I’ve written before about the extraordinary premium put on leadership in this once-in-a-career period we’re passing through, but because of its importance it’s none too soon to recur to it. What can be said that hasn’t already been said?
Bill George, a Professor of Management Practice at Harvard Business School and the former chairman and CEO of Medtronic (a medical device maker) has recently published 7 Lessons for Leading in Crisis, and since it’s not the typical content-free platitudinous essay on this topic, let’s take a look and see how his thoughts might translate to BigLaw. Let’s start with the 35,000′ overview and take it from there.
According to George, here are the 7 principles:
- Face reality, starting with yourself.
- Don’t be Atlas; get the world off your shoulders.
- Dig deep for the root cause.
- Get ready for the long haul.
- Never waste a good crisis.
- You’re in the spotlight: follow your True North.
- Go on offense: focus on winning now.
He readily concedes that it’s very tough to be (not just to appear) optimistic in the midst of a crisis, particularly one of the uncharted depth and severity of this one: But that’s precisely what could distinguish you. The flip side of this is to avoid falling into the (tempting, and perhaps readily thrust-upon-you by panicky partners) trap of yanking at any and all readily available "quick fix" levers. On the same note, George opines that the current financial crisis was largely caused by what he calls short-termism, CEOs and other leaders who ignored both their own internal "True North" and that of their organization. The opportunity now—perhaps as never before in your career—is to think deliberately and strategically about what the future landscape might hold for your firm.
This is precisely why you need to avoid the "do something quick" mentality that undermines your colleagues’ and clients’ belief in how steadfastly you will adhere to your core principles in the midst of this storm. Two further observations on that:
- You have been, are, and will be in the spotlight as never before. Truly, everyone is looking to see what you say, how you behave, and what you do. They will pick up on signs of reaching hastily or desperately with tremendous acuity and their memory of the reflex you chose to pursue in the crisis will be long.
- Pressure—perhaps intense pressure—will be brought to bear for you to seem as though you are boldly confronting things and that you are demonstrating in the moment that you are capable and deserving of your leadership mantle. There’s only one thing wrong with this: This is not about you. It’s about the firm, the legacy that previous generations have bequeathed to you and the legacy you will be passing on to the next generation. To repeat: This is not about your "saving face."
And there’s a third, critical, related point here:
- Don’t be afraid to admit that you don’t know what you don’t know.
- Be candid and forthcoming with all of your various constituencies. In many ways, they don’t expect you to know it all and you will tarnish your credibility if you project otherwise to them.
So if you don’t know everything, what do you do?
Here’s what George has to say about this dilemma:
One of the great myths of leadership in recent years is that leaders have to appear strong and invulnerable to mistakes and pressures. All of us without exception make mistakes and will capitulate under enough pressure. The key is being open with others, taking them into your confidence, admitting your mistakes, and looking to them for advice and support. Rarely does anyone turn down a leader who genuinely asks for help.
Yet we’re exposed regularly by the media to the stereotype of the flawless leader who always has an answer and is never left questioning a decision. While most leaders know this is a fantasy, they still struggle with admitting their own vulnerability when a situation goes awry and crisis strikes. It’s as if doing so is tantamount to admitting failure as a leader.
What are you supposed to do to avoid this?
- Express humility.
- Reveal (selective) vulnerabilities.
- Cultivate an air of openness.
- Encourage candor by embracing it yourself.
He also laments what he calls the "noticeable void today of principle-driven leadership in business and society." If this strikes you as coming a bit out of left field, the line starts to the right. And yet isn’t it what we’ve seen at the root of so many of the behavior syndromes that led to the Great Credit Meltdown? In this connection, perhaps no quote is more memorable, or infamous, than that of former Citigroup CEO Chuck Prince who remarked to the WSJ a few short months before the gale winds began blowing that "As long as the music’s playing, you have to keep dancing. And we’re still dancing."
My reaction—perhaps yours—was he said what?
Here’s the leader of one of the (notoriously) too-big-to-fail global financial behemoths announcing to the world that he has set his organization full-speed-ahead towards the iceberg, and he’s trusting that he can pull the ship safely off course at the last second. (Precisely, not to belabor a point, just as the entire rest of the financial world is attempting to do exactly the same thing, leading to the great liquidity freeze which was an essential part of the core of this crisis.) George’s prescription could not be simpler to state or, perhaps, more challenging in the heat of the profit-maximizing moment to live by:
The leaders who successfully navigate their organizations through crises are ones who focused on their leadership principles and stayed true to their values. Only by practicing a clear set of principles can we ensure that the recovery is long-lasting and that future business is sustainable. As a society, we need to get back to practicing values-centered leadership. That’s the only way we can restore integrity to leadership.
Why is this so difficult? Don’t we all profess—vociferously—to live by our principles and march to our values?
Well, yes.
I just finished reading John Kay’s The Long and the Short of It (Erasmus Press: 2009 [so far published only in the UK]), where he trenchantly observes ("Contrarian Thinking," p. 192, emphasis supplied):
Modern financial markets are dominated by the power of conventional thinking. City [of London] folk share superficial views with each other and project current trends too far and too fast, Social and commercial pressures, reinforced by ubiquitous benchmarking, encourage professional fund managers to act on these widely shared opinions regardless of private reservations.
What has this to do with Chuck Prince and with our global financial system’s collective conscious and enthusiastic decision to drive over a cliff?
To point out the seemingly irresistible pressure during the boom to lard up balance sheets ever more heavily with RMBs’s, CMO’s, CDO’s, credit default swaps, and other "weapons of financial mass destruction" (Warren Buffett, of course) even if individual fund managers could see the tsunami on the horizon. It is famously better for a banker to go broke conventionally than to prosper unconventionally, and so it appeared to be with our callow and feckless Mr. Prince, quondam Master of the Universe.
I am reminded of nothing so much as the pitiful rats in behavioral psychiatrists’ cages, pressing the cocaine lever until they die of exhaustion and malnutrion: "But it feels so good, how can I stop?"
But back to what you don’t know. What to do about that? This is, to my mind, the most important part of the piece. George’s recommendation is simple and direct::
:
- An internal management team drawn from a highly selective group; and
- An objective external counselor.
Can you afford to pull these highly valuable internal advisers from their day to day work? Here’s George’s answer (emphasis his):
Keep key people focused on winning. During a crisis there’s a risk that your entire organization gets so focused on keeping the ship afloat that no one is planning ahead. Therefore, you should assign a small team of highly talented people to devise the post-crisis strategy. It may seem risky to pull key people out of crisis management to plan for the future, but this is required to win. How will you reshape your organization’s strategy to emerge from the crisis as the winner?
And the point
To rise above the cacophony, the sound and fury, of the crisis, and to wisely—and in an uncompromisingly principled way—guide the organization to a brighter outcome on the other side:
For seasoned leaders, the most applicable are Lessons #5 and #7, "Never waste a good crisis" and "Go on offense: focus on winning now." So often the go-to strategy for veteran leaders when a crisis strikes is to buckle down and ride out the storm. They don’t make any major changes. Instead, they wait until the climate is right to resume normal operations.
Crises offer rare opportunities to make major changes in an organization because they lessen the resistance that exists in good times. Leaders should move aggressively to take actions necessary to strengthen their organizations as they emerge from the crisis. Coming out of a crisis, the market never looks the same as it did going in. Leaders should see this as an opportunity to reshape the market to play to their strengths, while shedding their weaknesses. While others are licking their wounds, successful companies focus on winning now. These are often difficult lessons for veteran leaders to heed.
For many leaders, going on offense when they are in the depth of a crisis is most counter-intuitive, yet it is the winning strategy.
Sound impossible?
Yes, it is challenging. Perhaps your challenge of a lifetime. But you know the right things to do:
- Focus more than ever on what your clients really want; not just what your partners feel comfortable providing.
- Shed weaknesses.
- Execute rigorously.
And above all, don’t try doing this alone.
Engage your carefully selected key internal advisers and even more carefully selected strategic external advisers. Choose them because they don’t come to you (or life, for that matter) with canned, pre-packaged approaches, but because they are honest, probing, and subtle thinkers who are not afraid to admit they may start their inquiries as agnostics. (If they won’t admit that, in fact, move on.) And you can always look at the bright side: You’ll develop your leadership skills faster than you ever dreamed possible.
