Businesses across all industry sectors are facing tough times as the current financial crisis deepens. Business Management’s Tom Benson asks: does this require a different approach to leadership?
“This situation is so complicated, and the experts seem to be so few and far between, that it would seem to me a very good moment for bringing in a kind of collective leadership – or at least a leadership that utilizes multifaceted advisors with different points of view.”
-Barbara Kellerman of Harvard University’s John F. Kennedy School of Government
The word ‘crisis’ implies a certain kind of immediacy. The attack on the World Trade Center is an extreme example of this, where from one moment to the next, the world changed. We needed and wanted a certain kind of crisis leadership at that point, and we got it. Within days we knew who the enemy was and had a focus for our response: Osama Bin Laden and al-Qaeda.
This financial crisis is different. Firstly, it has been has been relatively slow to unfold. The drama has taken place over a period of weeks, months even, and the effect has been a feeling of steadily increasing unease rather than instant shock. Secondly, there is no one person to blame, as such; even where there are obvious fall guys – the head of Wachovia, the head of Lehman Brothers, the head of AIG, all of the people being questioned before Congress – the finger-pointing is too simple to be taken seriously. This is a problem of many hands.
Unfortunately, just as there are no single bad guys, there are no easy-to-pinpoint good guys. “There is such a level of complexity here that one scarcely knows where to turn for leadership,” suggests Barbara Kellerman of Harvard University’s John F. Kennedy School of Government. “If you’d asked me a month back, I might have suggested that Hank Paulson was a good example of a leader for tough times. But when Congress didn’t approve his bailout plan the first time around, his clout seemed almost palpably to diminish. It didn’t make him suddenly a bad leader; it means the momentum of the situation, combined with the complexity of it, makes it very difficult to pinpoint a single leader.”
Another problem has been the enfeebled position of the US president at the time the crisis began. “Every time he took to the airwaves, it had virtually no effect,” continues Kellerman. “Nobody, in effect, was listening. Had there been more effective presidential leadership, things would not have unraveled as fast as they did. It’ll be interesting to see what happens when the new president takes office, and the role he plays in calming fears. We’re beginning to sense a level of fear and panic, both in the markets and on the street, and I can only quote FDR in that there’s nothing to fear but fear itself. I think the first task at hand is to calm people’s nerves and to try to reduce that level of panic.”
In other words, from the highest office down we now require a different approach to leadership – and we can all play a part. “This is a systemic issue so I hate to train the lens only on those at the top, as if they are somehow single-handedly responsible for what happens,” argues Kellerman. “For instance, I think activists of various kinds – shareholder activists, for example – have a real role to play in how we emerge from this. The media also has a significant say in how events and situations unfold.”
And as to what CEOs can do, Kellerman feels successfully managing through tough times calls for a greater degree of balance – both personally and professionally. On a personal level, this means looking at simple things such as maintaining a good work-life balance, getting enough sleep, staying reasonably healthy and not losing your cool; on a professional basis, it means going back to one of the tried and tested fundamentals of what constitutes good leadership. “This situation is so complicated, and the experts seem to be so few and far between, that it would seem to me a very good moment for bringing in a kind of collective leadership – or at least a leadership that utilizes multifaceted advisors with different points of view,” says Kellerman. “You need to make sure that you hear all the various arguments before making any major decisions.”
Executives need to be highly informed, have access to all kinds of information, and implement a collaborative leadership structure that both reaches down into their own organization, and also out to leaders at different organizations across industry verticals and in various geographic locations. Opinions need to be diverse, as opposed to single-minded. And mavericks and alternate thinkers should be celebrated, not marginalized.