Features
Amy Reeve 8 Jan 2018 03:05pm

A guide to leading in a crisis

That we’re operating in an uncertain environment is now a given. Leadership is no longer about seeing a crisis through it’s about purpose, preparation, and enabling your people to help steer the ship. Amy Reeve shares how

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Caption: Photography: Getty Images

Leading through a period of uncertainty is hardly new. The last century was as marked by war, technological disruption and political upheaval as this one is proving to be. Go back another 100 years and there was as much fragility and poverty as there was social reform and industrial progress. So why does the political and economic uncertainty we’ve been feeling lately seem so disconcerting, far-reaching and, well, permanent? And if volatility is the new normal, what does this mean for leaders?

The turbulence is not localised. From South Africa, where Grant Thornton’s latest international business report shows “a nation experiencing total uncertainty with no sign of any stability on the horizon‚” or Dubai, where Sheikh Mohammed Bin Rashid Al Maktoum concedes that political uncertainty in the Middle East is “a challenge”, to the UK, where the National Audit Office says continuing uncertainty over Brexit could jeopardise public finances, the business environment feels volatile. Even Asia, which IMF deputy-managing director Mitsuhiro Furusawa described in June 2017 as a “world leader in growth” still faces a near-term outlook “clouded with significant uncertainties and risks” because of a lack of clarity around US economic policy.

Globalisation is part of the reason for this pervasiveness. For all its benefits, trading without barriers means the bad decisions as well as the good ones have an impact on somebody somewhere else. Combine that with the huge change that technology is unleashing, not to mention surprise political results, changing demographics and environmental concerns and the result is a complex environment. “We’re in a much faster-changing world,” adds Alice Deakin, a facilitator for ICAEW’s professional development academy and former director of Deloitte’s CFO Programme. “People are definitely talking about change not as a finite thing but as a permanent state.”

A 24/7 culture of communication also adds pressure. Because reporting is instantaneous, says Kevin Gaskell, author of Inspired Leadership and the former CEO of Porsche, expectation is high. “The City expects… a response, a performance. And people are more demanding. They expect a better quality of life, a better quality of work, so it’s more complex than it ever was.”

That’s not to say everybody feels jittery. Many confidence barometers still report business buoyed by growth in their economy, even if it is short-term. And not all uncertainty is bad uncertainty, as Amir Yaron, professor of finance at Wharton Business School, and his colleagues Ivan Shaliastovich and Gill Segal explained in 2015. Uncertainty related to good events – the optimistic view of the tech boom in the 1990s for example – is typically followed by desirable results like greater economic growth, higher investment rates and higher asset prices.

It’s the element of surprise leaders don’t like, says Patrick Harker, president and CEO of the Federal Reserve Bank of Philadelphia, formerly dean of Wharton. As long as they feel they have robust contingency plans, they’re not overly worried. “Ask every business leader; their biggest concern is: ‘whatever changes occur, just do them gradually. Let us adapt.’ Their biggest concern is if something hits them, and they simply can’t or don’t have the time and the resources to adjust.” That’s why Deakin is helping leaders to get their heads around the concept of confident uncertainty. “That means acknowledging you don’t know exactly what’s going to happen but that’s OK because you’re agile and you’ll move with it.”

“We’re in a much faster-changing world. People are definitely talking about change not as a finite thing but as a permanent state.”

New Armoury

So if a new armoury of skills is required of today’s business leaders, can it be learned? There has been some naval-gazing among business schools on this topic. After the financial crisis when customers began to look more closely at the leadership skills of those presiding over failed companies, and the values of those companies, the debate began about what sort of leaders the business schools were churning out. Perhaps there had been too much focus on educating students with a set of metrics that didn’t create enough value in the long run? Maybe leadership development should be the primary goal of an MBA instead?

According to TopMBA, which rates business schools, yes it can be learned and many have redesigned their curriculum to reflect the change of environment. The Tuck School of Business in America has designed programmes bespoke to each MBA student, it says, while INSEAD pointed us to its new MBA curriculum and a “super course”, which covers ethics, political environment and public policy “with the underlying theme of business as a force for good”. As Aetna CEO Mark Bertolini puts it, today’s successful leaders must be worldly wise. “That is beyond the numbers that you’ve been taught to manipulate and the spreadsheets you’ve been taught to build. In the end it’s not the numbers; it’s your ability to see the world in a different way.”

So with your eyes wide open, and an understanding of the ripple effect your decisions may have around the world, Gaskell’s advice is to empower others to do their best work. You need to take your employees on a journey to create “something extraordinary”, with social responsibility at the core. Not to the detriment of profit he insists – “the phrase I use is: get better, and bigger will come” – but so that employees are clear about direction, even during times of turbulence. “In my experience of leading businesses, people are looking for clarity of vision. This is who we are, this is where we’re going, this is what success looks like and, by the way, once we get there this is how it will feel. You’re bright people, help us to achieve it.” And he should know: as CEO of Porsche, he led the company from near-bankruptcy to the most profitable car company around.

In times of uncertainty you can’t just do it on your own, agrees Deakin, the leadership mind-set must spread wider: “Leadership is not just being this great figurehead at the top of the business, leadership is being the most senior leader pushing it down the organisation to other people, so they’re looking out for what’s coming, are willing to make decisions and innovate. It’s much harder in this climate to enforce a strategy.”

“AI is going to be one of the most destructive things we have seen. It will reach a point where it makes it untenable to carry on working as we’re doing.”

Technology and change

Dave Coplin, author of Business Reimagined and former tech evangelist – chief envisioning officer at Microsoft, actually – is inclined to agree. He thinks the financial crisis was a catalyst for change. “It used to be about one person standing on top of the tallest hill pointing at the rest of the organisation to go in a particular direction,” he says. Good leaders today have learnt from recent history and the ensuing uncertainty to empower their people with purpose, “and then do the most important thing a leader can do: get out of the bloody way”. That takes confidence, he concedes, as well as reciprocal trust and a supportive organisational culture. But get it right and “I guarantee your engagement scores will be the highest in their industry.”

With technology at the centre of this bewildering maelstrom, Coplin is well placed to offer some perspective on its impact. He’s been looking at the transformational potential of tech for over 25 years, including six as director of technology architecture and research for KPMG. “I fundamentally believe,” he says, “that technology is a rising tide that will lift all boats. I’m telling you now: AI is going to be one of the most disruptive things we will have seen in the entirety of our society. It’s going to be huge. Not in a Terminator, robots taking over the world way, I’m more optimistic than that. But it will reach a point where it makes it untenable to carry on working as we’re doing. What we have to do instead is find a way of working that’s fit for the 21st century. So what leadership do we need to help us through this kind of world?”

For a start, leaders must look outside of their own organisations, their own industries even, to really understand where the world is going to be, believes Coplin. It’s about being true to your purpose – “use your purpose as your North Star” – building resilience and agility and rolling with the tide. Does that mean tearing up the five-year plan? “No, but I don’t think we should use them in the same way we used to,” he says. “There is no roadmap beyond, ‘let’s just deal with things as they come’. We’ve got a rough idea where we’re going and we’ll use the resilience of the people in our organisation to deal with the ambiguity and get the best possible outcome.” That means continually tweaking vision and strategy. And accepting technology for what it is. If AI, for example, is going to automate roles, then think of it as freeing people up to do more: “If an algorithm can do 30% of my job it doesn’t mean I’m 30% redundant, it means I’ve now got 30% new capacity to do stuff algorithms can’t do.”

Talking of capacity, part of Gaskell’s leadership strategy is to just stop doing stuff. He believes in the old adage that less is more: “If you can stop doing 75% of what you do, you can focus on the 25% of what you do best and be really good at it,” he says.

Leading professionals

But what about when you have a more ambiguous power structure, where it’s not so clear who is supposed to be leading and who is supposed to be following? The slightly unconventional world of professional services firms is what Cass Business School’s Professor Laura Empson, author of Leading Professionals: Power, Politics, and Prima Donnas has been studying. Many professionals already feel insecure within these organisations, so it doesn’t take much to throw them off balance. The reason they operate within an “unstable equilibrium” is that the partnership structure is reliant upon leadership among peers – “individual autonomy sitting alongside contingent authority” – which in turn can contribute to some quite sophisticated political manoeuvring and a complex working environment.

So if you’re dealing with intelligent, driven, independent people who are uncomfortable with being treated like followers and generally suspicious of colleagues who attempt to lead them, how as a leader can you develop your skills to get things done? Can these professionals be persuaded to work together to achieve a common purpose? Yes, says Empson, and it comes back to good old inclusivity. “What I’ve found in these organisations is that you don’t get very far if you think about leadership at an individual level, you need to understand leadership as a collective action. How peers come together to collectively construct something called leadership,” she explains. At an individual level you can come to be seen as an effective, legitimate leader, but to understand the complex network you sit within, you must think of leadership in a collective, plural sense.

And despite their size, professional services firms are not immune from uncertainty. “Professional firms have always operated on a knife edge. We’re very clear how rapidly one of these firms can be destroyed through reputational damage,” points out Emspon. “While we shouldn’t get carried away with the idea that things have got a lot worse, I would say you require really strong and effective leaders to steer these firms in a much more complicated environment. In an already unstable equilibrium, the more frequent these crises become, the more unstable that equilibrium becomes, and you constantly have to recalibrate and rebalance yourself.”

It comes back to agility. The world might be in turmoil, but if you’re resilient, nimble, inclusive and purposeful, there’s no reason why your business should suffer. Uncertainty is the new certainty. It’s time to deal with it.

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