“Management is doing things right; leadership is doing the right things,” said Management Consultant Peter Drucker. The problem comes when a business faces a crisis and the leader no longer can determine what the right thing is.
I wrote a white paper once on 5 Faux Pas of CEOs in Crisis, which you can view on my blog. One of these faux pas is that they are only as smart as the last person they talk to.
When faced with a crisis, some CEOs and business leaders cease to think for themselves. Perhaps it’s because they feel responsible for the crisis in the first place and maybe they’ve lost confidence in their ability to lead. They no longer trust their own judgment.
By itself, this dip in confidence does not spell the death of a company. In fact, that is often when the smart leader knows to ask for help to get the company back on track.
But what I’ve seen happen many times is that the CEO begins consulting several people, which I would generally recommend as part of the effort to gather as much information about what can be done to get out of the crisis. But rather than compiling all that information and making a judgment based on the best direction to go, the CEO instead changes plans according to whatever the last person told him to do.
I once worked with a non-profit educational institution. The president had been let go, deservedly so. The interim president was changing the restructuring plan with every person he talked to. There were new firings and closings announced every week, and when he got objections to the firings, he would call those he fired to tell them to continue in their jobs.
Needless to say, the institution was in chaos. Imagine yourself going to work not knowing whether you’d be fired that day or not. And whether you really had been fired or you’d later be told, “Oh, never mind!”
He finally did make the decision to hire me, which he may have regretted when I fired him six weeks later.
Yes, it’s good to consider a lot of options and gather a lot of information when making a plan to get your company out of crisis. And it is key to talk to the right people. And how do you know who the right people are?
I read good advice on this topic yesterday in the New York Times, in an interview with Ron Kaplan, the chief executive of Trex, a manufacturer of outdoor decks. As a young controller at a forge that was losing a lot of money, the chairman asked him if he wanted to be general manager. He said yes, although he knew nothing about running a force.
He followed his father’s advice and looked for people with experience and made them his best friends. How did he know which people to listen to?
“By watching and listening,” he said. “When people speak, you measure the variance between what they tell you is going to happen and what actually happens.”
Look for people with experience and credibility. And after speaking to the right people, pick a well-considered plan and stick to it. My analogy is that you are building a house of cards. Each fragile layer is dependent on the foundation below it. Continually move that foundation and you could end up with just a failed mess.
The Turnaround Management Association is hosting its 9th annual Southeast Regional Conference at the historic Jekyll Island Club Hotel May 29-30. I’ll be on a workout panel, called Titans of the Turnaround. Hope you can join me at this fun and informative event!