Good business leadership is crucial at any time – and never more so when times are tough. Whilst it’s easy to blame the recession for companies folding, I believe that with the right leadership, most businesses should be able to withstand the recession – and even thrive and grow.
One of the most damaging aspects of this recession’s longevity is the lowering of expectations. People are happy to get by, to play it safe rather than take risks or invest in growth as they would in more prosperous times. When a company is struggling, it’s understandable that leaders take the short-term view, focusing on quick gains to cut costs and increase short-term revenue. However, this ‘bunker’ mentality means that vision, strategic investment and long-term planning is often forgotten in the cut and thrust of survival.
Short-term survival. The great businesses that we work with focus on short-term survival – but have an unwavering eye on the medium to long-term and a clear focus on post-recessionary times. Key to this is getting and keeping the right people; thinking about engagement to ensure they stay after the recession lifts – and what is being done to attract new talent.
To determine how you are operating and to encourage a more long-term strategy, write down activity in the business that is focused on short-term management and tactical survival. Now summarise in one paragraph how you are focusing on a vision for medium to long-term growth and getting the right people. It’s also worth thinking about what people are following in your business leadership.
A bunker mentality.This means that fewer leaders are looking at what other great organisations are doing. However, it’s important to study what competitors, industry leaders in your sector and leaders in the wider business community are up to – and to consider what you can learn from what they are (or are not) doing. Search out those that clearly have a great foundation of strategy and leadership and, most importantly, a fantastic team of people.
Looking inwards. Another recessionary trait is the tendency to insularity, making processes and cost reduction exercises the focus, for driving business practice. Many organisations we work with spend inordinate amounts of money on project teams who look at ways of improving efficiency, cost-cutting and headcount reductions, with very little emphasis on opportunities to invest in risk focused, margin generating strategies.
Balancing thrift and risk.The most successful leaders balance the obvious need for cost-cutting with the investment required to take calculated risks out in the market. A lack of focus on opportunity, including those that might be seen as slightly risky, will eventually lead to failure. The only likely result of excessive retrenchment is the ultimate demise of the business.
No one is saying it’s easy to lead well, particularly in these difficult times, but leaders need to hold their nerve, look forward and trust the good people that they have around them.