Q #181: How to provide authentic leadership during a crisis?

In this series, Bob Morris poses a key question and then responds to it with material from one or more of the business books he has reviewed for Amazon and Borders.

In Authentic Leadership and then in True North written with Bill Sims, Bill George asserts that all great leaders throughout history have had a “True North…the internal compass that guides you as a human being at your deepest level. It is your orienting point – your fixed point in a spinning world – that helps you stay on track as a leader. Your True North is based on what is most important to you, your most cherished values, your passions and motivations, the sources of satisfaction in your life. Just as a compass points toward a magnetic field, your True North pulls you toward the purpose of your leadership.”

In an article for the Wall Street Journal (March 15, 2009), George recommends seven lessons for leaders charged with leading their organizations through a crisis:

1. Leaders must face reality. Reality starts with the person in charge. Leaders need to look themselves in the mirror and recognize their role in creating the problems. Then they should gather their teams together and gain agreement about the root causes.

2. No matter how bad things are, they will get worse. Faced with bad news, many leaders cannot believe that things could really be so grim. Consequently, they try to convince the bearers of bad news that things aren’t so bad, and swift action can make problems go away. This causes leaders to undershoot the mark in terms of corrective actions. As a consequence, they wind up taking a series of steps, none of which is powerful enough to correct the downward spiral.

3. Build a mountain of cash, and get to the highest hill. In good times leaders worry more about earnings per share and revenue growth than they do about their balance sheets. In a crisis, cash is king. Forget about EPS and all those stock market measures. The question is, “Does your organization have sufficient cash to survive the most dire circumstances?” Goldman Sachs, where I serve on the board of directors, anticipated the difficult times and built up its cash reserves. When the markets got really bad, Goldman had adequate cash reserves to weather the storm.

4. Get the world off your shoulders. In a crisis, many leaders act like Atlas, carrying the weight of the world on their shoulders. They go into isolation, and think they can solve the problem themselves. In reality, leaders must have the help of all their people to devise solutions and to implement them. This means bringing people into their confidence, asking them for help and ideas, and gaining their commitment to painful corrective actions.

5. Before asking others to sacrifice, first volunteer yourself. If there are sacrifices to be made – and there will be – then the leaders should step up and make the greatest sacrifices themselves. Crises are the real tests of leaders’ True North. Everyone is watching to see what the leaders do.

6. “Never waste a good crisis.” This piece of advice comes from Benjamin Netanyahu, the next prime minister of Israel, at the panel I chaired in Davos. When things are going well, people resist major changes or try to get by with minor adaptations. A crisis provides the leader with the platform to get things done that were required anyway and offers the sense of urgency to accelerate their implementation.

7. Be aggressive in the marketplace. This may sound counter-intuitive, but a crisis offers the best opportunity to change the game in your favor, with new products or services to gain market share. Many people look at a crisis as something to get through, until they can go back to business as usual. But “business as usual” never returns because markets are irrevocably changed. The Bottom Line: In a crisis we learn who the real leaders are, and whether they have the wherewithal to stay on course of their True North.

I urge you to check out Bill George’s books as well as this Web site:

http://www.authleadership.com/

Comments, questions, requests, or suggestions? Please share them. They will be most welcome and I thank you for them. Best regards, Bob