In Chinese the character for the word crisis is made up of the symbol for danger and opportunity. This is the mother of all crises for our industry and therefore has the most potential opportunity – the danger, well there’s plenty of that too. One of the biggest dangers I see right now is survivor confidence – which is the belief that because you are left standing your model/structure/plan is validated. Because you are alive you believe that Darwin has chosen you to be the future and you don’t have to do anything else – just coast along as you are the chosen one.
I am writing this to leaders of companies of all sizes but also to companies of one, especially the 100% commission originator. I see banks that didn’t truly play the game, jumping in with two feet and a blindfold, thinking because they weren’t affected before they can’t be affected now. They think by avoiding certain people from certain companies selling certain products that they will be safe, but they can’t see that their models are high risk money losers even selling the vanilla they have on the menu today. I see banks unable to control expansion, burdened with unsaleable loans, ambushed by buybacks, and left with overhead from unsuccessful acquisitions. Having an open window at the Fed doesn’t make you smart or rich but it does cushion the blows.
Darwin’s lesson was not survival but adaptation, and adaptation is evolution. If you have made it this far you should look back to see why. Was it great planning, great decisions, or good luck? Likely it was a little bit of all three but at least a lot of two. The Crisis has moved from a free falling crisis of a credit vacuum to an evolution of whom the government decides should be in the business and what characteristics they should have.
There are certain changes you have to be prepared for as you continue on your adaptation. There are not worth fighting or denying. There are many results that can occur from these changes and the choices you make today; it’s truly up to you to position your entity and yourself in the right position to take advantage of the change.
Many of you know I’m a huge fan of Bill George, ex-CEO of Medtronic, now at HBS and author of True North and Authentic Leadership, and now, 7 Lessons for Leading in Crisis. His view is clear, concise and realistic. – and spot on. In my next few blogs Ill be weaving in some of his lessons and ideas. His first lesson is to Face Reality – starting with yourself and then moving on to your firm. His second lesson is to Not Be Atlas, share the burden and the view. His third lesson is to Dig Deep for the Root Cause, avoid the temptation to jump to quick fix or leave the steering wheel and jump under the hood of a moving car.
His fourth lesson is to Get Ready for the Long Haul. Those who have survived this far were able to prepare for the worse. They imagined many but surely not all of the scary scenarios that have played out since. During these times, Cash is King. Low debt and liquidity trump all options for all of us personally and our businesses.
But how do you know you are making the right decisions? How do you know you don’t have a blind spot in your view or a soft spot in your heart? First you have to be clear in writing as to your current status and a plan of action. Then you have to share it with key personnel, a board, an advisory board, or consultants. As an individual it’s those you trust to be honest with you and who know you well as well as a business coach. You need to clearly be forthright with your issues and concerns and be willing to make yourself vulnerable to criticism. It’s not easy but crucial.
In 7 Lessons Bill George quotes a story from Andy Grove, one of the founders of Intel. Andy was describing a difficult time in Intel’s history when he and Gordon Moore, CEO at the time, couldn’t agree on a direction for the firm. Their team argued and bickered as they lost millions and lost their bearings. Andy asked Gordon “After the board kicks us out, what do you think a new CEO will do?” Gordon quickly replied’ “He would get us out of memory chips.” Andy said “Then why shouldn’t we walk out the door, come back and make that decision ourselves?”
It wasn’t easy, and it took Intel another year to accomplish it. That hard decision allowed them to concentrate on that which they had a distinct advantage, microprocessors, and dominate for the next two decades. Grove later reflected on why its easier for outsiders to make the tough decisions:
“People who have no emotional stake in a decision can see what needs to be done sooner. CEO s from the outside are no better managers or leaders than the people they are replacing. They have one advantage, but it may be crucial: the new managers come unencumbered by such emotional involvement and therefore are capable of applying an impersonal logic to the situation. They can see things much more objectively than their peers did.”
Are you truly able to see yourself and your business for what it is and what it can be? Odds are that if you are resistant to doing it, you will need input from a variety of sources. Listen to it all. Look for common themes and observations. Make the tough decisions now if you haven’t already so you can position yourself best to allow adaptation to take place correctly.