Chris's Reviews > Seven Lessons for Leading in Crisis

Seven Lessons for Leading in Crisis by Bill George
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Aug 23, 2009

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Bill George, former CEO of Medtronic, writes a short book of dealing with crisis and setbacks. In the book he outlines seven principles:

1) Face reality. Jim Collins says that before a leaders makes any critical decision, it's necessary to confront the brutal facts. George concurs. "Until you acknowledge that you are facing a serious problem, including your role in creating it, you cannot move forward to solve it."

"It is important to publicly express appreciation to the truth tellers so others in your organization will follow suit. Only with a culture of candor and openness can organizations cope with crisis and act in unison to get on top of them."

2) Don't be Atlas; get the world off your shoulders. Reach out and ask for help from trusted advisors and others on the team. "the strongest bonds are built in crisis."

When in crisis, there's a temptation to hunker down, to go silent. Some leaders isolate themselves in an office in order to focus on a solution. Other individuals go AWOL. Neither approach is healthy. Better: engage the facts, gather a team of safe advisors, go public asap with what you know. And be clear about what you don't know.

"If you embrace your fears instead of running from them, they will gradually dissolve."

"On our own, we are vulnerable to misjudging the problem . . ."

John Hope Bryant in Love Leadership: "Admitting weakness and owning up to mistakes have counterintuite benefits. When you are honest, people are more likely to forgive any weakness and mistakes. You are also able to make a stronger connection with others. That ultimately gives you ability to persuade and influence people, which in turn strengthens your ability to lead."

"To perform at your best throughout a crisis, you need a high level of resilience: a combination of hardiness, toughness, and buoyancy of spirit. These are challenging qualities to maintain during the rigors of a crisis, but they will sustain you through difficult times. That's why you need to build your resilience before the crisis starts."

The author shares his three resilience-building practices: 1) Keep your body in shape. 2) Keep your mind sharp and spirits high. 3) Don't take yourself too seriously.

3) Dig for the root cause. There's a temptation to jump to quick-fix solutions. It's key--even if it takes a little longer--to research the real issues so that the proposed solutions don't leave the organization vulnerable to a repeat.

"It is human nature to attempt to fix the symptoms before the root cause is determined."

Trust by verify . . . insist that people give you the whole story. Maintain close contact with people throughout your organization, not just your direct reports.

Leaders who stay in their offices holding meetings and reading reports instead of gathering firsthand information never have the benefit of using all their senses--touch, smell, sound, sight, and hearing--that trigger their emotions and there intuition to recognize far more than their intellect does.

"In retrospect, here's what I should have said . . ." [This kind of reflection and humble self-critique is refreshing. It's a great line, tool.:]

Win Wallin, CEO of Medtronic when pacemaker leads began to fail. He gathered kep people together and insisted on two things: "1) an in-depth analysis of the root cause to ensure that these problems could never happen again and 2) complete transparency, inside and outside the organization, as a vehicle to force insiders to deal with the problems."

"Leaders don't need to solve the problems themselves. Instead, they need to ask probing questions to ensure the real problem in identified and corrected."

Gather all your experts to analyze the problem . . . give them time to reach definitive conclusions.

An organization cannot deal with a crisis until it determines its root cause, but people are often mentally blocked from recognizing it because the implications are so frightening. The leader must bring people together to confront their worst fears and address the risks.

4) Get ready for the long haul.

"When facing a crisis, it is prudent for you to assume that the crisis will last a long time."

Andy Grove, CEO of Intel and author of Only the Paranoid Survive: "People who have no emotional stakein a decision can see what needs to be done sooner. CEOs from the outside are no better managers or leaders than the people they are replacing. They have only one advantage, but it may be crucial: the new managers come unencumbered by such emotional involvement and therefore are capable of applying an impersonal logic to the situation. They can see things much more objectively than their predecessors did."

Paraphrasing the famous Intel anecdote . . . "Are you prepared to walk out of your office, come back as 'the new CEO,' and make the most painful decision of your career, unemcumbered by your emotional involvement but guided by an impersonal logic? If you are, you may become a great leader."

In a crisis, cash in king. Ask yourself, do we have sufficient cash reserves to get through the worst crisis imaginable? If the answer is no, you should take immediate action to shore up your cash reserves.

5) Never waste a good crisis. "The challenges you are facing represent your best opportunity to make major changes in your organization because they lessen the resistance that exists in good times. You should move aggressively to take actions necessary to strengthen your organization as you emerge from it."

"When business is booming, staffing and spending levels inevitably expand too rapidly, and wasteful habits creep in. People become highly resistant to reductions in infrastructure and employment, arguing that cutbacks will hurt the company's growth and market position. In my years in business, I cannot think of a time when we cut too deeply or too soon. The greater danger lies not in recognizing the crisis early enough to take aggressive action. When that happens, revenues decline faster than expenses, and you never catch up."

Medtronic faces a looming crisis in 1993, so George triggered preemptive and aggressive cuts in product costs, overheads, infrastructure expenses, meetings, perquisites. Execs even agreed to take pay cuts. And the much-feared price cuts never came to pass. The increased profit margins enabled Medtronic to go on the offensive, gain market share, finance increased R&D and cut product development lead times from 48 to 18 months.

6) You're in the spotlight: Follow True North

"When you are open, you are in a better position to ask people for their support. If things get worse, as they often do, people are more sympathetic to your point of view if you have kept them fully informed. During this time, you should be highly accessible . . ."

"Whatever is said [nowadays:] inside the company is quickly transmitted to outsiders, and whatever is written or said outside is also read or heard inside. Therefore, communicating the same messages internally and externally is essential."

In their book, Transparency, Bennis, Goleman and O'Toole write about the importance of creating "a culture of candor." The only way to create such a culture is for leaders to be candid themselves. The greater your openness, the more people will rely on you to provide them with the inside view, and the less they will rely on the rumor mill.

"You are better off seizing the initiative and telling people what you know and what you don't, while assuring them that others are working to get the facts as quickly as possible."

Narayana Murthy of Infosys, "We always believed the softest pillow is a clear conscience."

7) Go on offense; focus on winning now. Reshape the market to play to your strengths. "While others are licking their wounds, you should focus on winning now."

"During a crisis there's a risk that your entire organization gets so focused on keeping the ship afloat that no one is planning ahead. Therefore, you should assign a small team of highly talented people to devise the postcrisis strategy. It may seem risky to pull key people out of crisis management to plan for the future, but this is required to win."

Anthropologist Margaret Mead once said, "Never doubt the power of a small group of people to change the world. Indeed, it is the only thing that ever has."

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