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Economic Crisis Creates Leaders
by Dr. Rick Johnson
February 15, 2010
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Economic Crisis Creates Leaders
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Significant challenges faced by leaders during tough economic times will separate real leaders from the imposters. So, ask yourself, “Are you a real leader?”
Recently while surfing the net I ran across an anonymous quote that read…..
“Leaders Don’t Create Crisis but Crisis Creates Leaders.”
What a profound statement. Crisis creates leaders. Crisis is certainly more prevalent and dramatic during tough economic times. It is no wonder that we are all being tested during these tough economic times. We must recognize and understand crisis and change management during these times to become more effective leaders to reposition our companies to thrive during recovery. This requires specific recovery and repositioning strategies.
Academics often claim that crisis management is synonymous with reactive leadership. They base their opinions on the belief that crisis is unpredictable. I think they are full of crap. Many Crises’ is often predictable both as an external dynamic and an internal dynamic. Crisis is generally a result of an organization operating culture becomes out of alignment with its operating environment. Effective leaders may not have a crystal ball but they have a good understanding on both internal and external market dynamics. This means they often recognize signals of impending crisis and can manage the urgency of the situation minimizing the potential danger while maximizing response efforts.
That being said, many of us (not all) missed the economic signals of the current recession. Part of that is due to the fact that the fish were jumping in the boat for so long we may have allowed our visionary skills to relax by getting into a comfort zone.
Profit Covers Many Sins
I often state that “Profit Covers Many Sins”. Simply put that means that leaders struggle managing change while in the easy profit comfort zone as they prefer to avoid conflict, tough decisions and anything else that could upset the status quo. Leaders that find themselves in this environment are often jolted by crisis and since they are unprepared the very existence of the corporation could be threatened.
Initial survival requires immediate attention and urgency to solve the underlying issues that could be causing the crisis. Economic crisis demands immediate attention by establishing contingency planning activities that include cost management and reexamination of “Lean Management Philosophies”. Effective leaders look upon this type of situation as an opportunity to create a new business model that leverage the company’s competitive advantage and upgrade the systems, structure, processes and personnel within the company.
Economic Crisis Creates Opportunity for Change
Creating change when the fish are jumping in the boat is extremely difficult. It is human nature to avoid stepping out of a comfort zone. We realize that change is often a threat to stable relationships, balances of power, functional sharing of operational activities and distribution of resources. Change can also create conflict which we all have a tendency to avoid. It is often very difficult to introduce change without some pain being felt somewhere in the organization. Face it, if there were no pain there probably would be no need for the change.
Credibility and Respect the Foundation of Change
Although most effective leaders recognize the need for induced change we often struggle with providing direction without causing pain. It becomes an exercise in balancing the intense pressure of stress while fighting the human instinct to resist change. This in itself demands that leaders establish respect and credibility long before crisis occurs or change is introduced into the organization. Leaders that haven’t earned this respect and credibility will find it extremely difficult to lead during crisis and will be unable to effectively manage change.
Credibility and respect are built on the company’s core values and the individual’s core values which must be in alignment with the core purpose of the organization. Employees need to understand how these core values relate to the changing environment they find themselves in.
Crisis Creates Leaders
Crisis itself can become a wakeup call. It can rejuvenate our competitive spirit and force us to recognize the most pressing issues of the changing dynamic forces thrust upon us by the current economic recession. Once we awaken from that self induced complacent slumber of easy success and profitability it becomes much easier to recognize the signals and tremors of impending challenge and potential disaster. It becomes much easier to seize the initiative and harness the sense of urgency to create the change required to reposition the company to thrive during recovery.
Check out Rick’s new CD and workbook Real World Leadership Kit --- “Learning to Lead So Others Will Follow”
www.ceostrategist.com – Sign up to receive “The Howl” a free monthly newsletter that addresses real world industry issues. – Straight talk about today’s issues. Rick Johnson, expert speaker, wholesale distribution’s “Leadership Strategist”, founder of CEO Strategist, LLC a firm that helps clients create and maintain competitive advantage. Need a speaker for your next event, E-mail rick@ceostrategist.com. Don’t forget to check out the Lead Wolf Series that can help you put more profit into your business.