Leadership in a Time of Crisis

Leadership is the kind of subject that invariably rises to the top in a time of crisis.  Otherwise, it is one of those topics that companies talk a lot about but otherwise don't feel the need to pay much serious attention to.  When skies are blue, the business can usually cruise along quite nicely with executives who are likely top operational managers but may or may not also have good leadership attributes.

Think about how executives typically reach senior management positions?  The key responsibilities of middle management are to deliver against their operational and functional commitments.  Those who perform well in their jobs will generally be promoted to positions of higher responsibility.  The selection process will ensure that they have very good operational skills and have experience in managing different kinds of functions in the organization - finance, sales, customer service, HR, manufacturing, logistics - or all of them in the case of good general managers.

Managing a large global organization is very tough and getting tougher given our unpredictable, fast changing, intensely competitive market environment.  Being a successful manager in such an environment is truly difficult:  you have to constantly improve your products and services to keep up with fast changing technologies and markets; you have to work hard to retain existing customers and attract new ones regardless of how ferocious the competition is; and you must achieve good financial results quarter after quarter, lest  you disappoint shareholders and financial analysts, who will then start asking for your head. 

But, in highly disruptive times, let alone in a time of crisis, being an excellent manager is not enough.  Presumably the company is in crisis because the new disruptive environment is so different from everything that came before.  The tried-and-true management disciplines are no longer working.  Something else, over and above excellent management is required, namely leadership.

At a public lecture at MIT last March, former IBM Chairman and CEO Lou Gerstner succinctly articulated the difference between good management and good leadership:  Management is about business results and processes;  Leadership is about people and organizational culture.

The reason companies are often not able to turn themselves around and survive a serious crisis is not because they don't know what to do, but because the culture of the institution is not able to embrace the needed changes.  What they lack is the leadership that through simple words, hard work and sheer passion is able to generate the urgency needed to mobilize people, as well as the sense of confidence needed to attack and solve the complex problems the organization is facing.

Management skills tend to be hard or quantitative in nature.  Business and management schools, as well as engineering schools to some extent, do a fairly good job in teaching such concrete skills - technology, analysis, modeling, finance, logistics, marketing and so on.

Leadership skills, on the other hand, are soft, that is, people-oriented in nature - human capital, market strategy, knowledge, innovation, culture.  Some might wonder whether such leadership skills can be taught at all.  Perhaps these are skills that you have to be born with. 

I believe that like skills in so many other areas - in sports, music or math, - leadership will come more naturally to some people than others.  But just about everyone can improve their talents if they work hard at it and learn from their experiences, as well as the experiences of others.  I certainly hope so, given that teaching leadership skills is one of my priorities at this point in my life.

What are the some of the key attributes of good leaders?  Let me briefly comment on three such attributes that I have observed in good leaders over the years.

Modesty and Humility

To better appreciate why modesty and humility are critical attributes of good leaders, consider their opposite qualities:  arrogance, pride and hubris.  Hubris is a particularly appropriate term, first used in ancient Greece to describe the overconfident pride and arrogance that gets people, especially the powerful and rich in trouble.  The word was frequently used to describe the actions of heroes in Greek tragedy whose disregard of the gods and their laws resulted in their downfall.

Human nature has not changed all that much in the intervening centuries.  It is nearly impossible to find people, - especially those whose accomplishments have helped them achieve positions of power, success and wealth - who do not exhibit feelings of arrogance and pride to some degree.  But to be a good leader, one has to truly fight hard not to let those feelings take over.  Otherwise, they will lead to a distorted view of reality.  They might even lead to a disregard of societal laws and norms, much as tragic heroes disregarded the laws of the gods.

Good leaders must have their feet firmly planted on the ground.  They must be unpretentious.  They must be fully aware that they are no better than anyone else, that luck as well as talent played a role in their achievements, and, in particular, that they are not immune from trouble.  You need a fair degree of humility to be able to both enjoy your accomplishments, but be ever watchful for the troubles that will inevitably lurk ahead.  You need to be very good at effectively managing the business in the present, as well as anticipating potential problems in the future.  You must be ready for whatever that future might bring.

Former Intel Chairman and CEO Andy Grove offers valuable cautionary words in his aptly titled book, "Only the Paranoid Survive"

". . . when it comes to business, I believe in the value of paranoia.  Business success contains the seeds of its own destruction.  The more successful you are, the more people want a chunk of your business and then another chunk and then another until there is nothing left.  I believe that the prime responsibility of a manager is to guard constantly against other people's attacks and to inculcate this guardian attitude in the people under his or her management."  

An Open Mind 

An open mind, that is ready to embrace whatever changes the new disruptive environment brings, is an essential attribute of good leaders.   In "Who Says Elephants Can't Dance?: Inside IBM's Historic Turnaround", Lou Gerstner wrote about IBM's near-death experience:

"… all the assets that the company needed to succeed were in place.  But in every case -  hardware, technology, software, even services - all these capabilities were part of a business model that had fallen wildly out of step with marketplace realities.  There is no arguing that the System/360 mainframe business model was brilliant and correct when it was conceived some forty years ago.  But by the late 1980s it had become fatally outmoded.  It had failed to adapt as customers, technology and competitors changed."

The same culture that once made an institution great often becomes the key impediment to its ability to adapt to the new market realities.  A successful company, - especially the senior managers who rose up the ranks by building it into a great institution over the years, - can become rigid, almost paralyzed when facing an environment radically different from the one they grew up and had so much success with.  It is important to remember that disruptive innovations are disruptive because they have truly changed the market environment and create a whole new game.  Much of what the previous winners did may no longer work. 

Transformational leaders help their organizations face the facts and embrace the new technologies, products, services and business models that are now needed to compete in such a different marketplace.  Speaking about the changes needed at IBM, Lou Gerstner wrote 
 
"What was needed was straightforward but devilishly difficult and risky to pull of.  We had to take our businesses, products and people out of a self-contained, self-sustaining world and make them thrive in the real world.   . . . The challenge was making the workforce live, compete and win in the real world.  It was like taking a lion raised for all of its life in captivity and suddenly teaching it to survive in the jungle."

A Culture of Collaboration 

Disruptive innovations almost always come from outside a company, whether it is new technologies, products and services, or new competitors, processes and business models.  Those innovations are increasingly collaborative and open, the result of people working together in new and integrated ways.  Just about every study on innovation has identified the power of collaboration as one of the major forces driving innovation in today's environment.

For example, in the IBM 2006 Global CEO Study, about two thirds of the more than 750 CEOs interviewed said that their organizations must make fundamental changes to respond to significant external forces over the next several years.  They are thus under intense pressure to innovate. 

One of the key themes that emerged from this study was the importance of collaboration in driving innovation, particularly beyond the walls of the company, with clients and business partners cited as top sources of innovative ideas.  In today's fast-moving and highly competitive world, more and more businesses recognize that there exist a lot more capabilities for innovation in the marketplace than they could try to create on their own, no matter how big and powerful the company. 

While CEO's told us that collaboration is absolutely critical, they also told us that partnering, whether crossing internal or external boundaries may sound easy in principle but is very difficult in practice.  This is not at all surprising.  Working with different groups to achieve common objectives usually requires a change in the culture of most organizations.

These leadership attributes reinforce each other.  Deep down, to truly embrace a culture of collaboration requires a certain degree of humility as well as an open mind on the part of an individual, group or company.  It requires an acceptance of limitations in ones ability to get things done without help, which then makes it emotionally easier to reach out and work effectively with others.

It is only through good leadership that an organization can overcome the arrogance, rigidity and isolation that invariable lead to serious trouble, and focus on the future with the proper spirit of modesty, flexibility and willingness to work with and learn from others.  There is perhaps no more important lesson for us to learn given our uncertain times.

Comments

[Tim Dempsey]

Irving,
I couldn't agree more... I wrote about this as well at about the same time.

Thrilled to see you are so active in the important areas the TIGR group is working on.

As always, best regards.
/t

[Juliette from Georgetown University]

Great Blog on leadership and innovation! If I must add something to this already really rich blog would be to go more in detail in how leaders must help foster innovation in companies (for the purpose of a class on "The Culture of Innovation"). Two books then come in mind as far as leadership and innovation go. The first one is Judith Estrin's book "Closing the Innovation Gap" in which she considers leadership one of the most important part of innovation, it plays a key role in the "ecosystem" of innovation. When talking about the ecosystem, she says: :"Just as plants require water and sunlight if they are to grow, sustaining innovation requires the right leadership, funding, policy, education, and culture (Estrin 44)." I therefore agree that in time of crises, management must be replaced by leadership (more control is what we need, more regulation...if you know what I mean). The second book that treats the same topic of leadership is entitled "Innovation--The Missing Dimension" by Richard K. Lester and Michael J. Piore. In this book, the authors discuss the role of leaders in leading the innovation process and their concept of "interpretation" is very relevant to this blogpost. I strongly recommend reading the introduction of this book (if you haven't already done so).
Otherwise, I agree 100% with the qualities required to be a great leader and I believe that on another scale, our new President is proof of great leadership!

[Tran Minh Thanh ( From Hanoi, Vietnam )]

Mr Irving !

1) Will your written Article "Leadership in a Time of Crisis" be rewritten to be more crystalized, clearer ?

2) Mr Irving ! Many topics you write are very practical and meaningful in terms of business executte experiences. I read these articles weekly because not many business-tech leader like you could write down business practices easy to read, understand. And appliable

[Sergiy Kadulin]

Great blog, thank you!

Especially written on my birthday (Jan-19) :-)

I am in process with my MBA master thesis devoted to Business and Spirituality, and your thoughts resonate with my thinking.
I am also thinking about the critically important capability of leaders in crisis to be able to build emotional enterprise, which is far more difficult to replicate by competition than products and services.
And level of universe global awareness might be distinctive quality of leaders in the coming era. Those ones who will win.

[JohnnyQuintero]

Mr. Irving,
Im a big fan of your blogs. Beliving in a better recovered economy is in everyones mind. Everyone including myself must be remembered by telling us that good time are to come. "Tough Times Dont Last, Tough People Do" With this attitude everyone is going to get thru this depression. We always have to keep a POSITIVE attitude and never, never every give up. Here is a Positive article I wrote to look at. Keep in mind "We Cannot Manage What We Do Not Monitor".
http://by.ly/19w859jm