Thursday, August 20, 2020

Survival is not a strategy: The most common mistakes organizations make about strategy

[Editor's Note: In difficult and uncertain economic times, it is easy to get distracted by the very real details of getting through the "economic day." Sometimes, the development and execution of strategy that leads to a true competitive advantage can get lost in the tactics of survival. Organizations with a focused strategy can emerge from economic (and health) downturns with distinct competitive advantages. I thought this book might be interesting for those of you whose companies might have perhaps inadvertently slipped into one of the mistakes about strategy. I hope you find it useful.               -Dave Mead, Mead Consulting Group]

Michael Porter is one of the most renowned authors on the subjects of strategy and competitive advantage. In her book, Understanding Michael Porter: The Essential Guide to Competition and Strategy, Joan Magretta distills Porter's core concepts and frameworks into a concise guide for business practitioners.

Porter discusses common strategy mistakes. Key concepts include:

Assuming you can do it better than everyone else. One of the biggest mistakes a manager can make is to assume the best results come from competing to be the best, going down the same path as everybody else and thinking that somehow you can achieve better results.  Competing to be unique is a much more effective strategy.

Confusing marketing with strategy. It's natural for strategy to arise from a focus on customers and their needs. So, in many companies, strategy is built around the value proposition, which is the demand side of the equation. But a robust strategy requires a tailored value chain - it's about the supply side as well, the unique configuration of activities that delivers value. Strategy links choices on the demand side with the unique choices about the value chain (the supply side). You can't have competitive advantage without both.

Overestimating strengths.  There's an inward-looking bias in many organizations. You might perceive customer service as a strong area. So that becomes the "strength" on which you attempt to build a strategy. But a real strength for strategy purposes has to be something the company can do better than any of its rivals. And "better" because you are performing different activities than they perform, because you've chosen a different configuration than they have.

Not having a “What we’re not going to do now” list.  The need for trade-offs is a huge barrier. Most managers hate to make trade-offs; they hate to accept limits. They'd almost always rather try to serve more customers, offer more features. This prevents them from being able to focus resources.

Misunderstanding the definition of business. Understanding your business too narrowly can leave an organization exposed to disruption from “unseen” competitors (e.g., the record business, Blockbuster video, etc.)

Trying to please everybody - The desire to delight and retain every single customer.

If you listen to every customer and do what they ask you to do, you can't have a strategy. Strategy is not about making every customer happy. When you've got your strategist's hat on, you want to decide which customers and which needs you want to meet.

The worst mistake-but the most common one - is not to have a strategy at all"

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Friday, June 26, 2020

Five possible scenarios of the economy in the future


[Editor's Note: 
Every day we get new and often conflicting messages about the Covid-19 pandemic and the economic outlook. It is very difficult for most companies to think out farther than "how to re-open" and "how to survive." However, as we have learned from previous economic downturns and disruptions, the most significant competitive advances (and retreats) come during these events and the subsequent recoveries. Thinking through the possible scenarios of the future and being prepared to adjust as they play out will be critical to future success. I hope you find this thought-provoking.  -dpm]

 Five possible scenarios of the economy in the future    

[Scenarios - in no particular order]
1. Paralysis/Survival: L-shaped recovery This describes a situation where the pandemic will persist and, similar to the Spanish Flu pandemic (1918-1920), the second wave may be worse than the first. Government and the healthcare system are overwhelmed once again by a second wave and the pandemic persists through 2021 causing very serious long term global economic consequences.

This, clearly, is the worst-case scenario. In this situation, "unexpected" and disruptive events will increase over the next two to three years, and companies (and/or economies) will react by pulling into a protective shell. The shocks include the failure to contain COVID-19 across the globe, the potential that a successful vaccine in sufficient production volumes is unavailable through 2021, and there are repeated economic shutdowns due to significant "flare-ups" of infection. Isolationism and protectionism may prevail. Unemployment remains at very high levels through 2021. Companies (could) react by trying to protect existing assets with continued layoffs, reduced R&D investment, reduced product development, and lower foreign direct investment. Consumers may compound the problem by continuing to reduce spending dramatically.

The bottom line in this scenario:A long, global recession, possible depression


 2. Slow Growth / Long recovery - The Swoosh-shaped or 
"Bathtub -shaped (__)
This scenario predicts a future where the impact of Covid-19 will persist, and the economy will take several years to recover.

This, too, is a grim scenario, though not as irredeemably dismal as the previous one. In this case, "disruptive events with moderate impact continue, and while seen as normal, they result in slow economic growth. This scenario would be marked by debt and currency problems in key world economies, though a full-blown long-term global depression is avoided. Unemployment would continue to be higher through 2021 and well into 2022, and consumer confidence would remain low. High unemployment numbers will continue for several years, taking almost a decade to return to pre-pandemic levels. Companies would learn to cope with their losses. They would make modest investments. The rebuilding of consumer confidence begins on a long, low trajectory, especially in areas such as restaurants, hospitality and travel.

The bottom line in this scenario: Life becomes hopeful but it's a long grind to full recovery. Trends such as remote work, decline in bricks & mortar retail, meal and grocery delivery, etc., are accelerated.


3. Thriving with Chaos (or Thriving with COVID-19): U-shaped recovery The Pandemic persists past initial projections placing a burden on governments around the world that struggle to handle the crisis. Public-private partnerships emerge as companies across industries partner to respond to critical needs and needed innovationExternal events will be uncertain and surprising, but companies will respond mostly in an active and opportunistic fashion.

In this scenario life is still gray, but sunlight begins to filter through the gloom in some areas. The unpredictable, disruptive events of the pandemic" would continue, but "corporate and national resolve to be successful in the face of adversity" would drive modest prosperity. While uncertainty would continue, companies take a more empathetic stance to best serve employees, customers, stakeholders. New employee and customer safety measures, new facility layouts, regular testing, social distancing, flexible scheduling, and remote work (telework) would be considered a cost of doing business. Companies would try to seize business opportunities amid the disruption and uncertainties and make increasing investments in areas that seem to be potentially profitable. The economy is slow to improve through 2020 and 2021, but then rebounds sharply.

The bottom line: Life could be better, but there's money to be made if you know where to look.

4. Growth - The V-shaped recovery  In this scenario, external events will be known and expected, and companies will respond actively and aggressively. There is no second wave of the virus, Mechanisms to combat the virus (such as vaccines developed in record time by the end of 2020 and produced in sufficient quantities) are mobilized and lead to effective prevention and treatments. A Global "Marshall Plan" is developed to vaccinate not only the United States, but also the world.

This, clearly, is the best-case scenario, one in which countries and peoples of the world recognize common goals and focus on healthcare and economic development as the route to permanent stability. The key features of this scenario would be that the recession proves short-lived through 2020, the economy begins to rebound in 2020 but improves sharply in 2021 to return to some normalcy. Consumer confidence responds in very short order as the virus recedes.

The bottom line: The COVID-19 pandemic disrupts society, but despite a slow start, is curtailed by an increasingly effective health system and government response. As the storm passes, Life's return to normalcy is swift.

5. False Optimism - Sharp Uptick followed by a long swoosh. In this scenario, as economies open up, there is a surge of pent-up demand amidst quarantine fatigue. However, as the pandemic persists past initial projections, the reality of a long grinding recovery becomes apparent. Conditions are similar to the long slow recovery outlined in scenario #2 (above).

The bottom line in this scenario: There is a false optimism that results from an early surge in the economy. Then reality sinks in and while life becomes hopeful, it's a long grind to full recovery. Trends such as remote work, decline in bricks & mortar retail, meal and grocery delivery, etc., are accelerated.

Beware trying to guess the future. Many organizations lock in on a view of the future. With so many uncertainties that would be a mistake that could result in a lack of preparedness.

If these five scenarios - or a combination of them - represent what lies ahead in the next several years, what strategies should companies put in place today to deal with them?  Clearly, though, neither these scenarios nor the strategies that follow from them will apply across the board. The scenarios will play out differently not only in different industries, but also in various regions of the country and the world. Accordingly, the strategies that companies develop to cope with these situations will need to vary to reflect these differences.

It would also be a mistake to allow the uncertainties that prevail today to put business decision making on hold. The future may be unclear, but one thing is certain: In today's circumstances, scenario planning is more than a tool. It is a weapon to combat uncertainty, and the future will belong to companies and executives that wield it well.   
      
How well is your company prepared to respond? Are you taking control of the things that you can? Are your actions strengthening your company - or weakening it? Are you building flexibility into your plans? Have you changed your approach to planning?


Thursday, May 14, 2020

Ten tips for preserving the value of your company in these uncertain times

[Editor's Note: Many business owners have spent years building value in their businesses. A number had been planning to exit in 2020 or 2021. Now, people are fearful that the value that took years to build, may erode over a few months. While this combined health and economic crisis is more complex than other economic downturns, let's look at what we have learned from other periods of uncertainty and put in place the steps that will help preserve value.   -dpm]

Fear, Uncertainty, and Doubt - These conditions can shake even the most confident business owner and CEO.
  • Fear of the unknown.
  • Uncertainty about the future
  • Doubt about the appropriate path
 Principles we learned in previous downturns:
  • Focus on business fundamentals
  • Control what you can
  • Pay attention to relationships
  • Communicate, Communicate, Communicate
  • Look for opportunities
Here are ten things to keep in mind in order to preserve value: 

1. Conserve cash- This event could have lingering effects on consumer confidence and recovery could well take several quarters.
  • Liquidate surplus finished goods inventory if applicable - turn it into cash
  • Manage receivables closely
  • Watch Cash Flow - Daily
2. Change the way you operate
    • Systematically Examine expenses
      • Not just the level, but the processes and the vendors
      • Eliminate some expenses for the next 90-180 days (especially discretionary)
    • Process mapping to determine if there are unnecessary steps, cost, or waste
    • Give your suppliers/providers the ability to offer good ideas, not just be an order taker
    • Eliminate some positions - Take the opportunity to trim the underperformers
    • Cut wages if necessary (start w/ top management)
    • Accounts Receivable - "Pre-collection" activities
    • More frequent invoicing
    • Seek extended terms from suppliers (Talk with them - don't just stretch them out) 
3. Keep your banker informed of your plans especially as circumstances change
    • Overcommunicate with your banker
    • What new communication is required - type/ frequency/ form?
    • What new reporting is required?
    • Do you understand bank and regulatory requirements and their impact on financial lending instruments?
    • How can you streamline your reporting function for timely and accurate reports?
    • How has the environment changed your relationship with your bank?
    • What policy and procedure updates are necessary to meet lender requirements?
4. Demonstrate leadership as a CEO or Business owner
    • Be visible - Communicate with employees what you know; be honest about what you don't know; Be frank, but show confidence
    • Maintain high expectations
    • Require accountability
    • Reinforce your culture
    • Control what you can 
5. Communicate with customers and suppliers
    • Tailor offerings to your customer's needs, not yours (saves $, flexible payments, simplify, lowers risk, solves problems)
    • Use this opportunity to strengthen relationships - People want to do business with someone they know and trust
    • Keep in touch with suppliers; some may be in trouble
6. Upgrade talent

7. Develop scenarios and plans for the future new normal
    • Things will not be the same. No one can accurately predict the future, so we need to anticipate and be prepared for different views of the future environment
8. Be prepared for the upturn    

9. Look for opportunities created by uncertainty - perhaps a merger or acquisition, new partnerships, etc.

10. Importance of Acting NOW
    • Most significant competitive gains occur during downturns
    • Competitors are sleeping - internally-focused
    • Look for ways to reinvigorate your company and employees
    • Get on the front side of this; Not acting will make things worse 
    • Never waste the great opportunity of a downturn
________________________ 

 We can help. Our senior consultants have helped companies successfully navigate through several economic downturns.  Contact;Dave Mead if you would like to start a conversation.

Tuesday, April 28, 2020

Restart, Then What?

Restart, Then What? 

[Editor's Note: We are all consumed by questions. It seems that every newscast and article is littered with questions...but no answers, because no one really knows. Anxiety and uncertainty abound. Some folks hope for the best; some fear the worst. It seems that asking many questions is a positive - as long as we plan to be adaptive as the future plays out. I hope you find the following article useful.        -dpm]
 
We are consumed by questions.
  • How pervasive will the Covid-19 pandemic be. Will it persist or resurge into the fall and flu season? Will it persist in 2021? Will there be definitive antigen tests to show who is resistant? When will a vaccine arrive?
  • Will my family and employees be able to stay safe and healthy?
  • How do I navigate my business through the health guidelines of social distancing, remote work? How will I need to configure the work space?
  • Could I take advantage of PPP and loan programs? How can I continue to conserve cash? Can I hold on to my key employees if they are furloughed?
 
These are questions every person and business person is asking and rightly so. Many small and lower middle market - even a number of larger - businesses are concerned with survival
 
What will the future look like? As we move through the coming weeks, we need to be looking at different views of what the future will look like. Everyone is focused on a restart. How we do that is critically important, but then what?
We wrote in 2009 that the economy was not going to "come back," because after each major recession, there are changes to behavior, expectations, and how we do business. And there were changes, regulations, etc., that impacted our business life. We adjusted. In many cases, it took several years to fully recover.
Because this pandemic has affected our health, our sense of security and safety, and our social habits - in addition to extreme damage to our economic health, it is much different than previous economic downturns. What will be the impact?
  • The recovery - will it be V-shaped, U-shaped, L-shaped .... or "Bathtub-shaped" (that is, a long U)
    • How fast will the recovery be? What will be the lingering effects?
    • How will the effects of the pandemic affect the way products and services are delivered?
    • What will our workplaces look like?
    • How will your business and your industry be changed?
      • Customers that once thought nothing about gathering at meetings, conferences, sporting events, restaurants, theatres, dealerships, etc. will now be less willing to assemble. How long will this last?
      • What will be the condition of your customers financial health, your suppliers financial health? How will it affect their spending habits?
        • Even if your products and services are B2B, what about the customers of your customers?
    • How will the sales process change?
  • With multiple trillions of liquidity into the system, what will be the impact on inflation?
What are the opportunities? Yes, there will be opportunities.
  • Opportunities to acquire companies that bring new business lines, new products.
  • Opportunities to bring in talent
  • Opportunities for new products and services that will accommodate changes in lifestyle, workstyle
 
Beware of unintentional changes to your culture. Many company cultures changed during 2008-2012 - they became "risk averse." Organizations rewarded those who were adept at cutting costs, avoiding risk, inwardly -focused.
 
In 2014, we were sitting in a client executive team meeting where the company was discussing a possible acquisition. This acquisition was a company that offered a complementary product line, had strong financials, a solid management team - and the price was reasonable. A great fit and the timing could not have been better.
One after another, the members of the executive team went around the table and each expressed doubts and reasons not to make the acquisition. The company culture had changed over the previous several years. They missed an incredible opportunity. A competitor made the acquisition and over the next several years emerged as a dominant player.
 
Need for Scenario Planning. Organizations need to be developing different scenarios of what the future might look like. We cannot predict the future - whether it be the balance of 2020, 2021, or the longer term. We need to evaluate different views of the future so that we can plan to be quick to adapt as a possible scenario unfolds.
Mitch Daniels, president of Purdue University just announced that he wants to open the university for the fall semester with a variety of scenarios and plans for doing so. Whether you agree with his logic or not, he said that we cannot afford to wait to see what happens; we need to put plans in place so that we can be prepared.
 
Hope is not a strategy. Waiting for things to pan out will leave us unprepared and behind the curve. Good leaders are planning out multiple scenarios so that their organizations can move as things evolve.
_________________________

We can help The Mead Consulting Group has been helping companies with scenario planning for many years. Prior to the 2008 downturn, it was mostly our largest clients that did scenario planning. Since the 2008 "black swan," many more of our lower middle market companies began to see the benefits of scenario planning.
We are conducting complimentary introductory meetings about scenario planning. If you would like to discuss how we might help your team, please contact Dave Mead at (303) 660-8135 or meaddp@meadconsultinggroup.com

Stay safe and healthy!
Best regards,
Dave Mead 

Monday, April 27, 2020

Getting the Restart Right: How to Lead When Nobody Has a Map



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.
Deng’s modest, reserved approach isn’t one most business leaders prize, although it compares favorably to other leaders who’ve navigated uncertain times. During the pandemic, many leaders who share those traits also became trusted figures.
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 caf├ęs 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).