Effective Leadership in Tough Times

By Allen Bernard

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As the economic picture gets bleaker by the day, many CIOs are wondering just how they are going cope. Budgets will surely be cut at some point, staff may have to be let go, projects once deemed mission-critical may no longer garner the same support as in better times; basically, leading IT in a recession is going to be a new and bitter experience for many.


This was the theme of Ram Charan’s talk on Friday at CIOhio, an annual gathering of the midwest’s leading CIOs and business leaders hosted by TechColumbus. Charan, a PhD and advisor to some of the biggest names in business—Coke, Nike, DuPont, Bank of America—said times are tough and they are only going to get tougher. This will lead to a lot of hard decision-making very soon; decisions most people are not happy making and most employees are not happy hearing. So, what do you do?


“IT leaders have to think in these tough times through three lenses,” Charan said in a one on one interview:


       What is really happening with the financial crisis, “because that is having a huge and very serious impact on the business … as well as the CEO/CFO.” In other words, you, the CIO, have to understand what is going on as well as the CEO and the CFO. Don’t wait for them to educate you; do it yourself.

       What is the impact and opportunity on the company’s business and its future.

       What are the right goals for IT. (Hint: if they’re not in line with the business’ goals, i.e., raising cash to stay alive, you probably need to take some time to reevaluate the situation—fast.)


“To be a partner to the CFO and the CEO (CIOs) have to show how they are going to create value to the company,” said Charan. This is nothing new to many CIOs, but, given what’s happening in the global economy there is a new impetus to get it right. “The economy is going to shrink. You haven’t seen anything yet. An IT (leader) who does not understand a company’s cash position is going to have a very tough time.”


Not to be confused with a company’s credit position; cash is King today and will remain so for the foreseeable future. Because of this, CIOs have to be thinking about ways to help their company’s cash position. Everything has to be very now-focused. Thinking long-term will only come after your company’s immediate survival is taken care of.


In his talk and well as during the interview, Charan, the Indian-born co-author of The Game Changer laid out the five traits all leaders must embrace today. While there are a multitude of leadership styles and methods, these particular five will allow you to weather the current storm. “The fundamentals of leadership have never changed,” he said. “When the times get tough, the tough get going. This is where we are.”


Inspiration – During hard times such as these, most of your staff will be feeling a combination of anxiety and fear. So, to inspire, you must be honest, authentic, credible … in a word trustworthy. Do not offer up platitudes, for example, that everyone’s jobs will be safe when you know it’s not true. “When people are in bunker mentality … the anxiety is real,” he said. “Be honest. When you do this, your integrity has to be solid.”


Realism with a Touch of Optimism – Don’t be all doom and gloom. It’s a hard balance to strike but you have to be realistic that things are not good but also optimistic that things will get better. Positive energy is what you are after. Hunker down and do the things you need to do today to survive, but be looking for opportunities for when things turn around and, most importantly, share those findings with the rest of your staff. “Let the people see some practical dreams,” said Charan.

Communicate, Communicate, Communicate – While this is always a good idea, it becomes critical in tough times. You have to let your people know as much as you can as soon as you can. If you don’t know, say so (see item one). “If the mentality is bunker mentality, break through with frequent communication,” said Charan. “Communicate both where you are winning and where you‘re problems are.”


Hands On – No ducking this one; you’re It. If you have to make tough decisions, make them early. Waiting won’t help. The economy is not going to recover quickly so it’s best to get yourself positioned to weather the storm early. Waiting only adds to the fear, uncertainty and doubt (FUD) swirling through your organization. The bottom line is companies are going to be getting smaller, said Charan, so no use waiting around for the inevitable orders from above. “This is real. This is serious. You should see the questions being asked in the boardroom,” said Charan.


Get Outside – There is no substitute for walking around a shopping mall if you really want to know what is happening in the broader economy. It doesn’t matter what you make or what services you offer, if consumers aren’t buying, eventually, it will come back on your business. “It’s imperative for all leaders to … go outside and see what is the action in the external environment,” said Charan. “Do not let that information be filtered through intermediaries.” The CIO of McDonalds does this. So should you.


Also, talk to people in other departments and, if you can, other industries. Find out what the VP of Sales needs; find out what your COO is up against. But, do not ask them about strategy. Those questions are for happier times. Find out what they need; what their pain is. Help them salve this pain and you will have found a partner.


One exercise Charan uses is, at weekly staff meetings, to have a staff member take the first few minutes of the meeting to describe a change in another industry, any industry, any change. Then the group takes the next few minutes to figure out what this change means and for whom. After a while, it starts to become second nature to get your head out of your industry and see the bigger picture.


The Worst of Times …


Based on his conversations with business leaders last week, Charan also said that things are not going to be getting better any time soon. So, if you really want to become an asset to your CFO and CEO, then you have to understand what they are thinking about. And that “thing” is cash—all day, everyday. Cash is it. With credit markets all but dried up, if you company doesn’t have some cash reserves or, even better, some true cash flow, that is where you need to be spending your time as CIO—coming up with ways that IT can help the company generate cash.


“Can you figure out something in IT that will help that unit generate cash soon?” said Charan. “If you can do this, you will have a partner in the business.”