Leading in Crisis: Key Takeaways from Latest Family Business Seminar

by Gale Martin, Director of Marketing and Member Relations, S. Dale High Center for Family Business

Day to day, some executives never get to directly save lives in the course of running their family business. Then again, their mission isn't shooting astronauts into space and bringing them back alive either.

Make no mistake about it, however. Today's stalled economy shows no signs of catching on fire soon, according to one of the presenters, Scott Heintzelman, a partner with McKonly and Asbury, who is better known by his moniker, "The Exuberant Accountant." Though personal savings are up, the current employment recession shows no signs of abating. It's Heintzelman's prediction that economically businesses will have to accept a new normal, which looks very little like the old economic environment, and that leaders need to adapt their business plans and models accordingly.


Mike McGrann, family business consultant

Leading a family business in today's economic climate may feel manning a rocket launch into outerspace, at least in terms of the risks and pitfalls involved. It's fraught with challenges such as diminished sales, labor shortages, poor employee morale because of layoffs and downsizing, paying for the ever increasing costs of fringe benefits, complying with new regulations, etc. The economic downturn has been cause enough to throw businesses into tailspins and test their ability to lead through crises.

Presenter Mike McGrann, executive director of the S. Dale High Center, suggested that leading in crisis demands that executives ask and answer some hard questions:

1. Are you honest about the brutal facts? Are you willing to face them?
   A few years ago, US Airways management would not accept responsibility for the severe employee morale problem and slowdowns following a 20% pay cut; and instead of containing the performance problems, they exacerbated their woes--dramatically--imperiling their corporation. "The difference between a good leader and a great leader is the amount of information they receive," says management expert Michael Useem.
2. Can you let go of the need to be right? Convergent vs. divergent issues.Great leaders build a participatory culture. That means giving team members a voice (though not necessarily a vote), a right to express their opinions and challenge others' assumptions, a role in establishing their goals, and a feeling that their voices are heard. Leaders need to let go of the need to be right. As leaders, they get to make the final call. "Arrogance makes failure," says Millard Drexler, CEO of the Gap, Inc. "Once you think you know the answer, it's almost always over."
3. Are you willing to conduct "constructive post-mortems" that get to the real cause?Problems are multi-layered and systemic and not linear. There is rarely one single cause for a problem. Leaders are part of the circle that is seeking processes of change and mutual solutions. Ask questions with the goal of seeking knowledge and understanding. "Don't push growth; remove the factors limiting growth," says Peter Senge, organizational learning specialist.

4. Where is the unique opportunity within the crisis?There are very few quick fixes. At the same time, even crises offer opportunities to examine where business leaders are spending their time:  managing the present, selectively forgetting the past, or creating the future? Typically, leaders, especially those in crisis spend too much time and energy managing the present and selectively forgetting the past. Management expert Peter Drucker has said, "New opportunities rarely fit the way an industry has approached the market, defined it, or organized to serve it."
5. Have you clarified your values and your vision? You can't make it through a storm without a compass.Effective business leaders have clarified their values and honor certain precepts such as integrity and transparency. Strong leaders have articulated their vision for their organization, too. They have also put practices and procedures in place to ensure their organization feels an urgency for achieving the vision, which shapes everyone's daily thinking. Leaders need to be true to their values, even when it hurts. "A vision provides, both the stability to stay the course and the inspiration to change."

A great summation of a business leader's most important job can be found in The Entrepreneurial Mindset by Rita Gunther McGrath and Ian MacMillan: "Their job isn't to find opportunities or identify critical competitive insights but to create an organization that does these things for you as a matter of course."