Friends,
Lesson 6: Keep faith with the future
If you don’t invest in the future and don’t plan for the future, there won’t be one.—George Buckley, chairman, president, and CEO of 3M
CEOs and their leadership teams need to remain forward looking despite the near-term pressures their businesses might be facing. There are opportunities in a crisis, even though that notion is too lightly bandied around when companies and their employees come under real stress. Many of the CEOs we interviewed were determined to ensure that their companies emerge from this recession with a competitive advantage by setting the course for higher productivity, acquiring a footprint in a new market, or not squandering a company’s talent or reputation in pursuit of lower costs.
Source: McKinsey August 2009 • Dennis Carey, Michael Patsalos-Fox, and Michael Useem
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Leadership Lessons for hard times - 6
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Leadership Lessons for hard times - 5
Friends,
Lesson 5 : Build and protect the culture
Stay focused on culture, people, and values: it’s the area most likely to get compromised in this environment.—Eric Foss, chairman and CEO of Pepsi Bottling Group
A healthy company enjoys not only strong financials but also a culture and values that bind it together. Much of what our interviewees describe as important is driven by corporate culture—open communication or a focus on a company’s long-term health, for example. Several CEOs chose to highlight how a strong culture had helped them in hard times and how important it is not to sacrifice that culture when a company comes under pressure.
Stay focused on culture, people, and values: it’s the area most likely to get compromised in this environment.—Eric Foss, chairman and CEO of Pepsi Bottling Group
A healthy company enjoys not only strong financials but also a culture and values that bind it together. Much of what our interviewees describe as important is driven by corporate culture—open communication or a focus on a company’s long-term health, for example. Several CEOs chose to highlight how a strong culture had helped them in hard times and how important it is not to sacrifice that culture when a company comes under pressure.
Source: McKinsey August 2009 • Dennis Carey, Michael Patsalos-Fox, and Michael Useem
Leadership Lessons for hard times - 4
Friends,
Lesson 4 : Be transparant with investors
Our policy is: “If in doubt, communicate.” We always want to conduct our business with integrity and forthrightness.—Ron Sugar, chairman and CEO of Northrop Grumman
Most CEOs we interviewed have noticed that the amount of time they spend communicating with investors has risen exponentially of late. Here too they strive to be as open as possible. “If I’ve learned anything in the last 18 months, it’s that transparency in troubled times really matters,” says Travelers’ Jay Fishman.
Yet he believes the crisis has revealed that transparency still goes against the grain for many people. “If asked to describe this or that exposure, the advice from many IR departments is to use some formulation that basically says don’t worry. I’ve tried to resist that. Now is not the time to tell people not to worry. If you’re in the financial-services industry, you ought to be able to quantify. I try to be specific, and we’ve gained credibility as a result.” Pepsi’s Foss too recommends transparency with investors: “we’re facing up to our issues” and in this way “demonstrating that we have a management team that knows what it’s doing.”
Lesson 4 : Be transparant with investors
Our policy is: “If in doubt, communicate.” We always want to conduct our business with integrity and forthrightness.—Ron Sugar, chairman and CEO of Northrop Grumman
Most CEOs we interviewed have noticed that the amount of time they spend communicating with investors has risen exponentially of late. Here too they strive to be as open as possible. “If I’ve learned anything in the last 18 months, it’s that transparency in troubled times really matters,” says Travelers’ Jay Fishman.
Yet he believes the crisis has revealed that transparency still goes against the grain for many people. “If asked to describe this or that exposure, the advice from many IR departments is to use some formulation that basically says don’t worry. I’ve tried to resist that. Now is not the time to tell people not to worry. If you’re in the financial-services industry, you ought to be able to quantify. I try to be specific, and we’ve gained credibility as a result.” Pepsi’s Foss too recommends transparency with investors: “we’re facing up to our issues” and in this way “demonstrating that we have a management team that knows what it’s doing.”
Source: McKinsey August 2009 • Dennis Carey, Michael Patsalos-Fox, and Michael Useem
Leadership Lessons for hard times - 3
Friends,
Lesson 3 : Be transparent with employees . . .
The only way to address uncertainty is to communicate and communicate. And when you think you’ve just about got to everybody, then communicate some more.—Terry Lundgren, chairman, president, and CEO of Macy’s
One legacy of the current downturn will be a reinforced belief in the value of frequent, transparent communication with employees, and not just the CEO’s direct reports. The CEOs we interviewed could not overemphasize the power of openness at all levels.
“At Cardinal, we work hard on internal communications,” says Clark. “We do a lot of town hall meetings, for example. We used to just do them around earnings time, but now we do them to discuss any major initiative that’s under way.” Clark also notes that investor relations (IR) and internal communications work hand in hand, so that any information that goes to the investor community is reworked for employees. “We do a very good job of making sure information doesn’t get in front of one group without getting in front of the other.”
Source: McKinsey, August 2009 • Dennis Carey, Michael Patsalos-Fox, and Michael Useem
Leadership Lessons for hard times - 2
Friends,
Lesson 2: At board meetings, put strategy center stage
The board has been heavily involved in strategy formulation with me, and we have a better strategy because of it.—Bill Nuti, chairman and CEO of NCR
The way CEOs work with their boards has changed fundamentally during the past year. In tough times, difficult decisions must be made quickly, so it’s not surprising that many CEO find themselves communicating more regularly with the board to keep it abreast of developments. Full board meetings have been supplemented by letters, e-mails, intranet postings, informal discussions, and conference calls. At Cardinal Health, “board updates”—conference calls held as frequently as every two weeks—address questions from board members. “They weren’t board meetings. There were no minutes. No one was obliged to attend. But it was very helpful,” says Clark, who sees the updates as an efficient way to address individual concerns and increase confidence in the management team.
Lesson 2: At board meetings, put strategy center stage
The board has been heavily involved in strategy formulation with me, and we have a better strategy because of it.—Bill Nuti, chairman and CEO of NCR
The way CEOs work with their boards has changed fundamentally during the past year. In tough times, difficult decisions must be made quickly, so it’s not surprising that many CEO find themselves communicating more regularly with the board to keep it abreast of developments. Full board meetings have been supplemented by letters, e-mails, intranet postings, informal discussions, and conference calls. At Cardinal Health, “board updates”—conference calls held as frequently as every two weeks—address questions from board members. “They weren’t board meetings. There were no minutes. No one was obliged to attend. But it was very helpful,” says Clark, who sees the updates as an efficient way to address individual concerns and increase confidence in the management team.
Source: McKinsey August 2009 • Dennis Carey, Michael Patsalos-Fox, and Michael Useem
Leadership Lessons for hard times -1
Friends,
Lesson 1 . Confront reality
Always question whether the “halo effect” of a business or business situation is blinding you to what lies on the horizon.—Herbert Henkel, chairman and CEO of Ingersoll Rand
Few predicted the magnitude of the current crisis. But those in the corporate world who first detected—and accepted—the fact that something was amiss had a distinct advantage in implementing strategies to help weather the storm.
Source: McKinsey August 2009 • Dennis Carey, Michael Patsalos-Fox, and Michael Useem
Lesson 1 . Confront reality
Always question whether the “halo effect” of a business or business situation is blinding you to what lies on the horizon.—Herbert Henkel, chairman and CEO of Ingersoll Rand
Few predicted the magnitude of the current crisis. But those in the corporate world who first detected—and accepted—the fact that something was amiss had a distinct advantage in implementing strategies to help weather the storm.
Source: McKinsey August 2009 • Dennis Carey, Michael Patsalos-Fox, and Michael Useem
20090803
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