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Updated: October 30, 2010 14:59 IST

Balancing the business ‘wobble boards’

D. Murali
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Title: Turnaround Leadership, Making Decisions, Rebuilding Trust and Delivering Results after a Crisis. Author: Shaun O'Callaghan.
Special Arrangement Title: Turnaround Leadership, Making Decisions, Rebuilding Trust and Delivering Results after a Crisis. Author: Shaun O'Callaghan.

Make the right promises, gather multiple new viewpoints, develop the core business skills, deliver results through relationships, and rebuild trust with authentic communication. These are the five imperatives when recovering after a crisis, says Shaun O’Callaghan in ‘Turnaround Leadership’ (www.vivagroupindia.com).

What is a crisis?

Crises, as the author instructs, can come in many shapes and sizes. For instance, system-wide and sector-specific problems can arise from a recession; technology changes may render a business model obsolete; and there may be major regulatory changes and shifts in customer spending habits, he describes. “Company-specific problems may result from poor strategic choices, lack of financial discipline, failed implementation of an IT project, or self-inflicted damage to a brand.”

The book defines crisis as a situation when there is a change in the view of a key stakeholder on an important assumption made about your business. Two aspects of crisis are the turning point and the danger posed by the problem, reasons the author.

Four types of stakeholders

In the normal course of business, a leader is constantly making and trying to deliver on a set of promises to key stakeholders, notes O’Callaghan. The four types of stakeholders he identifies are the customers, suppliers, employees, and investors.

The skill that a leader needs to balance the needs of different stakeholders is no different from the wobble board at the gym, the author analogises. “These round boards, with a half sphere on their underside, require the user to balance and constantly alter his or her weight distribution in order to keep the board flat and upright.” Times of crisis can make balancing more difficult, as if there are ‘people kicking the wobble board at unexpected times.’

Broken promises

On a related note, a chapter titled ‘internal drivers of a crisis’ lists ‘broken promises’ as the first of four causes arising from within management that contribute to a crisis-generating turning point. (The other three drivers are corporate breakdown, management optimism, and lack of sensitivity.)

The author rues that many companies do not have a complete or up-to-date schedule of all the critical promises the business had made to its stakeholders. He cites the case of a CFO who never made any promises to investors. “While this may be an excellent strategy for not being held to account, it does not prevent investors from making assumptions in their spreadsheets to determine valuations. They just make those assumptions without any management input.”

The communication lever

When a company is reeling under a crisis, trust levels are generally low, leading in turn to cash and time problems, missing out on opportunities when an upturn happens, and often a change of management.

The only lever to pull, to rebuild trust and set the business on a recovery path, is improved communication, prescribes O’Callaghan. He advises that after a crisis your communication as a leader must not be anything other than authentic, as people will be watching you carefully to see if your words match the reality of the situation and your actions match your words.

“People tend to remember stories better than bullet points, conversations happen via a series of questions and answers rather than a lecture with PowerPoint slides and the most important part of the communication will occur when you are not there,” the author observes.

Recommended read for managers in troubled waters.

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