You Can’t Manage Your Way Out Of A Crisis—You Have To Lead

The pandemic has caused plenty of fear and angst across industries, but it will also offers big opportunities for leaders who choose to seize them.

The worldwide containment effort to halt the spread of COVID-19 has had far-reaching impacts on both the world economy and local communities.

Our lives have been significantly altered and the economy has been severely impacted, as reflected in the Dow Jones Industrial Average, which was down nearly 30 percent before partially recovering recently. In addition to our 401ks quickly shrinking, job losses have accelerated over the last two months with real unemployment now over 20%, levels not seen since the Great Depression.

There is no doubt that the coronavirus pandemic qualifies as a crisis, and that it has and will cause many hardships for people. But a crisis also creates opportunities for leaders. President John F. Kennedy said in a speech in 1959, “The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger—but recognize the opportunity.” While Chinese language scholars have since explained that this interpretation might not be completely accurate, his point has never been more relevant: a crisis is an opportunity to lead.

Leaders vs. managers

Functionally, managers and leaders apply different approaches in pursuit of different outcomes. Managers get people to follow rules and procedures in an effort to reduce risk and deliver predictable outcomes. Managers view variability as a threat to be reduced as much as possible. A crisis creates change that often overwhelms most management systems.

Leaders, on the other hand, rouse others to take risks and challenge the status quo in an effort to achieve something new and better. Leaders view variability as an opportunity to achieve results that others think are impossible. A crisis is an incredible leadership opportunity.

Companies are filled with managers who have good intentions but are often unable to convince themselves to take a risk. They’re part of a culture that rewards hitting your goal, not taking on challenges that might be hard to solve. They accept boundary conditions for what they are—limits on what’s possible. While this structure works well when the objective is to maintain some semblance of the status quo, it often fails in times of crisis. Since crises don’t resolve themselves, somebody has to step up and find a solution to the new set of circumstances.

During times of uncertainty, a simple truth reveals itself: You can’t manage your way out of a crisis; you have to lead.

Crisis creates leaders

In the early 2000s, William Clay Ford Jr. was the CEO of Ford Motor Company and great-grandson of company founder Henry Ford. During his tenure as CEO, he tried to focus the company on making great cars instead of remaining mired in internal politics and infighting, but without much success. Then the Great Recession hit in 2007. Ford had to convince his family members, who controlled almost 40 percent of the company voting shares, to allow him to pledge the trademarked blue Ford oval as collateral for a financing package to help the company survive the downturn.

Saving the family legacy became more important than the internal politicking that had plagued the company in the past. This gambit created a renewed sense of focus and willingness to take risks that allowed the company to break through the decades-old management barriers and enabled the incoming CEO Alan Mullaly to make real changes.

Ford is an excellent example of how a crisis creates incredible opportunities for business leaders. It creates an environment that, under normal circumstances, is nearly impossible to replicate. A crisis shifts the organizational mindset in three important ways.

1. An increased appetite for risk. During normal times, business decisions are based on some type of risk/reward analysis. Is the potential gain enough to outweigh the risk of failure? In practice, the fear of failure almost always overrules the argument for change. As a result, most organizations are inherently risk averse.

But in a crisis, the dynamic shifts dramatically. When everything stops working as expected, risk becomes less risky. Change becomes not something to be feared, but rather a strategy to possibly make things better. These new ideas may not work, but they become much better options when the status quo is failing. When an organization realizes that there’s almost no downside to taking a chance, then everything starts to become possible and the real risk becomes doing nothing.

A crisis creates an opportunity for leaders to convince others that it’s in their best interest to embrace change and take risk.

2. A renewed focus on what really matters. Most organizations evolve over time to become good at managing competing, and sometimes conflicting, priorities. For a variety of reasons, once something makes the list as important to do, it becomes almost impossible to stop doing it. As a result, organizations allocate resources across a range of priorities, even though some are clearly far more important than others. By default, this reduces the focus on the best ideas.

However, a crisis fundamentally shifts this balance. When your back is up against the wall, the only priority becomes survival. You have no choice but to direct all of your attention to the problem that really matters. This focus is an extremely powerful tool that can give ordinary people the ability to do the extraordinary — especially when people’s jobs are at stake.

A crisis enables leaders to focus everyone on what really matters and to eliminate distractions that might otherwise get in the way of the goal.

3. A reevaluation of mindset. According to the consulting firm McKinsey, 84 percent of executives agree that innovation is critical for their business, but only 6 percent are satisfied with their performance. It seems that the more people try to implement processes to be more innovative, the less they actually do it. The problem is not the process, but the people following it — and more specifically, their mindset. But someone’s mindset does not easily change on its own.

When an organization faces a crisis, the people inside it are forced to reevaluate how they think about their work. This opens the door to shifting the entire mindset of the organization. Values may change from collegiality to brutal candor, from compliance to rewarding initiative, from valuing learning more than being right. If you’re satisfied with how things are, you will never motivate others to overcome a crisis — because innovation requires a mindset to pursue the impossible, and that mindset starts with the leader.

A crisis forces leaders to reevaluate their mindset and create an environment where success is the only option.

Perspective is a choice

You have a choice in how you view this crisis. In fact, the opportunity actually lies in your perspective. As John Wooden, the legendary UCLA basketball coach who won 10 national championships in a 12-year period once said, “Things turn out best for the people who make the best of the way things turn out.”

A crisis is the perfect time for people to take more risks, focus on what really matters and embrace the opportunity to lead.

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Chuck Swoboda is Innovator-in-Residence at Marquette University, President of Cape Point Advisors and retired Chairman and CEO of Cree, Inc. He is co-inventor on more than 25 patents covering LEDs and lighting technology, and has over 30 years of experience in the technology business. Additionally, he is an author, speaker and host of the “Innovators on Tap” podcast. His new book is "The Innovator’s Spirit: Discover the Mindset to Pursue the Impossible" (Fast Company, May 5, 2020). Learn more at www.chuckswoboda.com.