Corner Office-Chameleon Leadership

Corner Office-Chameleon Leadership

Adopting different leadership styles during a crisis.

When my grandkids visit my winter residence in Arizona, they love chasing the little desert geckos that hang out by the pool. The speedy creatures are nearly invisible as they cling to a wall or the trunk of a palm tree, their skin color blending into their surroundings, only to dart away when they see curious preschooler hands approaching.

The other day, I noticed one sunning itself by the pool and watched as it changed colors to match the sand-colored rock, the green leaves, and the gray cement patio. It occurred to me that the ability of geckos and chameleons to survive by adapting to their surroundings is similar to how business leaders must adapt to their business surroundings. (Don’t laugh at how I get inspiration for my column. Writing is an art, not a science!)

Just as chameleons change their skin color in response to light and ambient temperature, business leaders must also change their leadership styles in response to the type of business environment in which they find themselves. In short, the leadership style that is requisite for managing a healthy, growing business is not the same as what’s needed to lead a troubled business.

I’ve watched leaders who lack chameleon characteristics many times over the years. Numerous corporate directors have said to me, “I just don’t know what happened to Fred, our CEO. He was doing such a great job until our company was hit with these difficulties, and now he seems to have gridlocked and doesn’t know what to do. ” And with the current recession affecting many businesses, there are probably a lot of CEOs and corporate directors out there asking the same question. I think I can shine some light on this question with a little anthropological, sociological, and psychological behavioral analysis. Have I got your attention now?

 

Unfortunately, the lack of agile leadership is a dilemma that’s been around for a while, even back in the first century B.C., when Publilius Syrus, a Latin writer and philosopher, said, “Anyone can steer the ship when the sea is calm.” And even more unfortunate is that most business schools and business leaders still to this day don’t understand that it takes different types of leadership attributes to steer the ship when it is in 30-foot waves. The diagram below illustrates how specific attributes manifest themselves in healthy companies and troubled companies.

A brief examination of each of these attributes demonstrates why it’s critical for leaders to change their style when in a crisis situation, or for the board of directors to change leadership of the company if the current leader is incapable of adapting his or her leadership style to the crisis.

Focus

Most business schools teach that when leading a healthy company, the CEO’s job should be focused on strategic and financial objectives. The outlook is supposed to be long term, so cultivating corporate culture, stimulating innovation, and fine-tuning systems and processes to optimize productivity are most important. In other words, things are running smoothly, so you don’t need to rock the boat. And when change has to be made, it is done systematically, with attention to carefully gaining consensus from all involved.

On the other hand, the CEO’s focus when leading a troubled company needs to be on short-term survival, taking immediate actions, and making tough decisions. The leadership can’t be focused on strategy or long-term financial objectives when the company can’t cover its payroll obligations on Friday. See the difference? Rather than a patient, nurturing leader, troubled companies need decisive, problem-solving leaders who can focus primarily on the next 13 weeks.

 

Decision Making

By the same token, leaders of healthy companies should make decisions deliberatively, contemplatively, and analytically—just as their spreadsheets and management reports and meetings would lead them to do. After all, that’s what we’re all taught in business school.

But when a company is in crisis, this leadership style won’t work. Speed in decision making is key, and the answers to current problems usually don’t reside in the spreadsheets, management reports, and financial statements. In fact, when my firm is hired by companies in crisis, many times the financial statements we are given at the beginning cannot be trusted, either because we suspect they’ve been manipulated or because they are erroneous. If we wait to get exact numbers, the business will be gone. That’s why we rely on the best information available and gut instinct. We need to paint the car as it’s moving down the highway at 60 miles per hour. It may not be the prettiest paint job, but it’s painted.

 

Authority

Everyone knows that a good leader is a good delegator. A CEO who tries to do it all himself or herself is considered too authoritarian, a control freak, and a heart attack waiting to happen. All good MBA students can tell you that one sign of a healthy company is a CEO who is able to delegate to his or her subordinates.

On the flip side, a good leader in a crisis gets directly involved, takes charge, and makes hands-on decisions. When a company is in crisis, it’s no time for a democracy. Employees get nervous and scared, and need to see that someone’s in charge, leading the way to the light at the end of the tunnel. You don’t have time to gain consensus for change; you need to set the direction and force execution of new ways. (Besides, the crisis is demanding change already, so that part is taken care of naturally.)

People

In a healthy company, a CEO’s job is largely about managing and developing people. Internal dynamics such as staffing, systems, skills, and structure are what the CEO is dealing with on a daily basis. A long-term outlook on grooming new managers, promoting from within, training employees to develop new skills, and personal development are important.

However, time is the biggest enemy of a company in crisis, and that means there’s simply not enough time to develop the right people for the right jobs. Instead, leaders in a crisis must recruit the talent they need from the outside, sometimes even “cleaning house” at the top of the management structure to make room for the requisite skills and set the tone for lasting change.

 

Respected

The reputation of the CEO for effective general management, and ability to handle operations, systems, and corporate culture is what counts in a healthy company. Being able to build alliances, promote teamwork, and communicate the company’s vision is what’s most respected.

But if the company finds itself in a crisis, the CEO is most respected for achieving financial credibility with investors, creditors, and vendors. Visions of future goals aren’t practical if the company goes bankrupt at the end of the month. Instead, what’s on the line is the CEO’s grasp of the financial and operational aspects of the crisis, and what he or she is doing to fix those problems immediately. Emergency surgery is what will keep the ailing patient alive.

 

Consistent

Nobody likes surprises, especially when things are going well. When a company is healthy and growing, the CEO is known for being consistent—Wall Street rewards the companies who perform in a consistent way every quarter. Again, the leadership style is to keep the ship running smoothly.

However, when the company hits 30- to 50-foot waves, the CEO will be judged on his or her ability to shift gears in order to adapt quickly to the new environment. This means moving beyond denial and avoidance and immediately acknowledging the company’s serious trouble. A CEO must move swiftly to cut out unprofitable businesses or plants, make bold and fast moves to restructure, and do whatever it takes to recover and restore the business to profitability.

As I’ve demonstrated through this brief tutorial, the leadership style that works for a healthy company does not work for a company in crisis. The irony is that it’s the opposite of most life experiences, where what one has learned in the past about what works can be applied again. But, the fact is that the successful attributes you’ve learned about leading a healthy company (being analytical, consistent, and objective-oriented) will be the cause of your failure in leading a troubled company.

Instead, you’ve got to be like my chameleon friends and adapt to the challenges you face by making quick decisions, shifting gears, and surviving. And the sooner a leader recognizes this and adjusts accordingly, the better the likelihood that the company will survive the crisis.

So, here’s to those little chameleons that are smart enough to adapt to their environment and survive. We don’t want them to be smarter than us, do we?

 

Contrasting Leadership Styles

Attribute Healthy Company Troubled Company
Focus Achieving Objectives Survival, Action, Problem Solving
Decision Making Deliberative, Contemplative, Analytical Speed, Decisiveness, Intuitiveness (Gut)
Authority Delegation to Subordinates Direct Involvement & Decision Making
People Develop Skills Recruit Talent
Respected Management Reputation Financial Credibility
Consistent Known for Consistency Ability to Shift Gears

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