Wise heads have seen economic cycles come and go. There are lessons from the past to steer an organisation through the worst of it.
Steering is not rowing. The functions are different, yet complementary. If you want to row and steer, the quality of both will suffer, compounding the challenges of these turbulent times. There is no value in confused roles, responsibility and accountability, creating greater uncertainty for the rowers.
Steer in your strategic direction by implementing the following eight points:
- Model leadership
Consider the following definition of leadership:
"Leadership is an influence relationship between leaders and followers who intend real changes that reflect mutual purposes." - Joseph C. Rost, Leadership for the 21st
Help staff become willing followers. Give them certainty where possible, but make it clear that you do not have a magic wand. Do not make promises that you cannot deliver.
- Demonstrate systems thinking
Accept that things do not happen in isolation. Systems' thinking enables better understanding of practical business issues by seeing interrelationships rather than linear cause-effect chains. It exposes the deeper patterns lying behind the events, not just the details. That is, the complete processes rather than a snapshot of the parts.
- Develop the capabilities of a learning organisation
In times of change, learning is vital. Develop your organisational capability through:
- Aspiration - The capacity of individuals, teams and organisations to orient themselves towards what they care about and embrace change because they want to
- Reflection and conversation - The capacity to reflect on your own thinking, assumptions and behaviour
- Conceptualisation - The capacity to see larger systems and forces at play and to construct meaning which we can communicate to others
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Engage in fierce conversations
Address the ‘elephant in the room' syndrome where conversations take up valuable time while participants skirt the real issues.
The book Fierce Conversations by Susan Scott is an excellent reference which outlines the following principles of effective conversations:
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Interrogate reality
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Provoke learning
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Tackle tough challenges
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Enrich relationships
- Employ lean thinking - ‘Just in time' not ‘Just in case'
It is a good time to think lean. Major benefits flow from any one of a number of lean philosophies. Remember that it was not so long ago that we threw resources at opportunities and problems without regard to cost. Every instance of a previously resource rich reaction becomes an opportunity to demonstrate the power of lean thinking.
Lean thinking focusses on creating value and minimising waste in a continuous sequence. 'Work in progress' in a manufacturing organisation and 'Waiting' in a service organisation are excellent starting points. Improving working capital by reducing work in progress or speeding decision-making by reducing unnecessary waiting times are examples of how lean thinking can add value and make a significant difference.
- View cost as an investment
Never forget that cost is an investment and that the job of effective management is to maximise the return for the business owner. Leaders embrace cost management and focus on increasing return on your cost investment, rather than simply stopping spending.
- Start by reviewing your labour structure - Determine the scope for more productivity and flexibility without forgetting the need to retain valuable staff as an investment in future success.
- Review your supply contracts to obtain greater value - Market test, but always give your incumbent suppliers the opportunity to offer more competitive terms.
- ‘Added value' discussions improve client relationships - Work with key clients to review the way you service their needs and the scope to get value up and cost down. Use your collective expertise to identify smarter ways to service, package, transport and recycle.
- Display tough empathy
Tough empathy means giving people what they need - not always what they want. It balances respect for the individual with the current task.
Tough times require tough decisions. This includes revisiting some decisions that seemed right in the growth times. For example, make sure that your training investment is closely linked to developing future capability. If the ratio of revenue to expenses is trending downward, display tough empathy by embracing target costing to reverse the trend.
- Start steering
The time for leadership and action is now. When your job is to steer, remember that a key part of your leadership role is to develop motivated and capable rowers (followers) and let them row!
If necessary, engage a skilled consultant to help you get started. One that brings a fresh set of eyes and a bias for action to help you to capture significant opportunities sooner rather than later.