Leadership in the era of economic uncertainty - Review
As a project manager, I work with software developers and solution designers. Present them with a deadline for a bunch of tasks, and you will hear all the reasons why it can’t be done. Two reasons that stand out the most is, “We do not have the complete requirements.” and “The design is not complete.” At one end we have individuals who cannot make a decision based on incomplete data. At the other end of the spectrum are the CEOs and leaders who have to constantly make decisions based on insufficient data. Imagine the CEO’s response to this question by the board: “So Mr. CEO, when do you think the company will complete this initiative? This is crucial to improve our cash flow.” “Oh! I do not know, we are gathering requirements right now and once I hear back from my team I’ll let you know.”
Leading in the best of times has been a challenge. Leaders never have all the information they need to make the decision and waiting for the complete information results in inaction. Ram Charan (no relation to me) succinctly puts it:
“We will not know when we have turned the corner and we cannot envision the shape and scope of the world that will emerge. What we can be sure of is that this is a time of tumultuous change and with change comes both the danger and opportunity.”
The main point that Ram makes is that business leaders need to reprioritize their initiatives to undertake those activities to improve cash. If you as a CEO are indecisive - as in the case of Bears Sterns, for example - then you will cease to exist in today’s turbulent times. “This is a time for consolidation”, says Ram. “Protect your company’s core.” Manage for cash. Be ruthless and chop any activity/initiative that does not improve your cash position. Your sales and marketing people are the ears and eyes of the business. Retrain them to think “account management” rather than increase customer base. A few profitable customers are better than lots of non-profitable customers.
In “Leadership” Ram also provides guidelines and tips to CEOs, CFOs and the various functional heads. Ram cites the following leadership traits that are needed:
- Honesty
- Trustworthy
- Ability to gather real-time information/intelligence
- Ability to inspire
- Optimism with a heavy dose of realism
- Decisive
Overall, I thought it was a very timely book. On hindsight, I think a number of points can be applied to any economic environment - not just in recessions. A must read book not only for CEOs, but for any individual at any level of leadership.
Thank you for this review. I look forward to reading this book.