis is composed of two Chinese characters signifying “danger” and “opportunity,” respectively. Create “opportunity scouts” within the organization. If the employees know the current challenges, get them involved in imagining a response and a recovery plan that creates value in the current environment. When facing essential threats, people always see more opportunities. Your team’s ideas for surviving on both the cost and revenue sides of the business are often better than what you can implement on their own.

 

Lift Morale

Great leaders see the bigger picture that more than money is at stake; that people must put themselves and their loved ones ahead of business needs?

  •  Concern for employees. Great leaders care about their employees as people first and workers second. That distinction is not noticeable during a typical workday, but it becomes critical during a crisis. It’s important to acknowledge and validate how your people feel, as they’re often operating in survival mode – a natural “fight or flight” response. But fight (anger) of flight (escape) reactions keep us from acting on our opportunities. Ignoring how your employees feel will only magnify these feelings. For employees to see that management cares about them, they need to understand the “why” behind the decisions. Thus, the CEO needs to overcommunicate when sharing information about the choices they are making. If you watched Chernobyl, you will have seen when they had to ask employees and others to volunteer for things that the employees knew would kill them, the employees would do so if they knew why. However, once the rationale was explained, the employees volunteered. As Ben Horowitz says in The Hard Thing About Hard Things, “Take care of the people, the products, and the profits — in that order.”

  • Appeal to a Common Purpose. Effective leaders convince people to want to take action–and that requires appealing to a common purpose. If you just tell them what to do, you get little buy-in. A great example was Governor Cuomo’s speech on social distancing on March 22. Angry after seeing large groups of people congregating in New York City parks and not following social distancing instructions, he said, “This is just a mistake. It’s insensitive. It’s arrogant. It’s self-destructive. It’s disrespectful to other people. It has to stop now. This is not a joke, and I am not kidding.” However, this would unlikely to get the response he was looking for, so he reframed the challenge as a once-in-a-generation opportunity to get better, stronger, and more resilient. “America is America because we overcome adversity and challenges…and that is what’s going to make this generation great,” he concluded.

  • Focus on the Greater Goal. For companies that have followed the Chicago School mantra that they exist only to make money for shareholders, a focus on the goal is unlikely to gain much traction during a crisis as most employees don’t care. However, if you defined the Company’s purpose for existing on the following four criteria:

1.     Focusing on the impact on the world and people;

2.     Is not centered on the financial gain;

3.     Is something unattainable; and

4.     Rallies employees

You are more likely to enable employees to remain committed during this period of uncertainty and fear. Also, it allows your employees to rally around the goal to help the community and others at this time. An example of such a purpose is “To refresh the world, to inspire moments of optimism and happiness, and to create value and make a difference.” [Company is identified at the bottom]. I recently heard of a CEO of a who claims that Covid-19 is Democratic Hoax to damage the President and as such has not implemented social distancing or changed behaviors at his office where everyone works in close proximity. His workers are now comping down sick. When this is all over, no one with integrity will want to work at his company. Some have argued that it is irrelevant as there will be many unemployed, so you will quickly fill job openings. However, who do you want on your team? The best employees, with integrity, and belief in your organization, or just the flotsam and jetsam of the labor market?

  • Empathy. In crises, bad things happen to good people. Some people who did everything to be safe will get sick, and some will die. Great leaders have empathy; however, they realize that going through hard times makes people stronger. Thus, they provide support and care while encouraging those people to push on. By doing this, leaders get people to invest in themselves and learn how they respond to events that contribute to the outcome. Furthermore, investment in your people during such times creates better networks, community, and belief in the organization, which makes these employees more valuable to the team when things return to normal.

  • Community engagement. Every company is part of a broader community. Employees often live in subdivisions or apartment complexes. Their children go to schools. If they get sick, they go to a hospital for care. While companies in discretionary industries are in danger during a pandemic as sales fall, they are still a crucial part of their communities. If they rise to the challenge by giving back through donations, public service videos, or contributing resources, they can prove that they are an essential part of the community. It will help them gain more loyalty as crisis recedes.

““A great leader, I think—that a great leader walks into the room and you feel bigger. You don’t think, “Wow! What a great leader.” You think, “Wow! I’m willing to say this thing. I feel more comfortable on my own skin. I’m just having ideas I haven’t had before.” A great leader makes other people better. I think that’s the fundamental difference between the charismatic, heroic image of leadership, that has been a help for us and also a hindrance for us as a human right for a long time, and the kind of leadership that we need now, the kind of leadership that the world is calling for from us now, which is not about having one person and following that one person, but having someone who can create the conditions that make us all better—make us all bigger, smarter, more creative, more moral, just better.””

— Jennifer Garvey Berger, CEO, Cultivating Leadership

Answer: Coca Cola

 

Copyright (c) 2020, Marc A. Borrelli

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