Leading from the front

Leadership is the ability to lead others. By lead we mean inducement or to make someone act, feel or think in a certain way. For example, an important ability of an executive is deciding quickly and getting somebody else to do the work. This ability confronts the decision-makers to face and suggest solutions to the presented problems, because as an individual everyone has an internal compass of beliefs, values and principles that guide him throughout his life.
Leadership obviously revolves around a leader, the question is who is a leader? It is generally observed that they are the people who possess self-awareness, and are resilient to take responsibility for their failings and are prepared to lead others through rapidly unfolding events and often these events are unpredictable. Nevertheless, people having leadership abilities rise to the occasion and discover abilities within themselves, which they had never known in the past. In other words, leaders are the outcome of a crisis: there is an English proverb which says, "A smooth sea never makes a skilled mariner." In fact, leadership is a long journey into your own soul. In Chinese, the character for the word 'crisis' is made up of two symbols, danger and opportunity. That's exactly what it represents for an individual aspiring to become a leader.
In our daily life we are confronted with hurdles, difficulties and crisis and successful are those who take control of the circumstances and face the burnt of the challenge. As a successful executive, I've passed through many such crisis and survived them, but I've to point out that none of the solutions offered by me were perfect, and there is no assurance that these principles will be effective as they had been in the past.

From my experience, I've derived a number of lessons that I have gleaned through my years of leading in business, government and academia. I assure you that you will be able to apply these tricks of the trade immediately while dealing with the predicaments one is confronted with today. Each of the following lesson is an important one for you.
Acknowledgement of the problem: In a crisis situation, facing the reality is the most important lesson of all. You can not move forward unless you recognise that a crisis in real terms is being faced and the situation requires to review the circumstances and roles which created the crisis. Before you can lead your organisation through a crisis, you have to acknowledge that you are indeed standing in one. Then, you have to persuade others to acknowledge that a crisis exists. In this manner one can define the problems accurately and develop plans to deal with them. Mind it that crisis often start out in relatively benign ways, and then seemingly minor events turn into major ones. Unless one faces reality early, one can easily miss the signals of a deeper crisis that is waiting ahead. Unless the leader acknowledges the crisis, their organisation cannot address the difficulties.
The crisis isn't going to fix itself, so denying its existence can only make things worse. It is necessary that reality must be realised early and one should fix his role in the crisis, furthermore one has to guide people around him to realise the reality.
Take people along with you: One can not get through such situations alone, so don't try to carry the whole world on your shoulders. Reach out to others around you to share the burden and seek their help to come out as a winner. Some leaders take the whole burden on themselves. They retire to their offices to ruminate about the problems and try to work out solutions in their heads. People in the organisation start speculating about what is happening with their boss, who seems to be so withdrawn. Then rumours start, and they are always worse than the reality.
That's what happened to former Morgan Stanley CEO Philip Purcell in 2004 when his firm was facing myriad problems. Instead of going out to the trading floors and talking to the traders to see what was happening or meeting with executives to devise solutions, Purcell often hunkered down in his office and kept to himself.
Eventually his denial was so palpable that a group of former executives turned against him and led a successful effort to force his loyal board to oust him. When John Mack took over the following year, he rebuilt the executive team and the firm's confidence. This enabled Morgan Stanley to come through the global economic meltdown in reasonable shape.
To perform at your best throughout the crisis, you need a high level of resilience: a combination of hardiness, toughness, and buoyancy of spirit. These arc challenging qualities to maintain during the rigors of a crisis, but they will sustain you through difficult times. That's why you need to build your resilience before the crisis hits.
You have to develop your own techniques. The important thing is to have a set of practices that you make habitual:
-- Keeping your body in shape
One may like to jog for twenty to thirty minutes, which builds physical resilience and helps one to clear his head.
-- Keeping your mind sharp and spirits high
One may develop a meditation practice - twenty minutes, twice a day - that has been invaluable in getting through high-stress periods and coping with jet lag on frequent overseas trips. Meditation offers a sense of harmony and well-being that is essential for coping with the rigors of high-pressure situations.
-- Not taking oneself too seriously
The things that work to loosen one up a bit (and it would be misleading to say one gets completely loosened up) include deep conversations, laughter, a good movie or play, dancing, and relaxing with friends.
Finding the root cause: One has to control himself to jump to quick-fix solutions that may hide the real problems and leave yourself vulnerable to repeating the crisis. Hence, understanding the root cause is paramount to curing the problem.
Leaders who stay in their offices holding meetings and reading reports, instead of gathering firsthand information never have the benefit of using all their senses-touch, smell, sound, sight, and hearing-that trigger their emotions and their intuition to recognise far more than their intellect does.
Unless the root cause is corrected, the odds are high that the organisation will find itself in yet another crisis in just a matter of time. It is leader's job to prevent that, or the next time around the situation will be a lot worse.
It isn't easy to determine whether you've gotten to the root cause. The only way to do so is to gather all your experts to analyse the problem and give them time to reach definitive conclusions. It is also helpful to engage outside experts to offer their perspectives.
When the problem is fully analysed, corrective solutions can be determined. Solutions also must be confirmed by rigorous testing and internal and external experts. Even so, there always exists uncertainty about whether the solution is correct.
When your organisation is confident that it has developed corrective solutions, an intense effort is required to implement the solutions. As a leader, however, one should express cautious optimism, but not complete confidence, that you have an acceptable solution.
One of the most widely acclaimed examples of crisis management is Johnson & Johnson CEO Jim Burke's handling of the 1982 Tylenol crisis. In Chicago, an unidentified person caused the death of two people by lacing capsules of Tylenol with cyanide poison. After a third person died in Los Angeles, Burke immediately ordered a nation-wide recall of Tylenol from retail store shelves.
With J&J teams working around the clock to develop solutions, Burke became a familiar figure on the nightly news as his calming influence kept the panic from getting worse. Within six weeks, J&J had an alternative solution using tamper-evident packaging that enabled Tylenol to return to the market and recapture its lost market share.
Burke justifiably became a market leader for his handling of the crisis. He said at the time that the packaging was not tamper-proof, as such a design was not possible. He also observed privately that if another event had ever occurred, the brand would have been in trouble.
An organisation cannot deal with a crisis until it determines its root cause, but people are often mentally blocked from recognising it, because the implications are so frightening. A leader must bring people together to confront their worst fears and address the risks. In Medtronic's 1998 crisis, one has learnt that workers were willing to follow their leader and commit to the aggressive course only when their leader was willing to take involved risks on his own shoulders. The hesitancy and fears of failure is to be channelled into turning the risky decision into a major success.
Prepare to pass through the eye of the storm: When someone is confronting significant problems, one has to first react since things may not be really that bad. But in its early stage, one may be looking only at the tip of the iceberg, and things may get a lot worse. And in order to survive the crisis, one needs to prepare for a long struggle to defend against the worst conditions, so that one may be able to pass through the eye of the storm.
When facing a crisis, it is prudent for the leader to assume that the crisis will last a long time. When things return to "normal" (if there is any such thing as normal), everything will be different. When one senses a problem coming, ask yourself whether you are looking at a harmless piece of ice floating on the surface or the tip of the iceberg. If you don't know for sure, this isn't the time to move full speed ahead. If you do, you're asking for trouble.
In the 2008-09 economic crisis, many people ignored the early signals of the subprime mortgage crisis. Even the forced sale of Bear Stearns to J. P. Morgan did not send out sufficient alarms that other financial institutions could face similar fates. Only when Lehman Brothers, AIG, and Merrill Lynch blew up in the same week in September 2008, did financial leaders started to recognise how grave the situation had become.
In early 2007, Goldman Sachs's trading unit experienced a modest loss in subprime mortgages, including the impact of the bankruptcy of New Century financial, a mortgage banker. With a $1.2 trillion balance sheet, this may not have seemed like such a major problem to a firm like Goldman.
As Goldman's top executives explored its position in sub-prime mortgages in considerable depth, they realised that this situation could become catastrophic if immediate action was not taken. They decided to get out of the subprime business and stop doing business (other than advisory) with firms like Countrywide Financial that specialised in subprime mortgages. Meanwhile, Countrywide, Citigroup, UBS, and AIG aggressively pursued subprime mortgages until everything collapsed eighteen months later.
Goldman's leadership avoided the trap of thinking things couldn't get worse. Instead, they kept digging into the problem with their specialists, and came to the realisation that it could get a lot worse, as it did for so main other firms, if they didn't take corrective action immediately.
Wise leader who are building their organisations need to resist these pressures and take a conservative course. As John Bogle, former CEO of Vanguard, says, "We have shifted from an 'ownership society' to an 'agency society."' While the agents can sell your stock any time they choose, you have to run the company. If outsiders are pressuring you to leverage up your balance sheet, you will be wise to remember that your task as leader is to enable the organisation to compete for the long term.
Many leaders will learn form the global economic crisis not to underestimate the length and severity of crises they face, even if their crises have nothing to do with the economy. When facing the early stages of a crisis, it is essential not to declare victory too soon. Prudent leaders recognise that survivability is their most important goal, so that they can come back strong as the crisis subsides.
In crisis strengthen your organisation: One should move aggressively to take actions necessary to strengthen one's organisation as it emerge from a crisis.
In, "The Prince," Italian philosopher Nicolo Machiavelli advised his followers, "Never waste the opportunities offered by a good crisis." Although it is hard to recognise at the time, a crisis provides a unique opportunity to create transformative change in your organisation.
When business is booming, staffing and spending levels inevitably expand too rapidly, and wasteful habits creep in. People become highly resistant to reductions in infrastructure and employment, arguing that cutbacks will hurt the company's growth and market position. The greater danger lies in not recognising the crisis early enough to take aggressive action. When that happens, revenues decline faster than expenses, and you never catch up.
Stay true to your values: One can make or break one's reputation in an instant. Look at the leadership of New York City-mayor Rudy Giuliani in the aftermath of the attacks of September 11. While national leaders retreated to their bunkers, Giuliani was instantly visible and present among the grieving people of New York. His caring was evident for the city's police and fire-fighters who risked their lives that horrible day. Giuliani became a symbol of a New York that cared and a mayor who exuded confidence that the city would overcome the worst disaster in its history.
The key to handling public issues is to be open, straightforward, and transparent. In a crisis, both employees and external observers are extremely sensitive to any attempts to dissemble or hide the truth. These will quickly be exposed, especially if subsequent events reveal your statements to be inaccurate or misleading.
Being transparent creates an open and human image of the organisation. Its leaders seem like normal people who are tasked to take on difficult challenges. When one is open, he is in a better position to ask people for their support. If things get worse, as they often do, people are more sympathetic to your point of view if one has kept them fully informed. During this time, one should be highly accessible within his organisation, wandering around the offices and labs, visiting factories, and participating in events around the company.
As US treasury secretary Paulson, in the midst of the global financial crisis, took the heat when things weren't going well. In doing so, he protected his boss, President George W. Bush, and Federal Reserve colleagues Ben Bernanke and Timothy Geithner from criticism, although (they had been full participants in every decision). In spite of occasional missteps and not infrequent criticism, Paulson built his leadership around honesty and courage - traits that served him well throughout his career.
Given these complexities, how should leaders deal with potential whistleblowers? They can make them irrelevant by creating an open organisation in which information flows freely and disgruntled employees have vehicles inside the company to express their concerns.
The greater your openness, the more people will rely on you to provide them with an inside view, and the less they will rely on the rumour mill. If they cannot get the answers they need from the leaders, they will join the rumor mill.
Leaders in the public eye are expected to have the answers to most things. But what should one say when one doesn't know, which is usually the case at the outset of a crisis? This early period, when information is sketchy and people are trying to piece together the full story, can be an uncomfortable time. People are counting on the leader to reassure them that everything will be all right. That's hard to do when one doesn't know what the actual situation stands as it may be much worse than anyone imagines. How can you instill public confidence when you have private doubts?
The natural instinct of most leaders is to follow the advice of their lawyers and public relations specialists to hunker down until they know where they stand. By saying nothing internally or externally or issuing meaningless statements, leaders come across as being isolated from reality, insensitive and uncaring, or even as stonewalling. Worse yet, they may lose the initiative to outsiders prone to rash statements that contain elements of truth. Rumors start to spread inside and outside the organisation. What could have been a manageable crisis suddenly develops into one careening out of control.
These days the intensity of the spotlight is so great that leaders cannot get away with dissembling or being intentionally misleading. There are so many different channels for information to become public that the truth will eventually come to the surface. The velocity of information transmission is so fast that leaders must establish the groundwork for transparent communications long before the crisis hits. The key is getting out in front of the crisis in its first hours with clear statements, both internally and externally, that accept responsibility and build confidence and credibility with the constituents.
Focus on winning: Look at a crisis as a gift. It provides you a golden opportunity that may not come again to reshape your business and your industry and emerge as the winner. But you've got to be bold and focused to seize it. Many leaders assume if they can just get through a crisis everything will return to normal. So they hunker down and wait for the storm to pass. In the meantime, their competitors are reshaping the market to their advantage.
Emerging from a crisis, markets never look the same as they did going into it. High profits will return, but the means of making money will be entirely different than it used to be. Why not reshape the market yourself? First, you need a clear vision of what future markets will look like. This requires a keen understanding of how your customers' needs will change as a result of the crisis. Second, you need a focused strategy to reshape markets to play to your strengths while exposing your competitors' weaknesses.
If you can pull this off, you may be able to catch your competitors off guard. By the time they wake up to what your organisation is doing, you will have solidified your leadership of the post-crisis market.
How one can take the global economic crisis, or any other crisis, and turn it into an opportunity to transform the markets and the business? Here are 7 steps to focus on for winning in the depth of the crisis:
-- Step 1 Rethink your strategy.
-- Step 2 Shed your weaknesses.
-- Step 3 Reshape the business to play to one's strengths.
-- Step 4 Make vital investments during the downturn.
-- Step 5 Keep key people focused on winning.
-- Step 6 Create company's image as the industry leader.
-- Step 7 Develop rigorous execution plans.
By taking these steps, you create a win-win situation for yourself and for your business.
(The writer is an advocate and is currently working as an associate with Azim-ud-Din Law Associates Karachi)