Leading in the Face of Uncertainty
Lisa Thompson, LPC, PCC – Managing Director, Professional Services
At our recent Spotlight SeriesSM event, our room full of business leaders discussed the global state of uncertainty. While factors like the U.S. presidential election, the threat of terrorism and the impact of Brexit pose important risks for U.S. businesses, they are far from the only uncertainties in the business world. There are forces at work in every sector—from energy to healthcare, manufacturing, services, retail, technology and real estate—that make the path to the future unclear.
Risks can come from all directions in business, including changes in the geopolitical climate, downturn in the financial markets, changes in consumer preferences and introduction of new technologies. A shareholder group might try to take control of your company, or a competitor might launch a takeover bid to put you out of business. Problems might arise within your supply chain or your labor force. A fire, flood or hurricane might destroy inventory, or an unethical employee’s actions might make headlines in the news media.
Faced with so many uncertainties, business leaders must develop the skills and the strategies to address the serious questions that affect their organization’s sales, profitability, workforce and long-term sustainability. That means trying to reduce the uncertainty around questions like:
- Is a shift in my customers’ preferences a challenge or an opportunity?
- How will adding to my sales force or opening a new office affect profitability?
- What will my biggest competitors do in the next year?
- Will a technology change improve or hurt my business?
- Do I have a succession plan in place to mitigate loss of a key manager?
Despite the senior leadership team’s best efforts to plan and prepare, the road ahead is always filled with surprises. This is why corporate leaders need to build the appropriate skill sets and adopt an effective strategy for dealing with uncertainty.
Cultivate the right skills
Great leaders have many skills in common, but to successfully manage a team in the face of uncertainty, a leader must:
- Be a good listener. What are your customers saying? What trends do you hear in the media? Do your employees seem enthusiastic, disillusioned or worried about the future? Being a good observer will help you gain important clues to what lies ahead.
- Be ready to improvise. Regardless of the plans you draft, something is likely to change along the way. Cultivate your mental flexibility so you can respond quickly and appropriately to those external or internal changes.
- Be consistent. Recognize in advance that there will be unexpected hurdles down the road. Stay focused on the desired goal as you adopt your tactics to the new situation.
- Be guided by your mission and values. When faced with uncertainty, look at your organization’s mission and values as a foundation for your decision-making. Don’t be tempted to take actions that run contrary to those values.
- Be supportive of others. Fear can become a dominant emotion in times of crisis. Be supportive to other members of your team, customers and shareholders. Let them express their fears, but don’t let it drive your decisions.
- Be ready to seize opportunities. Remember that uncertainty is not always a bad thing. If you are a careful observer who is flexible in your thinking, you may spot growth opportunities that others have missed.
Time to strategize
Leadership in uncertain times requires putting these skills into action. Here is a suggested strategy for minimizing risks and maximizing future opportunities:
- Consider varied scenarios. A good starting point is to hold a brainstorming session to identify the possible ways the future might unfold. For example, what happens to our business if our competitor does X or Y? What if our new office is wildly successful, achieves moderate performance or is a complete failure? For this process to work well, it’s important to have input from a wide variety of perspectives, including finance, legal, marketing and sales. The goal of this initial step is simply to cover all the possibilities.
- Analyze the scenarios. The next step is to appoint an executive or assemble a team to analyze each of the scenarios. For example, how vulnerable is our company to a hostile takeover? Could a hacker’s attack ruin our credibility or put our corporate or customer information at risk? The goal of this process is twofold: Identify the potential impact of each scenario on the company, and determine the likelihood of the scenario actually occurring.
- Prioritize the scenarios. Next, the senior leadership team should review the teams’ work. A scenario with serious consequences and a high probability should command more attention in the C-suite than a low-probability scenario with relatively little impact. Because resources are always in limited supply, they need to be applied effectively.
- Mitigate the risks. What steps can be taken to mitigate the risks of certain scenarios? Should a new product or service be tested quietly before undertaking a large-scale launch? Will hiring experienced managers from the competition improve the odds of success (and mute the competitor’s ability to respond)? Input from the corporate counsel or CFO can be particularly valuable at this stage.
- Take well-considered action. Even with the best plan, there are no guarantees. But a company that stands still and does nothing is likely to have a short lifespan. Successful organizations understand the importance of taking a well-planned action, even when there are no guarantees of success. Being willing to make a mistake can be the ultimate test of leadership in a time of uncertainty.
Even if the worst-case scenario never comes to pass, your organization will benefit from taking the time to thoroughly think through the possibilities. This step-by-step process is a valuable way to ensure that your organization is as ready as it can be for whatever is thrown your way. In an uncertain world, a little preparation can go a long way to ensuring that you control change—instead of letting it control you.