Necessary Action (#425)
Tough times require decisive, proactive action
A few weeks ago, a CEO called me looking for feedback on the team overseeing one of their company’s core functions.
The team was built aggressively in anticipation of high growth; the team’s leader was well paid and had fought for raises for several of their direct reports. However, growth had stalled at the company and, as a result, the business was experiencing declines in revenue and profit as the team’s costs had increased substantially.
The CEO wanted my input on whether the team was correctly sized for the stage of the business, an issue he planned to bring to the department head. It should be obvious to anyone overseeing a P&L that having a larger, more expensive team overseeing less revenue is detrimental. I couldn’t help but wonder why the CEO was initiating this uncomfortable conversation, rather than the department leader who should have been aware of this dynamic.
Was the department head just hoping that the CEO would just look the other way at paying more for less in a down year? What customer of any product or service is ever happy about paying more for less? While there are several possible explanations for why the leader ignored the issue, it would have been far better to approach the CEO proactively with options to rectify the situation.
Most of us have experienced temporary paralysis when we encounter bad news or challenging realities. For example, we sometimes put off action after a health scare or fail to reckon with a financial setback because it’s difficult to face a problem head on or accept a tough new reality.
But the hard truth is that markets have ebbs and flows, and leaders must meet any given moment with the action it demands. In a buyers’ market for homes, you can’t list your home for a price that’s ridiculously above market and expect it to sell. In a sellers’ market, you can’t lowball sellers with condition-laden offers and expect to close a deal.
Similarly, businesses in many industries are adjusting to changes that require proactive action. After years of high growth and easy capital, many companies must now prioritize preserving their capital through efficiency. Job hopping and quiet quitting are wildly ineffective strategies in this environment. Similarly, leaders cannot overlook warning signs within their teams, hoping for a spontaneous turnaround, or assume that others will fail to recognize clear issues.
As I have written previously, the best way to navigate challenging times is to follow Jim Collins’ Stockdale Paradox: accept the brutal facts of reality but maintain hope that you can reach a better day through decisive action and resilience. Your eyes need to be wide open and when there are signs of unsustainability or trouble, it’s rarely prudent to wait around for the other shoe to drop.
This has implications for both employees and leaders. Here are the considerations for each group to demonstrate value in tough times:
For Employees: Don’t hide your head in the sand or wait around for directions. Employees can prove themselves indispensable by being what Liz Wiseman calls impact players: seek out opportunities to impact the company’s most important priorities, proactively offer support to leadership and try to make their jobs easier. Finally, always bring solutions, rather than just problems.
For Leaders: Hope is not an effective strategy and not making a decision is a decision in itself. Pay close attention to your costs and revenue and act quickly in areas that have become imbalanced or unsustainable. Make hard decisions earlier before they become harder. Double down on what is working well, and pull back spend from what is not working, before you are asked.
Growth and prosperity excuse a lot of problems, or even hide them entirely. In tougher times, those problems will quickly be placed under a microscope. Doing nothing about an issue and hoping no one will notice not only creates more personal risk, but it can erode trust in your ability.
As Warren Buffett famously said, “Only when the tide goes out do you discover who's been swimming naked.” This wisdom underscores the necessity of being prepared and proactive, rather than exposed and reactive, when inevitable reversals of fortune strike.
Quote of The Week
“It is not enough that we do our best; sometimes we must do what is required.” - Winston Churchill
Have a great weekend!
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Great points and love how you tied them all together. I'm going to find some way to use that Buffet quote!
Love this and so relevant for businesses today. Take control of the outcome that is needed, don’t want for it to happen to you.