ACETECH Conference LEADERSHIP IN TIMES OF TURBULENCE AND CHANGE PRESENTED BY MARY-ANN MASSAD.
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Transcript of ACETECH Conference LEADERSHIP IN TIMES OF TURBULENCE AND CHANGE PRESENTED BY MARY-ANN MASSAD.
ACETECH Conference
Leadership In Times of Turbulence and Change
Presented by Mary-Ann Massad
Agenda•HOW DO YOU LEAD AND SUCCEED THROUGH CRISES:
• GAIN LONG-TERM ADVANTAGE• CREATE A CRISIS MANAGEMENT TEAM • COMMUNICATE AND REINFORCE CORE VALUES• AGILITY VS. ABSORPTION APPROACH• INVEST FOR THE FUTURE• RE-THINK YOUR BUSINESS MODELS
•
•UNDERSTANDING YOUR EXPOSURE AND OPPORTUNITIES
•MANAGE YOUR EMOTIONAL AND PHYSICAL HEALTH •CONCLUSIONS
•BIBLIOGRAPHY
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How do you lead and succeed through crises?• Gain long-term advantage• Invest for the future• Re-think your business models• Create a crisis management team• Communicate and reinforce Core Values
and Decision-making in alignment with those values
• Agility vs. Absorption Approach
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Gain Long Term Advantage, Invest for the Future, Re-think Business ModelsCISCO Case Study
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Gain Long Term Advantage, Invest for the Future, Re-think Business
ModelsLEVERAGE OPPORTUNITIES IN A CRISIS: CISCO is a great case study of how to succeed in
spite of economic downturns-1993, 1997, 2001, 2003. John Chambers:
• “Focus on what we can influence, and not over-or under-react to things we cannot.”
UNDERSTAND AND STAY CLOSE TO YOUR CUSTOMERS
• Assess the damage externally. In 2001, we went to our customers in energy and manufacturing and automotive. We asked, “How are you handling this?”
• Ask yourself, “Is this a market-driven phenomenon or did we do it to ourselves?”CONTINGENCY PLANNING
• Make a determination of how long this will last and how deep it is going to be. Prepare yourself for it to be longer and deeper than you think. Build the flexibility to adjust quickly if you need to.
LEVERAGE OPTIMISM THROUGH VISION AND PLANNING
• Get ready for the upturn. “What’s our vision for where this industry is going with or without us? How are we going to execute in the next 12-18 months.
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Gain Long Term Advantage, Invest for the Future, Re-think Business
Models• CASH MANAGEMENT: $26 Billion in cash. “We now have 26 market
adjacencies that are not relevant to our revenue today, but they will be three to four years from now.”
• NEW REVENUE STREAMS: “We know how to handle leasing in tough times.” According to the Wall Street Journal CISCO financed more than $4 billion of purchases in the last fiscal year.
• COMPENSATION = OUTCOMES: In the past, strong personalities were rewarded on individual heroics and contributions. Today, executives are compensated on how well the collective business performs-not individual product units. 20% of CISCO’s executives left during this cultural transition.
• SHRINK PRODUCT LIFECYCLE: Cross-functional Boards and Councils focus on product management and market transition. Distributed innovation vs. traditional decision-making is 70-30.
• THINK SOLUTIONS: Technology company to leadership consultancy.04/19/23 6
Create a Crisis Management Team
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Create a Crisis Management Team6 Sources of Failure in Managing Risk:• Lack of appropriate data• Narrow measures of risk (don’t capture
full exposure)• Overlooking risks• Hidden risks• Poor Communication• Rate of Change
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Create a Crisis Management TeamCreate a Crisis Management Team to Avoid Typical Implementation
Errors
• Insufficient understanding and appreciation of the evolving crisis.– Create and maintain a sense of urgency– Continual monitoring of economic indicators to respond accordingly
• Senior Leaders’ Lack of Preparation and Commitment.– Provide a reality check and ensure that the sr. mgmt. team is taking the
necessary decisions to safeguard the company.
• Failure to see how individual initiatives are part of a comprehensive plan.– Providing an integrated response or mitigation strategy which balances
individual efforts against the collective.
• Lack of attention to the human element.– Communicate and calibrate action with respect to employee’s response to
crisis plan.
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Communicate and Reinforce Core Values
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Communicate and Reinforce Core ValuesThe Outliers-Malcom Gladwell:The Ethnic Theory of Plane Crashes-Parallels in Navigating Your
Company Through a Crisis
LESSONS LEARNED:Plane crashes like company implosions are usually the result of an
accumulation of minor difficulties. Typical air accidents involve 7 errors-combination and timing thereof which lead to disaster.
• Root Cause-Lack of communication and clear instructions• Politeness, fear of hurting other’s feelings or losing one’s job can
result in the un-necessary demise of organizations too.• Make sure that you calibrate or even shake-up your corporate
culture to emphasize clear, consistent, and honest communication.• People should not be afraid to tell their management the truth or
difficult information (and vice-versa). Failure to communicate could mean the failure of your company in a crisis situation.
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Agility vs. Absorption Approach Rumble in the jungle 04/19/23 12
Agility vs. Absorption ApproachRe-cap-
• ALI underdog Foreman-bigger, stronger 37/40 knockouts, 8 last fights ended in < 6 minutes,
• $10 MM, Kinshasa, Zaire, Oct. 30, 1974
• Ali started strong and then “allowed” Foreman to hit him while he was on the ropes- Rope-a-Dope
• Rounds 6&7 Ali continued to absorb punches-but landed more of his own, 8th Round-Foreman aimed one last slug and staggered forward with the momentum of it. Ali landed two straight right hands, a left hook and a last right-and Foreman was down.
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Agility vs. Absorption Approach3 Ways to be AGILE: OPERATIONAL-PORTFOLIO-STRATEGIC
OPERATIONAL- Southwest Airlines, Toyota, Tesco
Must Haves:• focused business model, id and seize opportunities more quickly
than rivals do• Shared real-time market data that is detailed and reliable• Focused corporate priorities• Aligned performance goals-teams and individuals• Mechanisms to hold people accountable and to reward them
Leaders Need To:• Stay in the flow of information• Sustain a sense of urgency• Maintain focus on critical objectives• Recruit entrepreneurial staff04/19/23 14
Agility vs. Absorption Approach3 Ways to be AGILE: OPERATIONAL-PORTFOLIO-STRATEGIC
PORTFOLIO - GE, Samsung Electronics, Procter & Gamble
Must Haves:• Quickly shift resources out of less-promising businesses and into
more-attractive opportunities
Leaders Need To:• Make unpopular calls on resource allocation• Base decisions on rational rather than emotional or political
criteria• Invest heavily in promising opportunities04/19/23 15
Agility vs. Absorption Approach3 Ways to be AGILE: OPERATIONAL-PORTFOLIO-STRATEGIC
STRATEGIC - Oracle, Emirates Air
Must Haves:• Strong balance sheet and large war chest to finance
investments• Organizational structure that allows you to seize
opportunities more quickly than rivals do.• Long-term perspective s from owners and executives
Leaders Need to:• Maintain owners’ confidence• Mitigate downside risk• Wait for the right opportunities04/19/23 16
Agility vs. Absorption ApproachAbsorption Approach
1. Low fixed costs-to weather all potential storms.2. War chest of cash-to deploy for unexpected opportunities and
threats.3. Diversified cash flows-to withstand downturns in specific units.4. Variable sizing-able to expand or contract as required.5. Tangible resources-to generate future profits (real estate or raw
materials)6. Intangible resources (brand, expertise, technology)7. Customer lock-in – high switching costs to prevent jumping ship.8. Protected core market-to provide a safe stream of cash to
weather storms.9. Powerful patron-to provide extra resources if required.10.Excess staff-to be shed in hard times.
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Understanding Your Exposure and Opportunities
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Many companies fail to see opportunities hidden in economic downturns
To maximize opportunities-must conduct a rapid but thorough vulnerability assessment and plan to minimize threats Consider several scenarios-worst case, best case, likely case Quantify impact on your business Assess competitor’s vulnerabilities
Reduce Your Risk Exposure and Protect Financial Fundamentals Adequate cash flow Access to Capital Manage Customer Credit and Working Capital Optimize financial structure Share price-inform investors and analysts/dividend payments vs. share buyback
Understanding Your Exposure and Opportunities
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Understanding Your Exposure and Opportunities
• Reduce Costs– Eliminate low value business activities– Zero-based budgeting/Budget for contingencies– Efficiency initiatives– Consolidate key functions– Suppliers and procurement practices– Off-shoring– Bonus “Rainy Day” Fund
• Manage Top Line– Customer retention– Sales initiatives-short-term incentives– Marketing investments for revenue generation
• Re-think Business Models (IBM early 90’s)
• Product Mix/Pricing Strategies-lower $ versions of existing products/results-based or subscription pricing
• Rein in planned investments and sell assets-shed unproductive assets/sell real estate or other assets to create cash fall-back position.
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Manage your Emotional and Physical Health
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Managing Yourself - Emotional and Physical Health
• Build up your family and friends network-people whom you can trust and bare your true self;
• Leverage peer and professional associations like ACETECH for business consultation and moral support.
• Make time to exercise, meditate, pray, and sleep (6-8 hours).• Eat properly and healthfully.• Stay away from addictive behaviors and substances-
especially when you are under a lot of pressure.• If you are anxious, depressed, irritable for more than a
month consecutively-get yourself to a doctor for a mental health check-up.
• Simplify your personal life and finances (keep personal debt low and savings high-where possible).
• Outside of work, maximize joyful experiences-family time, golf, sports, etc.
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Conclusion
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Conclusion• Leadership in times of turbulence and change requires a
multi-faceted approach:
– Stay cool and optimistic because times of crisis are always opportunities, even if they don’t appear that way at the time.
– Manage the business fundamentals-cash is king!
– Leading in difficult times is about calibrating agility and absorption in the right combinations at the right time.
– Superb communication is the key to successfully mastering any crisis
– You as CEO are the weakest link in the chain. You need to manage your emotions and health carefully to be in top form.
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Bibliography• HBR: Nov. 2008, Mar.2009• Malcolm Gladwell, The Outliers, 2008• Fast Company, Jan., Feb., Mar. 2009• Software Magazine, Spring 2009• Profit Magazine, March 2009• Technology Review, MIT, June 2009
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