Never let a good crisis go to waste … so said Winston Churchill. And he should have known. While he never saw a Corona virus pandemic, he did successfully lead Great Britain through the darkest days of the second world war.
I am grateful that I have never seen a war, but I have led companies through extremely difficult times. These included Black Monday in 1987 when the stock market fell by 36%, the 1990’s recession when interest rates peaked at 14.8% with unemployment at 11%, and the global recession of 2008 – 2010. Each of these events led to the demise of many good businesses. When we were deep in the dip, we worried whether the markets would ever recover – but each time they did.
The reality of the Covid-19 pandemic is terrible and terrifying and should not be minimised. But it too will pass. The economy will recover and great businesses will be built or rebuilt. The key task for many business leaders right now is to ensure that their business is still around to benefit from the investment overhang and opportunity for growth which will follow. The current period of value destruction and market starvation will be followed by a period of market expansion and consumer demand. In today’s unprecedented climate many leaders will make immediate decisions under the most extreme short term pressure. Unfortunately, this can lead to poor choices.
My experience of leading companies through the economic disaster zone is that, with different thinking, it is possible to emerge stronger than ever. During the most difficult of times the most able leaders will reassess and clarify the vision of success for the organisation. They will challenge and redefine the business model and prepare their team for long term success. Great leaders will step ahead. The way that I have led this is:
Most businesses have experienced an immediate and very substantial drop in cashflow. So, stem the loss. Interrogate your income statement – look at every line (and I mean EVERY line) and reduce expenditure or liquidate assets to preserve cash. Your first loss is your cheapest loss. Defer dividend payments and bonuses. Give the company the breathing space to prepare fully for the long term. Banks are making warm noises and governments have already announced programmes of fiscal stimulation but even if your company qualifies for help, the time taken to receive the cash will always be longer than planned.
Communicate, communicate, communicate
Brave leaders are open and honest. Difficult decisions need to be made and everyone in the team knows that. But the support for those decisions depends upon a shared understanding of what and why. Uncertainty breeds rumours and false information. Regular briefings, CEO news updates, conference calls, visibility and transparency will reduce fear and improve confidence. Provide forward news – build trust by telling the team before telling the market. Talk about long term goals as well as short term actions. Explain what success looks like and work back from there.
Make sure that they know that you respect and value them. Include them in your communications and discuss your decisions with them – and don’t forget that your suppliers and business partners are your clients as well. Ask how you can help them. What are their fears? What would they want you to do? Remember this is a long term strategy and you will need all of them when the gloom lifts. Strengthen those relationships now with investment in time and attention. You will be paid back many times over when the environment improves.
Above all, stay calm and build. Running a successful business is simple but it is not easy. In times of challenge, strong and clear leadership is key. Remain confident, make clear considered decisions for the short term but also use this period as an opportunity to reassess your business for the long term. Is your vision of success crystal clear? Does your entire team know and understand where the business is heading? Leaders can be guilty of not challenging the norm, of being satisfied with following procedure and tradition. It takes courage to question why things are done the way that they are. In a period of crisis, the best leaders will first secure the ship – but then they will take the latitude of these extraordinary times to review and plan. When was the last time that your company critically analysed the fundamentals of the business with everything on the table for inclusion? The world may never be the same again so now is the time to ensure you know where your business will fit into the future.
I have led numerous companies through this process. Sometimes the crisis has been created internally but mostly the business has had to react to an external market or economic shift. Strategic review should not be reserved only for times of trouble. The current seismic and unexpected disruption to the world is a time when the successful leaders of the future will reset and rebuild. Such a rethink will boost corporate performance and deliver extraordinary results just when the competition is thinking only of survival.
This article is written by Leadership Expert Kevin Gaskell, who has a unique talent for engaging audiences – and for inspiring them to take action. His experiences of driving turnarounds, achieving 500% profit growth and transforming local companies into global players were acquired within the corporate environment. His entrepreneurial experience of founding businesses, acquiring underperforming companies and transforming them into market leaders has allowed him to develop a complementary set of skills and knowledge.