Published by CEOWorld Magazine, December 16th, 2022
As another year comes to an end, we find ourselves as a nation in a bedeviling quagmire economically heading into 2023.
To date, as both Consumer & CEO Confidence measured by the Conference Board continue to fall the US is likely to be already in a recession, or headed into one in the months ahead, despite a historically super tight labor market. But there are troubling cracks in that veneer as well. And given the aggressive pace of interest rate hikes by the Federal Reserve this year fear mounts that something more than labor could break and become a crisis. And if it does, is your business well enough prepared to navigate it?
Given this backdrop it makes perfect sense, as I always say, to find your path forward and lead your team through it, like a 5-star general on the front lines. And as a result, it also makes sense to take lessons from leaders past who have seen it and been here before.
Typically, a crisis is a crisis because you’re unprepared for it. And there’s nothing worse warned Senator Mike Mansfield fifty years ago than being unprepared. As a statesman during tumultuous times his experience during the Civil Rights movement, Vietnam War and Watergate conjured a long list of lessons learned, most notably perhaps his greatest advice for any leader: Anticipate all you can.
“The crisis you have to worry about most is the one you don’t see coming,” he said.
Who doesn’t love that? But on the flip side if it’s a crisis you do see coming, how should you react?
The going chat at the CEO water-cooler in 2022 has been one of resilience. And why not? If your business survived a global pandemic shutdown, you’re likely ‘good to go’ in a recession too, right? Well. Maybe. Navigating through prior tough times is a badge of honor. But I wouldn’t bet your career on it just yet.
A new year’s journey of uncertain challenges lays before you in 2023, a year most likely to test your leadership skills and how you respond more than you think.
At the macro level a lot of things are going on right now. Nearly 3 years post pandemic shutdown, there’s the aftermath of the government’s $3 trillion stimulus driving up inflation to 40-year highs, the certain backlash of higher interest rates which slowed housing sales and business lending, the rising price of energy and the US dollar as both headwinds, tensions with China on technology, trade and Taiwan, the war in Ukraine and its impact on fuel, food, and funding, and finally the US job market, which has remained largely intact until recently as layoffs in the technology sector could be a harbinger of things to come in other industries. For some, these murky unknowns are cause for alarm. For others, it’s more ‘wait and see.’
But from what I see, hear, read and chat about with execs in my network, as “resilience” morphs into “fear” I think waiting for things to get worse is wrong. And if you agree then it’s time for a just-in-case new plan.
In July 2020 Forbes dropped an article called Management In Crisis: The Best Leadership Style To Adopt In Times Of Crisis. At the height of the pandemic the writer emphasized CEO management style mattered most. You should be authentic, transparent, transformational & innovative. All good advice, if you’re preparing for a pandemic.
But Covid-19 was a collective health crisis which naturally elicited more leadership compassion than profit. As CEO of the world’s largest $8 trillion dollar wealth management firm Blackrock, Larry Fink said in a recent New York times interview “If you weren’t focusing on your employees and their issues [back then] you weren’t doing your job.”
Today, it’s more about helping your business survive without government help should things turn suddenly against you. And for that I prefer the direct approach leadership style whereby you sit down with your executive team in a locked room, avoid distractions and make a plan for war, so to speak.
Lee Iacocca former CEO of Chrysler did much the same in his miraculous turnaround at the car maker back in 1979, before it miraculously repaid the US government $5.1 billion in loans the company borrowed to stay afloat 6 years ahead of schedule. Make no mistake Iacocca had a hard-hitting direct style as he often notes in his books but it got the job done. Always a man of action facing a dilemma Iacocca instinctively knew when to stand up at a meeting and look around the room, “So what do we do? Anything? Something? So long as we just don’t just sit here.”
But is leadership STYLE the key factor to leadership success in a recession?
It would seem some CEOs mix these up. Looming Recession related fears or not, in a stunt made for tv comedy Elon Musk offered another look at his particular style after his recent, if reluctant, $44 billion acquisition of Twitter in October. The Tesla founder posted a video of himself entering Twitter headquarters in San Francisco clutching a bathroom sink in both hands, later tweeting a caption “Entering Twitter HQ – let that sink in!”
According to the Washington post the billionaire plans to eliminate 75% of Twitters 7500 staffers, leaving a skeletal crew to presumably restart the business model? To me creating a paranoid workforce is not the motivational milestone I would expect initially from a new CEO heading into a recession, mild or otherwise.
Rather, at the core of it, in my research and experience CEO leadership style in tough times is what it sounds like, leading. Getting everyone on the same page. Because as stakeholders we naturally look to you, our fearless leader, to guide and comfort our fears, not elevate them.
Not surprisingly in his notable best seller 7 Lessons for Leading in a Crisis Harvard Professor and former CEO of Medtronic Bill George lays out his leadership strategy back in 2009, not long after the Great Recession when self-reflective leadership was more in vogue. He suggests you look in the mirror first.
- Face reality, start with yourself
- Don’t be Atlas, get the world off your shoulders
- Dig deep for the root cause
- Get ready for the long haul
- Never waste a good crisis
- You’re in the spotlight- follow True North
- Go on offense, focus on winning
These are solid lessons to learn from in a crisis. But when it’s the calm before the storm, heading into a pending downturn I think we still need a bit more ground level advice. So I dug deeper, and reviewed a dozen more CEO actions in tumultuous times and summarized their approach in simple terms for making a plan of action that anticipates before it reacts. Bathroom sink management style is optional:
- Define the path forward & prep a transparent scenario plan if a recession hits you
- Communicate your strategy, get early buy-in and build trust with staffers. Make them believe
- Identify the top priorities and monitor them closely, aka people & process together
- Anticipate bottlenecks — if “this” happens, then here’s what we do
- Revisit your Business Continuity Plan – either crisis or mild recession in 2023 you’ll be ready
As Iacocca put it “We are continually faced with great opportunities brilliantly disguised as insoluble problems.” I read that as if you take the opportunity to get prepared ahead of tough times, it could save your company. The good news is you’re not alone. Together at $23 trillion in GDP we are still the biggest and baddest economy in the world, and one way or another at some point in the months ahead we will slay the inflation dragon, shore up our supply chains and bring prices back down.
Until then we need strong leaders like you who can step up and drive home a motivating message that calms workers’ fears and creates Raving Fans, not fearful followers! So, as we celebrate the holidays and another Happy New Year, remember it’s action over style in 2023. And be sure to get it right, because unlike Iacocca’s General Motors forty years ago, this time there likely won’t be another government bail-out to cover your butt.
For more useful tips check out my recent C-Suite article CEO Dos & Don’ts in a Recession.