Are you a hero or a villain as a leader during cutbacks?
With the cuts you may be having to make in your business right now, do you feel like a hero or a villain? It’s too stark a choice, I know. But after my other posts focussing on the rational side of coping with economically challenging times, perhaps it’s time to think about how leaders feel.
After my previous three posts sharing how data leaders could cut costs, I set a challenge for our guest bloggers to share their tips. I’m glad to say that a couple of our contributors responded positively. First out of the stable, as is often the case on this blog, is Tony Boobier.
Tony is an AI & Analytics mentor & author, advising organizations around the world on the changes they need to make to be ready for the new world of work. In this post, Tony focuses on the internal, emotional challenges for leaders during a time of change & cost-cutting. What does it mean for a leader to be a hero during these times?
Do difficult times call for heroes?
At a time of crisis, do we want our leaders to be heroes or villains? By that I mean, do we want them to be assertive and forward-thinking, or defensive and cost-cutting? Let’s be honest, we live in difficult times. It’s a topic reflected in the theme of recent blogs on this site about saving money through cost control. Yet at the same time not reducing the value of delivery to customers. Previous blogs on this topic are full of useful advice about reusing data and the like, and avoiding kneejerk reactions. One can’t argue with these but in this post, I want to focus on our emotional response to the situation.
This month there was news of those heroes honoured in the Queen’s last bravery awards. A hero is often defined as someone who runs towards danger. It’s something that emergency services do every day. The 15 people named on the list, which included a man intervening in an armed attack, and those who tackled the terrorist during the 2019 London Bridge attack, have one thing in common. They moved toward danger and did not run away from it.
Winston Churchill had a view on this.
“One ought never to turn one’s back on a threatened danger and try to run away from it. If you do that, you will double the danger. But if you meet it promptly and without flinching, you will reduce the danger by half. Never run away from anything. Never!”Winston Churchill
Facing up to the financial pressures on businesses today
Some might suggest that the commercial situation is worse than just being in difficult times, but rather that they are dangerous times. These dangers are also likely to increase as increasing energy costs begin to bite. Of course, there’s a massive difference between physical and commercial danger, but it’s hard to argue against the fact that many businesses are at increased risk, and even in danger of failure.
Let’s look at some of the business figures. According to the National Statistics Office, total company insolvencies in England and Wales in the second quarter of 2022 reached their highest quarterly level since Quarter 3 (July to Sept) 2009, and More than 1 in 10 UK businesses reported a moderate-to-severe risk of insolvency in August 2022. The only real respite in recent times seems to have been the UK Government support during the Covid pandemic, but perhaps this concealed other deeper economic problems.
In the context of businesses, in the most general of terms, there are two options. These reflect Charles Darwin’s viewpoint of evolutionary survival, and are either ‘fight or flight’. The reality is that for many businesses, the decisions which they are now being forced on them are matters of survival. Their challenge is that of which way to respond to the situation.
Is your business in flight or fight mode due to cutbacks?
Does rigorous cost-cutting best match fight or flight? Are those businesses who are forced to make cost-cutting decisions like a boxer who is caught against the ropes, trying to avoid a knockout punch? How well, if at all, can they fight their way out of what seems a difficult metaphorical corner? What if there have already been kneejerk reactions to the situation, perhaps by cost-cutting through losing staff or reducing training?
The reality is that the opportunity for data and analytics businesses has never been greater. Their clients are desperate to gain better insight to help navigate through stormy waters. The potential for providing business value is outstanding, provided that clients themselves can be persuaded to part with their money. For data and analytics companies, the cup is half full, rather than half empty. It seems like a time for hero leaders, not defensive villains.
Maybe I’m being too hard on those who principally adopt a cost-cutting approach. After all the books have to be balanced, or at least the losses managed. The fantasy novel author Brandon Mull has a different and less heroic viewpoint about what we should do in a dangerous situation. In his 2008 book, Rise of the Evening Star, he writes:
“Running towards danger is foolhardy …but so is closing your eyes to it. Many perils become less dangerous once you understand their potential hazards.”Rise of the Evening Star, Brandon Mull
What does your business need from you now?
The answer may not be about whether we want our leaders to be heroes or villains, but rather that leaders make accurate, informed decisions. Warren Buffett, founder of Berkshire Hathway which is the top-ranked company in the Forbes Global 2000, reinforces that viewpoint, suggesting that risk comes from not knowing what you are doing. So, where does this all lead us?
In the current economic climate, should business leaders be heroically assertive or defensively villainous? What do our employees, business partners and clients expect from leadership at the current time? And at what point does a business leader stop being a hero and start to become foolhardy? Or perhaps that’s only a decision which can only really be made with hindsight?
Don’t business leaders need to hold their nerve before making cost-cutting decisions they might come to regret? Risks need to be firmly weighed up and the consequences of cost-cutting be fully understood, even taking into account (where possible) the Law of Unexpected Consequences. In these challenging times, won’t the most successful business leaders be the ones who exhibit boldness, effective risk management, and perhaps even heroism? Those who move towards danger rather than running away from it? They may not win a medal for gallantry but they could do a lot to reinforce their own personal reputation.
After all, at the end of the day, anyone can be the Captain of a ship in calm waters but the true test of leadership is how to navigate a ship – or a business – in stormy waters.
How do you see your current reaction as a leader?
Thanks to Tony for sharing his thoughts and that challenge with us. How do you respond? Does it help shine a light on you or your fellow leaders’ reactions right now? Are you seeing behaviours that you view as heroic? Do you recognise villains with whom you still need to build effective stakeholder relationships?
I’d love to hear more about your experiences as a data, analytics, or insight leader during these challenging times. What are you prioritizing? What are you cutting? How are you demonstrating commerciality to both your team and your peers? I wish you well and look forward to hearing more about your stories. Thanks to those who have already commented on other posts in this series.