Bill George's '7 Lessons for Leading in a Crisis'
Review: '7 Lessons for Leading in Crisis'
by Rolf Dobelli, Chairman, getAbstract
Business legend Bill George learned about corporate crisis firsthand as a novice manager in his 20s. His timing was impeccable: The day before he began a new job as Litton Industries' assistant general manager for microwave ovens, the U.S. surgeon general announced that microwave ovens posed a potential health risk.
When George arrived at Litton's Minneapolis office for his first day on the job, the place was in bedlam. If the Food and Drug Administration (FDA) had ordered Litton to take its only product off the market, the company would have gone under - and George would have been out of a job. For nine months, he worked around the clock with Litton's engineers to make sure its microwave ovens could meet tough new FDA standards. What a welcome to the business big leagues!
In his book on corporate crises, George says calamities either make or break executives. Litton's microwave crisis did not break George. He went on to a storied career as a respected CEO and a professor at Harvard's School of Business. getAbstract recommends his wise, savvy book to CEOs and other senior executives who will derive valuable lessons from its strategies and its many fascinating case studies.
Chinese Curse: "May You Live in an Important Age"
Crises uniquely test executives. A crisis will ruin some CEOs and elevate others. The leadership skill you will need during a crisis is not something you can learn in an M.B.A. program. Rather, you will discover it as the crisis develops. If you weather the storm, your leadership ability will shine bright. If you make mistakes, but keep your company afloat, you will still be able to learn valuable lessons. Thus, you will be better prepared for future emergencies.
Lesson #1 - Face Reality
In 1991, Salomon Brothers was in big trouble. It faced possible criminal prosecution for "submitting false bids" to the U.S. Treasury. The firm's senior managers refused to accept the dangerous reality of the situation. However, Warren Buffett, Salomon's major shareholder, quickly assumed control of the company and told the top executives to leave the firm. Lawyers and public relations professionals counseled the company not to "provide complete transparency" to the U.S. government. Buffett did the exact opposite, ordering Salomon to be fully transparent, even if the government used information it provided to prosecute the firm.
Buffett could see that the U.S. government surely would bring criminal indictments against Salomon if its leaders kept stonewalling. This would have made it impossible for the firm to bid during government auctions, which would have pushed the company into bankruptcy. Only by putting his reputation on the line could Buffett prevent such a disastrous chain of events. Without his leadership during Salomon's crisis, the firm certainly would have gone down.
Denial is a bigger career killer than incompetence. Crises often start small. At first, leaders can easily avoid facing a looming problem. They assure themselves that nothing major is happening and that a "quick fix" will work. Soon, minor issues inflate into major ones. Leaders must realize that crises do not magically heal. Ignoring a developing storm will only make a bad situation more difficult to rectify later. Accept reality. Acknowledge your role in contributing to the crisis.
Lesson #2 - Don't Be Atlas: Get the World off Your Shoulders
As a CEO, are you supposed to support the whole world on your shoulders in times of trouble? You are not. Turn to your colleagues for assistance. Learn from Morgan Stanley CEO Philip Purcell. When his firm faced numerous problems in 2004, Purcell could have spent his time on the trading floor getting a fix on things from his traders. He could have met with his executives to work out solutions. Instead, he sequestered himself in his office. That is not leadership. Former Morgan Stanley executives united to influence the board to fire Purcell. John Mack took over, put new leaders in place and got things rolling again. The company survived its crisis of confidence...
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February 1, 2010; 4:28 PM ET |
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