Wednesday, April 11, 2012

Steering By The Rear View Mirror

As corporate and government leaders we depend on data and historical trends to make sense of today's economy.  We look at quarterly performance, study charts of changing sales numbers, analyze trends in housing prices, and examine the number of new jobs created last month.  Unfortunately, much of the data has been disappointing, or worse, very negative.  Then, using this historical data, we make policies that take us into the future.

All of these are valid sources of information.  These indicators, and many more, have lead to a general agreement that the depth and breadth of the recent recession has had a devastating effect on both business and government.  Unemployment has been at unprecedented levels.  In addition, the world economy has been tested almost to the breaking point several times.

Working on the assumption that this is all true, then it stands to reason that caution should be the word of the day for organizations that want to survive.  Our tendency has been to cut back, lower costs, reduce services, hunker down and weather the storm.  It comes as no surprise that this is what the majority of our leaders have advised for several years.

This advice may have been very appropriate for the time.  After all, who could argue with recent history?  It is natural for us to set our course based on past experiences.  It is natural for us to make forecasts based on historical data.  It is natural for us to be cautious.

However, the one thing we can count on in life is change.  When things change, whether that change is rapid or gradual, an organization needs to be able to react by adjusting its course to match the new conditions.  There comes a time when leaders, boards of directors, or others charged with steering the corporate ship must take their eyes away from the rear view mirror and focus on the road ahead. 

Here's the challenge: History, and our natural caution, would tell us to hold to our conservative course until things have turned around.  In other words, we should hold on until we see recovery in our rear view mirror.  It's a bit like riding a roller-coaster sitting backwards.  But, if we prepare ourselves for what has passed, that last dip or rise, we will not be ready for what is coming.

Our program cuts and reductions in products and services have prepared us to survive the past, but are we prepared for the future?

Have our cuts placed us in a position where we cannot respond to the future opportunities and demands?  Are we put in a position where we need to gain back customers, or the trust and confidence of the communities we serve?

Today, we find ourselves, in both business and government, in a position where our roller-coaster ride is beginning to move upward.  But, how many organizations are prepared to take on the demands of a improving economy?  Do we have a game plan for recovery?

For businesses, now would be a very good time to know what needs to be done to win back customers that left because of reduced service, responsiveness, or lack of innovative products.

For government, now would be a very good time to know what long-term effects past decisions to defer maintenance will have on the long-term integrity of infrastructure, and how service reductions will change the quality of life in our community.

It takes courage to buck the popular trend.  (See the "Great Leadership In Troubled Times" post in this blog)  A leader who begins talking about recovery when "everyone knows things are bad' may have trouble selling the message that we need to recreate our organization to deal with a growing economy.  But today, the organizations that are ready to move to the next level of success are the ones that will ride the proverbial roller-coaster without suffering a bad case of whiplash.

Yes, things have been difficult.  But, we cannot let that historical fact turn us into a deer in the headlights of a recovering economy.

F. Scott Fitzgerald said, "The test of a first rate intelligence is the ability to hold two opposing ideas in the mind at the same time, and still maintain the ability to function." (As quoted by Marcus Buckingham in First Break All The Rules.)  I would modify this slightly for this discussion by suggesting that the test of a first rate leader is the ability to hold two opposing models of success in the mind at the same time, and retain the ability to move forward.

As much as we would like for life to be full of quick and perfect answers, the truth is that life is messy and full of shades of gray. (See the Polarities post in this blog)  Business is not simply good or bad.  In these interesting times we need to be prepared for both good and bad.  The economy is not simply good or bad.  Today it is a complex mix of both good and bad. 

The natural tendency is for the people in our organizations, both leaders and staff alike, to demand certainty.  They want black or white answers to every question.  But, the organizations that succeed in this economy will be those that can embrace uncertainty, and navigate these hazy, uncharted waters.

This is an interesting time for people within organizations at all levels.  This is a time when everyone needs to learn from the past, but look to the future.  If we insist on steering by the rear view mirror, we will all crash and burn.