Entrepreneurial Leadership In a Recession
Challenges Leaders Are Facing in Today’s Economy
It’s not hard to dispute that we are living through very difficult economic times. The global financial system has changed fundamentally and we do not yet know what the new paradigm will look like for entrepreneurs. We do know, however, that organizations that are well led will have a much better chance of surviving these turbulent times. This is not the occasion to take your eye off what needs to be done if you and your team are going to outperform the competition. Smart executives know that this economy requires leadership competencies that are different than when business was good. They also know that if any member of their team is underperforming, they are doing something proactive about it.
LEADING A DOWNTURN
What are the essential ingredients of successful entrepreneurial leadership in these troubled times?
1. Skillfully Manage Change
Entrepreneurs, for the most part, started their business because they were able to outperform their competition by doing what they do faster, better and at a greater value to their customers. They did not offer their staff any illusion of certainty but rather encouraged them to be nimble, seize opportunities and skillfully manage constant change. In today's business climate, no sector is immune to the treat of disruptive change and the entrepreneur should not stop doing what he/she did in the past that helped them be successful.
2. Clearly Communicate Your Vision
It is our experience some entrepreneurs, in these tough times, have forgotten what helped them skillfully start or lead their businesses. When they started and when they were growing, they had a clear vision for the organization. Their staff understood that vision and were committed to achieving those goals. Now, more than ever, the entrepreneur must communicate that vision. The entrepreneur's voice must be distinctive in order to excite others to exceptional performance, and despite the turmoil, change is possible and creates opportunities.
3. Manage Tensions
Effective leadership requires managing a series of tensions that are significant in a downturn. Entrepreneurial leaders will also be tested by their capacity to articulate meaning and make sense of these difficult times. This is not time to be faint of heart, sit in your office and not to talk to your staff. Rudy Giuliani, mayor of New York at the time of the terrorist attacks of 2001, offered New Yorkers hope for the future. As the tragedy unfolded, he assured them that NYC would be back. You, as entrepreneurs, put in the context of your business, have the same opportunity.
4. Seizing Opportunities
Entrepreneurs know, and frankly welcome difficult times because they know that the tough times will kill off poor operators. This allows the strong entrepreneur to take market share. They not only respond quickly to situation demands and opportunities but act to reshape them. They know that in difficult times, weak business leaders are trapped by circumstances and become entirely reactive. Skilled entrepreneurs not only react but proactively and constructively reshape events.
5. Retaining Your Culture in Tough Times
Entrepreneurs also know that cut backs are a prerequisite for cost control, and in some cases, survival. These actions are always painful. But they should not come at the expense of destroying the entrepreneurial culture that helped make the organization special in good times. Creating a sense of closeness with those who have survived the cutbacks, a closeness that ensures a "we are all in this together" feeling is critical to communicate.
6. Assessing and Developing Leaders in Tough Times
Finally, successful entrepreneurs focus relentlessly on the task of assessing the leadership competencies of his/her team. The competencies required to succeed as a leader in difficult times may be different that they were when business was good. One needs to be more creative, handle stressful situations well, and be nimble and pro active if they are going to outperform their competition. Even in difficult times, when you are cutting costs, it is critical to invest some money on leadership assessment and development programs if you are going to successfully achieve your vision. This action will very clearly send a message to your team that you are being your authentic self because you recognize this is not a time to have even one person who is underperforming...that every member is critical to the short and long term success of the business...that each of them will have different and difficult roles to play.
Richard James & Partners assists clients assess and develop high performance teams that outperform their competition. For more information, please contact us.