Chances are that if you’ve successfully become a CEO, you know what you’re doing. You’ve demonstrated that you’re a worthwhile leader, you get the right results and you’ve shown shareholders you’ve got what it takes to maintain a good reputation and keep a company running. But as the recession wave looms closer and companies find themselves faced with the pressing obligation to show profits, leaders’ ability to adapt and hold themselves accountable to their workers and shareholders will determine if they sink or swim.
For the past few years, tech companies especially have found themselves with a truly incredible cashflow at their disposal; investors weren’t as concerned with profitability as much as innovation. However, as interest rates continue to rise and people tighten their purse strings, companies are in a completely different spot than even just a few months ago. Leaders need to recognize this change in external market forces beyond their control and think about their execution plans for 2023.
I am not suggesting knee jerk reactions; however, to succeed, we need to begin thinking in terms of “nice-to-haves” and “must-haves.” Protect your must-haves, but be ready to reduce your nice-to-haves if necessary. I do not recommend making cuts right now. Instead, monitor the right leading indicators so that you can react and adjust with commitment and courage if the need arises.
Great execution demands that we have a Plan B when things don’t go the way we predict or the way we want; companies who do not have Plan B for success will do poorly in the near future. Poor execution is defined as missing the commitments you have made. If you do not have Plan B and are not ready to adjust, you will probably miss your commitments to customers that end up showing up in missed financial commitments to the street—and the street is unforgiving when it comes to missing financial commitments.
Some companies have been growing at all costs, burning cash, banking on a limitless supply from wealthy investors. It may be difficult to adjust your mindset, but it’s necessary, as the street has already signaled that we need to prioritize profitability. This is an adjustment that is needed to win in this current marketplace. You do not need to get to profitability instantly, but you’d better show a clear path to profitability and not miss your milestones along the way. It sounds like a simple mindset change, but it isn’t; don’t underestimate what it will take to achieve this change and the importance of communicating this shift to all leaders, messaged in a way that is inspiring to the whole company.
Don’t lose focus: prioritize accountability in yourself and others
A lot of these failures come down to lack of follow-through on obligations. Leaders have tons of commitments— to shareholders, customers, buyers, employees, and themselves— that seem important during the good times but are outright crucial in the bad times. Everytime a commitment is punted, deprioritized or otherwise ignored, companies lose money. This is a major leak that must be fixed if a company wants to stay afloat, let alone charge forward, during such turbulent times; companies must become efficient, and fast.
Holding yourself and others accountable is not just about efficiency, however. If you make a bad choice and make your execution of that action more efficient, all you’re doing is making something worse, faster. Execution is about getting things done correctly, on time and on budget, and this is much harder than it sounds— especially for big companies with many moving parts. The key is creating the correct systems, network and protocols, then driving up efficiency. To do this, we must often embark on the most universally hated responsibility we have as leaders: having difficult conversations with colleagues.
This is another thing that sounds simple in theory but is often very difficult to achieve in practice. If there’s a problem with someone’s style, work, or approach, you talk to them about it and you reach a solution together, right? Collaboration is the key to success. However, it takes skill to collaborate and have difficult conversations. It is more natural to circle the wagons and look inward in your teams instead of outward to collaborate with other teams and departments. It is hard to think about the best use of resources for the company, not just for your own team. Thinking only about your own team begins to create silos. This leads to rework, waste, and missed commitments. Working in your own silo is the fool’s choice. As effective and successful leaders, we must make the uncommon choice of reaching out to other teams and departments to collaborate.
I am often asked: How do you eat a 7-ton elephant? The usual answer is one bite at a time. I don’t think so. Eating and digesting an elephant one bite at a time still takes a long time and will cause indigestion. No. I prefer to eat the baby elephant! Essentially, what you don’t want to do is ignore the elephant in the room until it’s too big to handle. But this is the situation leaders find themselves in again and again, turning a blind eye to problems that could have been addressed six months or a year ago, now become a huge emotional and financial drain. The more leaders shy away from these difficult accountability conversations, the more money slips down the drain.
Denial of the communication breakdown is where leaders unintentionally waste the most time: Things are working fine! What are we worrying about? Maybe he’s not the best leader, but he did hit his quarterly goal last month. Oh, his department heads keep quitting? I’m sure that’ll blow over. And on and on. Until eventually, you’ve got no choice but to face that 7-ton elephant— and he is not happy.
Having those tough conversations is crucial for leaders to open direct and respectful lines of communication that save a lot of heartache in the long run. When this communication comes from mutual respect and understanding, both parties will have a solid foundation from which they can build a healthy organization. In fact, most people I’ve had those kinds of conversations with have ended up thanking me for being honest and helping them become better leaders. Once these issues have been settled, the real work can begin.
Create efficient systems
Once you’ve mastered the hurdle of being honest with your people, this opens up a door to examine your existing processes, communications and what your company defines as “good” execution practices for tasks and projects.
In my book, evidence of good execution is having the right focus, clarity and accountability to achieve your commitments. This is performance. This means that you’ve done what you’re supposed to do with the resources you were given, and have exceeded expectations in some way (perhaps by finishing a project well in six days instead of seven). However, it isn’t just about what a team member contributes; every person is part of a dynamic, constantly adjusting ecosystem that relies heavily on explicit communication between branches.
Good execution gives you good performance, and as companies take a hard look at their processes, they’ve noticed they are severely lacking. They find their current styles of communication leave pockets of error and stagnancy lying between not only managers and subordinates, but between supposedly “effective” individual project contributors across departments as well. Planning across the aisle has taken a backseat. This is a huge efficiency drain, and less efficiency usually equals less profit. During a recession, the worst thing you can do is waste money.
Cross functional discussions and planning across departments is a good way to assure collaboration with everyone involved in enterprise projects at your company. A well-maintained and regularly checked software system that unites all workers for the necessary cause and allows leaders to prioritize and plan will prove highly effective in the long run. Having robust systems in place creates a culture of accountability; direct and respectful lines of communication, clear expectations, and personal responsibility go a long way in driving efficient execution. Prioritizing these things in every employee and leader will ensure money-wasting actions are kept to a minimum.
As the recession looms and crests, it is imperative leaders look inward and commit to creating a company culture of accountability and fulfill obligations to themselves and their teams. Fortune favors the bold. The bold execute with courage and alacrity— don’t let the impending recession intimidate you. Focus on your commitments, get clear on what success looks like, then execute ferociously!