My corporate clients are in a panic. Their business reality, as they knew it before mid September 2008, has shifted. Companies with strong cash reserves are holding back on spending. Companies without strong cash reserves are shedding employees and cutting capital expenditures. The rules of the game have changed. Yet, we all know that some firms will not only survive, but thrive during these shifting times. What will make the difference?
Based on my experience, leaders who are adept at making sense of a VUCA (volatility, uncertainty, complexity, ambiguity) environment while making strategic decisions will thrive. The margin for error is narrower than ever. Leaders need accurate and timely information in order to navigate these rough waters. Here are three practices that leadership teams can employ to increase their odds of success:
1. Shared Sensemaking
Leaders can create a culture in which all employees are acutely aware of both opportunities and threats in their environment, frequently update each other regarding how they are making sense of that information, and interact respectfully to come to a shared understanding. I worked with one client organization in which employees saw early warning signs but needed to polish the message before sending it up the management chain. Their management did not like bad news and those who delivered it were ostracized, reprimanded, or fired. Therefore, the information that the leadership team received was not accurate, and critical decisions were flawed.
In today's environment, with daily shifts in global markets and economic realities, the ability to implement a direction, make sense of it, and then make adjustments is critical. I once worked with a client organization during the dot-com bust. They had tied their strategy for growth to an anticipated influx of capital, even though there was every indication that the bubble might burst. They paid close attention to what was happening and made realistic interpretations. They had the courage to go to their Board with a new strategy and rode out the storm.
3. Willing to Not Know
Leadership teams that are willing to say "I don't know" are much more likely to create an atmosphere of listening and exploring. In my more than 20 years of consulting, I have worked with a handful of executive leaders who were willing and open to tap the wisdom of their employee base. The quality of their strategic decisions was markedly higher and these were the firms that ultimately prospered in tough times.
Is your leadership team helping create a network of individuals attuned to your strategic vision, yet on the lookout for subtle shifts that might derail execution success? Are you able to make adjustments quickly enough, and without knee-jerk reactions? And are you willing to listen before making critical decisions? If your answer is yes, you are much more likely to thrive.
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