Leaders facing tough times can draw on a three-step plan, says Dean Christoph Loch.
Leaders of organisations facing big challenges such as the coronavirus crisis can follow a three-step route to stabilise, examine and move their organisations forward, the Dean of Cambridge Judge Business School, Christoph Loch, says in the first of a new video series “CJBS Perspectives: Leadership in Unprecedented Times” at the Business School.
Companies facing deep problems owing to the pandemic need to first “stop the bleeding” by establishing a floor to prevent the firm collapsing; examine strategic assumptions to understand what is not working; and then bring the organisation along in a new direction.
“Bringing an organisation along takes honesty and the realisation that bringing people along is an emotional piece of work and not a cold-blooded analytical piece of work,” Christoph says in the video, the first of a series entitled CJBS Perspectives: Leadership in Unprecedented Times, organised by the Alumni & External Engagement and Executive Education teams at Cambridge Judge.
The next two videos in the series are interviews by Christoph with two prominent business leaders, Lord John Browne, former CEO of energy company BP, Chair of the Francis Crick Institute and Deputy Chair of oil and gas company Wintershall DEA, and a former Chair of the Cambridge Judge Advisory Board; and Lord Karan Bilimoria, founder of Cobra Beer, Vice President of the Confederation of British Industry, and current Chair of the Cambridge Judge Advisory Board.
In the first video, Christoph describes the COVID-19 crisis as “in some sense the worst catastrophe I’ve seen in my 35 years of professional life, in that it cuts across many sectors.” But he noted that there have been major disruptions every decade such as the dot-com bust followed by the 2008 financial crisis.
“So this is not unique,” he said. “This is about resilience, personal and professional, the ability to respond to quick, unforeseen changes” – and that’s where the three-step process comes into play:
Establish a floor to stabilise the organisation
Stopping the bleeding means focusing on what you are still doing, conserving cash and steadying the organisation “to a level where you can at least survive and make the necessary changes”. This may entail tough decisions including job losses until business recovers, or under a current UK government programme putting workers on mostly paid furlough.
During this stabilisation period, it’s essential to serve very well the customers you still retain: don’t despair and treat them badly because “that’s a recipe for disaster as you’ll lose them as well”, and demonstrate brand resilience through marketing and other techniques that send a message “that we’re here and want to work with you”.
Examine strategic assumptions, and make adjustments
In characterising current strategy, organisations should ask four fundamental questions: What products do you offer and what do customers do with them; who are your customers; why do people buy your product or service at all, and why from you (and the organisation should verify this from customers, not just assume what it thinks customers like); and how your business model now works and ways it can be changed.
“You need to do an analysis so you understand which aspect or aspects of your strategy are no longer working,” Christoph said. “You cannot just blindly change things. If you don’t understand where the breakdowns are you can’t bring improvements to your business.”
He said there are three key paths to re-building the business after stabilisation: serve existing customers with current products and services, but improve them to make them more appealing; serve current customers but offer something different; and offer current products to new customers. However, offering totally new products to totally new customers may be very risky in the current challenging situation, to the point of sinking some companies.
Bringing an organisation along
Fair process, transparency and clarity in explaining decisions, and giving people a voice in such decisions is critical to ensuring that employees rally behind difficult changes in challenging times.
“Once decisions happen behind closed doors, the rumour mill starts turning,” Christoph said. “Once you lose trust, people will no longer give you their collaboration.” People gain respect if they feel they can influence decisions: “It’s not a democracy, it’s an emotional reaction. You may find that some people have better ideas than you.”
Finally, he said, leaders need to convey the hope of a brighter future in difficult times. “If you can identify a vision of how we can turn this negative thing into – on the other side when we come out of this crisis – something that is positive, then people will be very happy, and that is when people will be throwing themselves behind this.”
The interview is part of our CJBS Perspectives: Leadership in Unprecedented Times series of talks and presentations from exceptional leaders, faculty and alumni, born of the challenging times in which we all currently find ourselves.