It’s an understatement to say that the current business climate is a challenging one. Tom Brown weighed the insights offered at London Business School’s Global Leadership Summit and offers the best thoughts on what it takes to lead organizations right now.
You think of yourself as a bold business leader. Others have always agreed. But something’s changed. Is it time for you to change as well? When the economy is sound, financing is available for expansion, and opportunities abound for growth both at home and abroad, being a successful leader is far different from leading in an economy that seems to be in free fall. For example, a capacity for, even love of, risk taking is a good quality in a growth cycle. It will help you meet board and shareholder expectations for expansion and growth.
In a downturn, “Strong, inspired leadership is more important than ever,” says John Connolly, Global Chairman of Deloitte. He adds, “What’s different now is that you can’t assume anything.” Instead of taking bold actions in the hope of growing your company rapidly, deciding where to site that new plant and whom to hire or expanding into new regions or even countries, you may need to husband profits instead of spending them, decide what to do to reduce expenses, target who’s to be made redundant and make quick decisions on how best to pull back. You suddenly find that your best and most reliable suppliers are in trouble, your credit line has shrunk when a payroll is due, and your customers are having trouble paying on time or are no longer placing orders regularly because they themselves are facing severe problems. These are not problems you are used to dealing with and it all feels overwhelming. And the board and shareholders are letting you know how unhappy they are. You start to wonder if you are a business leader at all.
Before you let yourself be overwhelmed, take a look at history: business cycles have happened in the past, and many companies emerge stronger and better than ever in the next upswing. In fact, Jeff Immelt, Chairman and CEO of GE, says, “There are always times like these. You’re going to go through an economic cycle every 10 years.” John Connolly adds, “Now is the time to make decisions to step into the future.” As a leader, this is the time to be innovative and transformative, not a time to fall into despondency because, if you do, you will find it hard to emerge from the current downturn with any hope of future growth. There are ways to hold on and make it through, to transform your business in multiple ways while doing so, ensuring that you and your organization are ready to move quickly when the upturn begins.