This article in Saturday's Wall Street Journal has some interesting insight for leaders trying to negotiate the "new normal."
Getting the Restart
Right: How to Lead When Nobody Has a Map
After
a sprint of crisis management, the real leadership test is what comes next.
Returning to the familiar would be a mistake.
By Sam
Walker
Updated
April 25, 2020 12:46 am ET
Wall Street
Journal, Saturday, April 25, 2020
For business
leaders, the coronavirus pandemic has been a baptism in crisis management; an
exercise in making gut-wrenching choices, staying calm, projecting confidence
and providing comfort. Deep down, however, we all know that the real leadership
test is yet to come.
In
addition to the staggering human toll, this crisis has upended everything we
thought we knew about finance and the global economy and exposed glaring
operational weaknesses across business. Early predictions of a “V” shaped
recovery have softened to a “U,” or possibly an “L” if we’re not careful.
When
the Great Restart begins, many leaders will fall back on an idea once espoused
by Machiavelli, who wrote: “The great majority of mankind are satisfied with
appearances, as though they were realities.” They will try to reduce the
anxiety in the air by restoring familiar routines, procedures and traditions.
The problem is that business, as we knew it, cannot be recovered. It will need
to be reinvented.
Before
the pandemic, every company had problems. Many of them were negligible, so we
lived with them. Whether it’s the robustness of the supply chain, the culture
of meetings or the criteria we use to hire and promote, everything’s on the
table now. The value may be difficult to extract, but there has never been a
better opportunity to create positive, productive and lasting change.
Very
few modern leaders have ever successfully navigated something like this. There
is, however, one very useful example. And it’s not one you might expect.
The
first indication of what Deng Xiaoping had in mind for China came in April
1974, when he flew to New York for a special session of the U.N. General
Assembly.
When
Deng Xiaoping, center, visited New York for a U.N. meeting in 1974, he made a
special outing to Wall Street. He was already working on a plan that would
redefine his country.
At the
time, Mao Zedong was still in power and his Cultural Revolution—a brutal,
top-down, ideologically driven reform campaign—had left the economy in
shambles. Deng would not be formally installed as China’s paramount leader for
another four years, but he was already working on a plan.
On
April 14, Deng’s handlers booked a limousine to take him sightseeing. When they
asked the 69-year-old Communist what New York landmarks he’d like to see, he
had only one destination in mind.
“Wall
Street,” he said.
Deng’s
pilgrimage to the seat of American financial power didn’t come to light until a
Harvard professor, Ezra Vogel, learned of it from Deng’s interpreter. In
retrospect, however, it made perfect sense.
In the years that followed, Deng began a long, methodical
program of free-market reforms that overturned decades of socialist dogma. In
time, the move turned China into an economic power and helped millions lift
themselves out of poverty. Against all odds, Deng reinvented the way China does
business. To do so, however, he had to redefine China.
It may seem incongruous, given Beijing’s initial response to the coronavirus, to
look to China for leadership guidance. But if you look closely, Deng Xiaoping
has a lot in common with other leaders and executives who have overseen
successful reinventions.
Added
together, they offer an interesting playbook for the present.
Substance Over Style
Deng
Xiaoping was a chunky man with melancholy eyes who stood 5 feet tall, smoked
incessantly and spoke Mandarin with a heavy Sichuan accent. Unlike the
charismatic Mao, he was easy to underestimate.
When
Henry Kissinger met Deng for the first time in 1974, he found him “acerbic” and
somewhat lacking in self-assurance and diplomatic refinement. (He later
admitted he’d been wrong).
Deng made no attempt to spellbind people. In his 2011 book, “Deng Xiaoping and the
Transformation of China,” Dr. Vogel noted that Deng didn’t talk
very much. Instead of focusing on appearances, Deng perfected the subtler arts
of leadership. In person, he was famously direct and blunt, but always engaged
intensely and listened closely.
In the wake of the pandemic everyone, including leaders, will
have work through grief and trauma without letting it affect their performance.
Marc Andreessen, co-founder of the venture-capital firm Andreessen
Horowitz, once wrote that the
most difficult skill he had to learn as a chief executive “was the ability to
manage my own psychology.”
Under
Mao’s regime, Deng had been “purged” on occasion, but always made his way back.
He trained himself to never show anger or frustration. He wouldn’t hesitate to
remove people from power but he wasn't vindictive.
In his
2001 book “Good to Great,” Jim Collins found that most executives who led
super-growth companies were, much like Deng, quiet, reserved and self-effacing.
They possessed “indomitable will” but directed their ambition toward the
organization and its goals, rather than themselves.
The
lesson seems to be this: In moments of radical uncertainty, nobody cares about
your God-given eloquence and magnetism. Your leadership is a function of how
you behave. And behavior can be modified.
Revolution, Gradually
Deng
knew full well that returning to the status quo was not an option. But he also
understood that in an upended world, meaningful progress comes haltingly.
Rather
than opening China’s markets by decree, Deng moved only as fast as practical
and political realities allowed. He gradually gave local managers more freedom
and encouraged indirect investments in light manufacturing. He didn’t dwell on
setbacks or focus too much on the way things got done. “It doesn’t matter
whether a cat is black or white,” he once said, “as long as it catches mice.”
When
Hubert Joly took over as CEO of Best Buy in 2012, he faced a monumental
turnaround challenge. There were scores of urgent planning decisions to make
that might take months to fully judge. To limit paralysis by analysis, he
decided to avoid launching big initiatives and begin by making lots of small
plans and decisions that could easily be undone.
Hubert
Joly faced a monumental challenge at Best Buy. He began by making lots of small
plans.
“Instead
of making some plan for the next six months,” he told an audience in 2018,
“we’d get together to plan a week’s worth of work.” If his team wasn’t
satisfied with its progress by the following week, they changed course.
Mr.
Joly once likened his strategy to riding a bike for the first time. You don’t
want to go too fast, but it’s a lot easier to make course corrections once
you’re moving.
Pandemic
or no pandemic, most business leaders are wired to take action. They assume
that dramatic challenges demand equally dramatic remedies.
A
better approach may be to think ambitiously but advance patiently.
Firing Snoopy
When Steven Kandarian became CEO of MetLife Inc., the company was bogged down by ultralow
interest rates. Mr. Kandarian believed that a federal regulatory panel formed
in the wake of the 2008 financial crisis might move to impose strict new
requirements that could force him to break up the company.
So he beat
them to the punch.
Mr.
Kandarian made a “difficult” and “emotional” decision to spin off the bulk of
MetLife’s U.S. life-insurance business, a unit that dated back to 1868. “There
was a lot of attachment to that business in our company,” he said.
Then, MetLife made another painful decision. It decided to fire Snoopy, the
company’s beloved longtime marketing mascot. In a statement, the company said
Snoopy had served his purpose, but was no longer necessary since the company
would no longer be selling much to consumers.
Severing
these ties didn’t spook investors or customers. MetLife’s share price rose
nearly 25% in two months, and net income more than tripled the following year.
As
MetLife’s CEO Steven Kandarian made the difficult decision to spin off the
company’s storied life-insurance business.
Deng
Xiaoping wasn’t afraid to break sentimental attachments, either. He believed
that Confucius, the highly influential conservative philosopher, had handcuffed
China’s thinking and progress for 2,000 years. He quickly repudiated the
Cultural Revolution and in 1982, described Mao as “seven parts good, three
parts bad.”
In a
time like the present, when the past has failed us, leaders don’t have the
luxury to cling to sentiment. You can’t move forward unless you’re willing to
break strong attachments to the past.
The Churchill Method
History has shown that periods of turbulence are sometimes necessary. But the leader who really
matters is the one who comes next. Deng couldn’t have reformed China if Mao
hadn’t broken the economy.
The
tricky part for these leaders is figuring out how to motivate people.
In his new book, “The Splendid and the Vile,”
Erik Larson describes how Winston Churchill quickly changed British public
opinion about the looming prospect of war with Germany. His rhetorical strategy
wasn’t complicated. He simply spoke hard truths, then ended on a note of
optimism.
In May 1995, Bill Gates sent a long, impassioned memo to Microsoft employees,
declaring an end to the company’s primary focus on software. “The Internet is a
tidal wave,” he wrote. “It changes
the rules.”
In
1995, Bill Gates sent a sobering memo to Microsoft employees.
The
internet had to be elevated to “the highest level of importance,” he wrote, and
every facet of Microsoft’s business needed to be rethought.
At the
end of this sobering message, however, he inserted a Churchillian note,
describing the shift as an incredible opportunity. “We enter this new era with
some considerable strengths,” he wrote, that “position us very well to lead.”
Deng
was also blunt about China’s challenges. He urged the Chinese people to “seek
truth from facts.” But he also gave them hope by promising them a better
future. “Socialism does not mean shared poverty,” he once said.
Most
historians agree that Deng introduced relatively few new ideas. He tried to set
a general course and create the right conditions for innovation, but he allowed
others to work out the details. If local managers came up with promising
innovations, he rewarded their initiative by expanding them. He knew that a
search party of thousands beats a search party of one.
As
business leaders prepare their employees for the possibility of more lockdowns,
more layoffs and many abrupt course corrections, they shouldn’t sugarcoat the
size of the challenge. But they also need to remind them of the strengths
they’ve already shown, empower them to act, and above all, show some
enthusiasm.
This
crisis, like any crisis, is a once-in-a-lifetime opportunity to make
significant, lasting changes.
Setting the Compass
In
2008, Howard Schulz returned as Starbucks CEO. He’d grown concerned that the
company had lost the “essential magic” that had made its cafés so popular. His
agenda turned heavily on restoring the “emotional attachment” with customers
and making stores feel like the “heart” of a neighborhood.
As the global financial crisis deepened and the company posted a
53% annual decline in net income, Mr. Schulz doubled down on those
values. Starbucks retrained staff, opened forums where employees could share
ideas, added music to stores, poured into social media and donated money to
social causes.
The
following year, this purveyor of $6 lattes saw its net income grow 21%. By
2012, it had more than tripled to $1.4 billion.
In this
phase of the pandemic, people are still questioning everything. In light of
this, any organization’s mission statement might seem like a disposable relic.
But when the real work of rebuilding begins, people need something to believe.
The Great Restart
At some point, millions of rattled employees will return to work and begin adapting to the
new realities of temperature checks, plexiglass shields, disposable desk pads,
staggered shifts and devices that buzz when people get too close.
Some
will thrive. Others will grow demoralized.
Comrade
Xiaoping who died in 1997 never bothered to write a memoir, but if he were
alive, he might advise leaders in this moment to think boldly but be patient.
On a recent podcast, IBM’s former
CEO Ginni Rometty said the pandemic has reinforced “the value of adaptability.”
In the future, she added, the most important quality any worker can possess may
be “the propensity to learn.”
I’d
argue that this also applies to leaders, especially now.
—Mr. Walker, a former reporter and editor at
The Wall Street Journal, is the author of “The Captain Class: A New Theory of
Leadership” (Random House).
