When the Economic Weather Gets Stormy: Leadership Starts With You
Expert Advice by Julia Fabris McBride, Chief Leadership Development Officer Kansas Leadership Center, and Damon Young, Chief Business Officer Kansas Leadership Center
Like thoughtful entrepreneurs and executives worldwide, Topeka business owners recognize that turbulent times call for creative approaches to leadership. Record-breaking inflation, social unrest, and a global pandemic that just won’t quit have forced even the most stable companies to reevaluate. Perhaps you find yourself wondering if the-way- we’ve-always-done-it is strong enough shelter from the economic storms of the early 2020s.
Decisions you make now mean everything for the future of your employees, your company and even your community. Choose well and your company thrives. Fail to recognize that the moment calls for hard choices and a new approach to leadership and you risk your business collapsing or withering away, one customer and one unrenewed contract at a time.
GUIDANCE AND ADVICE FROM RECENT HISTORY
Early in the Covid-19 pandemic, the Kansas Leadership Center (a Wichita-based training and engagement center with a global reach) sought wisdom from history. We knew we’d be able to serve our corporate partners more effectively today if we understood how the most successful businesses navigated the 2008 global financial meltdown.
Why did some companies thrive amidst massive change and forced adaptation?
The results of our research pinpointed best practices we now use in coaching executives and teams as they seek to exercise good leadership, make wise choices, and increase both reach and revenue during tough economic times. What we learned may help you entertain new ideas and more possibilities for leadership.
RETRENCH AND INVEST
First and most intriguing, companies that thrived through the 2008 crisis both retrenched and invested. They acknowledged, understood, and accepted necessary losses. They made strategic cuts and focused scarce resources where they were needed most. But unlike companies that failed or barely survived the crisis, the successful companies didn’t just hunker down. Even during an economic crisis, they invested in new ways forward.
People at those companies knew they needed to let go of some things so they could lean into others. At successful 2008 businesses, those in top jobs and supervisory positions made difficult decisions that may be similar to those you’ve been called upon to make in response to inflation, supply-chain issues, or pandemic-related human resource challenges. The businesses that thrived during the 2008 crisis postponed some projects, went back to basics, and assessed exposure to risk.
But even as they limited risk in some areas they increased it in others, prioritizing innovation and investing strategically in research and development, training, and marketing. While it may seem counterintuitive, cutting costs in some areas while investing in others appears to be the path to success during turbulent times. Companies that combine retrenchment and investment strategies are more likely to thrive during an economic crisis.
PREPARING FOR THE STORM
In addition to balancing retrenchment and investment, companies that weathered the 2008 economic storm were prepared in three important ways. Even if you are still worried about this crisis, it’s never too soon to start preparing for the next one. Consider which of these lessons might merit attention from your company.
Companies that prioritize relationships are more resilient during a crisis.
The most successful companies in 2008 had an existing track record of supporting employee rights and safety, consciously committing to a diverse workforce, and consistently sharing visions, resources, and information across their organization.
The strongest companies are those with a culture of honest diagnosis.
Our research shows that businesses that thoroughly understand themselves and their environment are more able to thrive during difficult times. By examining areas of vulnerability to a crisis and exploring the broad range of perceptions about your business, you set the company up to weather future storms.
When subunits or subsidiaries are allowed to play by their own rules the company outperforms those who insisted on uniformity.
In 2008 the most successful multi-nationals empowered local units to make important decisions, do their own R&D and develop new products to meet the needs of their environments. If you work for a large global company, what can you do now to encourage those higher up to loosen control and set the whole organization up to thrive?
WEATHERING THE STORM DEMANDS A NEW APPROACH TO LEADERSHIP
There is no quick way out of the current economic storm. No matter what business you are in, big or small, locally owned, or multi-national; no matter who your customers, or what service or product you deliver, one thing is sure: the challenges you face are complex and daunting. They require you to think beyond the old, top-down model of leadership. No one person can meet today’s overlapping crises on their own. We need everyone doing their part.
Your business will more effectively navigate change and eliminate barriers to success when employees at all levels embraces these five leadership principles:
Leadership is an activity, not a position.
Leadership and authority are two different things. Leadership is mobilizing others to solve their most important challenges. Authority is more like management. Having good people in authority positions is absolutely necessary, but insufficient to weather the storm.
Anyone can lead, anytime, anywhere.
When it comes to our toughest challenges, everyone has a part to play. Lots of people need to contribute time and energy. Companies need everyone’s ideas; everyone thinking beyond the status-quo to identify and implement strategies for success during turbulent times.
Leadership starts with you and must engage others.
Some things an expert can fix, or the boss can order done. But as a culture, we’ve fallen into bad habits. Either we horde too much power at the top or (if we hold jobs in middle-management or the front lines of a business) we let ourselves off the hook, waiting for others to lead. Tough challenges require everyone to own their piece of the solution.
Leadership is risky.
As you look for ways to balance retrenchment and investment, be sure to acknowledge the risks involved. Encourage everyone to pause regularly, reflect on the situation or challenge in front of them, ask good questions, and test the waters with low-risk action steps before going all in with a big, bold investment idea.
Leadership is about our toughest challenges.
Boldly articulate your aspirations. Make the necessary hard decisions. Encourage people to keep their eyes on the prize. Remind your people that you are navigating rough weather together.
The economic storms of the early 2020s are real and could be dangerous. We have not yet made it safely to the other side. But with a combination of wisdom born of research and experience, and an inclusive, experimental approach to leadership there are clear skies ahead.
To download and read KLC’s research report, “WEATHERING THE STORM: Leadership Lessons from a Global Financial Crisis,” visit KansasLeadershipCenter.org.
