Top Teams in Tough Times

by Larry Levin, Ph.D.
February, 2009

For the past 15 years, we’ve worked closely with executive teams within global Fortune 1000 companies across the span of healthcare, financial services, manufacturing, life-sciences, and technology.

We’ve seen senior teams learn to navigate growth, manage significant and complex change, and learn how to address the new global marketplace and economies. These experienced teams have had to react to sudden shifts in political conditions and commodity prices, as well as to global mergers and rapid, unexpected market changes. These teams have had to simultaneously think of how to courageously grow a business while “bottom-proofing” it against a downturn. These are smart people doing what is “business as usual” for a top team—or at least should be. And these teams are both committed and ultimately responsible for setting and executing strategy, for ensuring financial results, and for securing a future for their employees.

Yet despite our experience, what we are seeing now is unprecedented. The sudden, intense, global economic shifts of 2008-2009 have impacted virtually every individual and every company across the world. Speed of change is continually accelerating. We see how quickly bad banking practices in the US impact the stock market in India and how commodity price drops caused by reduced demand decimates a growing economy in Russia. We see the enormous ripple effects that occur when historically stable organizations such as General Motors teeter on bankruptcy and the impact this has on their tier 1-3 suppliers. The list goes on. The flat and interconnected world that we are just beginning to understand is suddenly very real to us and seems very uncertain. Predictability and control, the two major variables of how we experience stress, are diminished. The world in which we live suddenly seems much more complex and ambiguous.

These are tough times for top executive teams faced with a new series of paradoxes that require a new mindset and new thinking about what alignment means. How do we bottom-proof the company and grow at the same time? How do we focus on innovation while ensuring we’ve “gone back to the basics” of our business? How do we maximize collaboration while restricting travel and meeting expenses?

Top teams carry with them tremendous collective intelligence, operating experience, and the ability to exert significant influence over their company’s mindset, focus, and performance. They have both the opportunity and obligation to navigate big change and make a significant difference in the future of their organization. And ultimately, they are responsible for dealing with both the “Now and the New”—the current reality and the evolving future.
So while all top teams have this responsibility, only some do it well, especially when under tremendous stress and pressure. From our research and interviews with senior leaders, there are seven essential practices that top teams must do in these tough times.

  1. Be for Something.
    In the face of uncertainty, senior teams must first decide and articulate their common purpose and their clear vision—what they are FOR. This is the key aligning principle as it defines the intersection of leadership direction, organizational concern, and current reality.

    Leaders, especially in times of threat and ambiguity, must align around a common direction for the organization and communicate this with clarity and tenacity. It is quite possible to stay true to a long-term vision while knowing that the path to get there has been radically changed. It is also possible that the very identity and vision of a company must be dramatically shifted, forcing leaders to change direction in ways that were never predicted. This is not all that unusual in times when mergers between competitors, once thought unimaginable, have become an everyday occurrence.

    This process requires real and ongoing dialogue among the senior team and throughout the organization about current realities and what must and must not change in order to secure their future. Everything must be on the table as teams re-define success and survival. As a senior leader in a large beverage company told us, “We have to get past how we have historically looked at things, overcome our classic objections around ‘we’ve never done it that way’ or ‘that won’t work here,’ and move the conversation forward. Hopefully somebody on our team will be looking farther out than everybody else.”

    Dynamically, this is where teams demonstrate courage, as they must both take on and manage risk while, at the same time, look for opportunities to grow. And this must occur in an environment of real openness, deep collaboration, and broad engagement as the world continues to churn and change. As Ram Charan writes, “The source of teamwork is a common future.” Defining this future is essential to aligning leadership teams and the employee body.
  2. Align the Stars.
    Once you have clearly defined the “senior purpose” of your team, you must align your team behind it. While this seems obvious on the surface, it is a critical and often difficult process. Questions that must be asked are: Given the mission and purpose of the organization, what kind of team do we need to be in order to accomplish it? Where are our critical interdependencies? How do we best reach across functions and geographies? How do we work together to lead the organization in these times? What does it mean to be a leader in this company today? These questions may sound simple, but there are no easy answers.

    Since the corporate environment today is not business as usual, top teams must re-examine how they work together in the service of the mission. In other words, they must constantly define themselves as a team. Two seemingly opposed default settings are at work: On the one hand, the senior team has a common enemy—survival—which tends to pull people together. On the other hand, the overall environment of uncertainty and scarcity drives more “tribal” behaviors; people hold on tight to their jobs, functions, teams, or information in an attempt to maximize security. The antidote to these almost automatic and autonomic responses is to create a conscious and deliberate environment at the top that continues to examine how they are working together in the service of the mission. We see examples where senior teams, whose major commodity is time, are deliberately scheduling bi-monthly off-site meetings to ensure they stay focused on the “big things.”

    Some of the questions that must be on the table include: What kind of team are we? What issues do we have to address and resolve? Are we structured properly? Do we have the right people on the bus? What are our critical priorities and accountabilities? How do we make decisions? What kind of team do we need to be going forward? This is iterative dialogue, and it is very important that leadership teams stay with it and take the time to make things explicit that were always implicit. Brian Kesseler of Johnson Controls Power Solutions describes asking his team to “challenge everything you’ve ever thought” as decisions that made sense six months ago may no longer apply.

    A CEO of a Global 1000 manufacturing company said, “We are having conversations we would never have had a year ago. We’re forced to look at things differently. We’re forced to anticipate what we might do today that will be absolutely wrong for the future.” Leaders need to drive this conversation or at least be open to it. And they need to remember that nobody solves problems of this complexity on their own.
  3. Focus on the Now and the New.
    The social and behavioral compact with employees is changing as aggressive cost cutting, resource redistribution, opportunistic acquisitions, etc., require people at all levels to acknowledge new realities and operate in ways that can be very different. Optionality, as described in Blue Ocean strategy, refers to how the team behaves in ways that maximize their chance to explore options honestly rather than retreating for fear of being wrong or making a mistake.

    I recently asked a CEO how he was handling the new environment. He replied that if he couldn’t find the real value in people and processes, then he had no right to be leading the company—that held true for his team as well. He went on to say that while they had to focus on the “real work,” they also had to be scanning the environment for opportunities and growth.

    His point was that as markets adjust, discontinuities appear. Some competitors don’t do well, thus disruption creates opportunities. His responsibility is to keep the executive team focused on the present and the future at the same time—what we call “The Now and the New.” This is not an easy thing to do.

    A critical skill set is the team’s ability to understand and manage paradox—which means dealing with seemingly opposing forces where there is no clear right versus wrong. Do we focus on strategic growth or do we try to bottom-proof the company? Do we focus on our core business or look for new ways of operating? There is no one right answer. Thus identifying critical areas of paradox and managing them as a “both/and” versus a classic “either/or” decision is an essential navigational skill.

    At the end of the day, the team has to decide on those few, but essential priorities around which to execute. There is a delicate balance between keeping dialogue open enough to fully explore options and making the decisions around where to sharply focus energy and resources. Knowing the “default setting” of your team—what their preferences are when faced with uncertainty—and ensuring that you lead in such a way as to balance open dialogue with making clear decisions on the top priorities, is key to moving optionality to execution.

    While there seems to be a desire in many teams to “go back to the basics” of what made a company successful, our view is this is important, but it is insufficient. The good news about burning platforms is they create possibility, and the responsibility of senior teams is to recognize, manage, and re-direct disruption into focused advantage. This is especially true if we believe, as most do, that this period of crisis and uncertainty will end, and organizations with strong leadership teams, good balance sheets, efficient operations, and investment in leadership will prevail.
  4. Be Visible and Talk Straight.
    There is no more important time for leaders to be visible. A CEO of a large life-sciences firm told us that if people are paying attention to just the headlines, they’ll become distracted and driven by fear. And this, he said, is antithetical to building the alignment, collaboration, and trust in leadership that is so critical to have at this moment in time.
    Building and maintaining trust is primary, yet difficult to earn and keep during these times. A scarcity mentality breeds bad behaviors. People tend to become more siloed and more tribal when feeling threatened. After restructurings have taken place in already lean organizations, people must do more with fewer resources, with more pressure and less certainty. There is likely an imbalance of loyalty, as employees sense that they care more about the organization than management cares about them.

    Yet, paradoxically, this becomes the time when both leaders and staff have to reach across functions and geographies and be more collaborative. Lack of trust slows things down at a time when speed is of the essence. Leadership teams must pay attention to those things that engender and build trust—ensuring there is a good balance between “say and do.”

    Clearly, the responsibility of leadership teams is to build this trust, communicate clearly, engaging employees to assist in solving problems, and be as honest and transparent as possible—to their customers, employees, stakeholders, and to one another.
  5. Lead Change from the Front.
    Leaders are required to imagine change that would have never been possible or imaginable in their reign. They are often challenged to fundamentally rethink the very nature of companies they have created or led for years. This creates huge paradigm shifts in executives and employees alike as the ground underneath them feels shaky.

    Separating the professional from the personal is more difficult than ever as many people see their net worth, options, and retirement plans under water with less sense of the old reference points. As Dr. Patricia Wheeler has commented, “It’s like working without handholds. Where is the old normal to hang onto as you are creating the new normal?”

    Leading change requires maximizing predictability and control, especially when both feel in short supply. Disruption caused by uncertainty is corrosive and distracting. But since change is real and is in our face, open and proactive communication about what will and must change is essential. Yet it is equally important to communicate what will not change in organizations. Core values, operational excellence, uncompromising safety, authenticity are among those things that, for great companies, should not change. The research on the “old” companies, those that have lasted 50 years or more, indicates that core values hold true and withstand the winds of change.

    One of the leaders we interviewed invoked the metaphor of being at halftime in a football game. The coaches spend some time talking about what has happened, but really focus on the top priorities for the second half and the need to execute against these. This focus drives predictability and control, and diminishes the disruption that is corrosive to performance. Leaders have a tremendous responsibility to coach their players and their teams when uncertainty abounds and threat seems to be around the corner.

    It is important for leaders to understand and deal with the stress and uncertainty within employees. Don Mueller, VP of Strategy for Children’s Health Care of Atlanta describes the need to be in tune with the “core needs of the employee body” and work to demonstrate that understanding. Children’s Healthcare works to ensure the employees stay connected to the core mission of the hospital and that their executives stay connected to the felt needs of employees. They do this in simple and powerful ways such as providing gas cards when prices are high and grocery cards for holidays.
  6. Demonstrate Courage in the Face of Uncertainty.
    Many years ago, I heard this definition of courage: “an equation composed of doubt plus commitment.” There is no question that doubt, whether it is about how long the economy will languish, or when the firm will regain profitability, is a very real part of the intellectual and emotional fabric of anyone’s thinking. Doubt, by itself, is at worst paralytic, and at least distracting. Commitment requires that leadership teams take an active role in crafting the vision of the future, and articulating what each individual must expect and do to move forward. This is real engagement. Realism and commitment equate to courage—being fully in the game no matter what.

    Marshall Goldsmith, in his wonderful book What Got You Here Won’t Get You There, describes good leaders as operating with a relentless view of the future, embracing those behaviors that reinforce the future. We think of this in our off-site work with leadership teams, which we call “advances” rather than “retreats.” Unfortunately many teams are in “retreat” right now, because they believe that their roles and goals are changing or will change. They’re unsure what the criteria for success will be in the year(s) ahead. An ongoing dialogue process that is connected to the senior purpose and focused on critical priorities is essential among the executive team(s). Elizabeth Bastoni of Coca Cola suggests that “If you create dialogue in the good times, you have a better chance of having the right conversations when things are going bad.”
  7. Be Fully in the Game.
    Jake Jackson, a Senior VP of Nationwide makes the point that leadership teams have a choice: They can go forward with fear or with trust. Jake believes that teams cannot operate successfully and capture opportunities in a tough market if they are governed by fear. Thus, the only choice is to embrace the challenges and go forward with optimism and trust.

    In fact, most of the leaders we interviewed painted a clear picture of creating top teams who lead with a mix of reality and optimism, who focus on execution and solutions, and who deeply believe in serving others and doing the right thing. One of the most frequent comments we heard was that any decent team can thrive in times of growth or even mediocrity, but only those teams who are “fully in the game” can rise to the occasion and grasp the opportunities when times are tough.

    This does not come automatically, even to the best of teams. Operating with conviction, with passion, with a clear articulation of what this team believes in—what it “is for”—is a conscious and deliberate process. It requires open dialogue. It requires that nothing is hidden and very little is unspoken. It requires an unshakeable belief in the team’s ability to have the courage and collective intelligence to navigate the future and lead the organization through rough water.

Lawrence S. Levin is Founder and Senior Partner of The Levin Group LLC, a consulting and advisory firm with over 20 years of experience in improving senior team effectiveness, organizational performance, and leadership solutions for CEOs, top executives, and Senior Teams. He spends most of his time working with executive teams, helping smart people become even better leaders. You can contact Larry by telephone at 404.377-9408 or by e-mail here.

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