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Two clients two paths

Leadership Styles in Extreme Uncertainty

· Coaching,Leadership,Clarity,Uncertainty,Decisions

Some people say that making good decisions depends upon analyzing every facet, dissecting every variable, and taking all factors into account. In other words, we operate on the assumption that decision-making is a rational and systematic process. This belief fuels work for business analysts, as they are the ones who carry out the analytic work while leaders are making decisions.

In practice, decisions of today do not always have the luxury of waiting for the facts of tomorrow. Consider the collective Covid response as our example. Leaders had to make quick decisions and commit to a course of action with little information and an uncertain outcome. Leaders were thrust into a corner, it felt like playing the game not to lose, rather than to win. This mindset prompts assumptions that give more weight to negatives – “what might go wrong” – than to positives – “what needs to go right." In hindsight, we can all agree that every single decision made during the peak of the crisis was a further step into the unknown.

Could this unprecedented crisis contain lessons in leadership for us all? Consider what could happen if more leaders consciously embraced the unknown when they made decisions. How would this look?

Much like many leaders in the Covid crisis, leaders who embrace the uncertain factors at play are more likely to engage a wider expertise rather than just their own. What I have observed is that these leaders do not assume they have the answers. They ask more revealing questions tapping into the wisdom of their teams. They direct their focus on what is possible, in order to pool and submit ideas to the forum. In other words, they pose the key questions and then see what occurs as an insight, an intuition, or as something completely obvious to others but not to them. This collective insight-driven leadership approach inevitably leads to clarity, and this kind of public clarity produces simplicity for all the whole organization.

During my own Covid experience, I worked with two clients who sat on opposite ends of this leadership approach. The first was still charred from their first crisis, where their business hadn’t cut costs quick enough during the Global Financial Crisis in 2008. When Covid turned up they brought these memories into the decision-making room. Understandably yet regrettably, their fear of the past outcome drove their decision making. They encouraged their analysts to confirm their doom and gloom predictions, clinging to a creed that sales would fall dramatically, and the market outlook was grim. They missed an opportunity to ask teams for contrary views on the market or alternate scenarios they could explore. The mindset of the executive team, given their GFC experience, was to stick to a mantra of “we know best”. They did not explore options to benefit from a possible market resilience, and they rushed into restructuring and reducing capacity. As expected with this kind of knee-jerk reaction, people lost jobs or had their income reduced, when only six months later these extreme measures were needing to be reversed.

The second client was living in the world of possibility in responding to this changing environment. I remember so clearly being with the executive team working through different scenarios, thinking about possibilities of how we could respond, what was the potential of this situation. “What if we could try this?” was asked several times, by different members of the team. People were given time to explore possibilities and encouraged to retrieve as much information as they could in for a quick turn-around proposal. These rapid ideations were brought back, critiqued and enacted based on a combination of known facts and gained insights. While it may appear reckless to expend time during a crisis on these proposals, risk assessments and data resources were optimized to quickly deliver a firm-wide response. The inherent benefit of this approach was not necessarily in the business acumen that provided a response, but the ability to engage the whole team in the proposal process and unpack the knowledge of the entire firm in a time of crisis. By focusing on utilizing existing resources to maximize opportunity, this firm’s leadership approach allowed ideas to flourish while ensuring a personnel impact would be a last resort in their decision process.

Obviously, this tale is dependent on more granular factors that you may be wondering about. You might think that the difference in response could be entirely due to the industry and market. However, I am curious if perhaps those factors were not so important after all. Whether embracing the leadership rationale of the first or second client might have more of an effect than macroeconomic factors at play. Now, looking back with hindsight, we can see the results. Client one lost revenue in the first year of disruption and client two increased revenue. It would also be good to note that two years on, both of the markets for these two companies are growing year on year!

Given this little parable, where do you sit on the leadership styles of these two companies? Are we as leaders tasked to make the decisions to respond to uncertainty based on our knowledge, experience and expertise or are we tasked to create an environment for the collective wisdom to come up with new ways to respond to the unknown? Should we lean more towards one or the other, or how could we accommodate both without risking a business? Let me know, I would love to read your comments.