Leading and the Downturn, Part 1

As the economic news becomes ever more dreadful, we receive an increasing number of questions of the form, 'What's a leader to do?" So little of what is driving the economy is under our control--runaway oil prices, chaos in the banking sector, the mortgage meltdown--that it is temping to yield to an attitude of helplessness. Indeed, there is probably nothing that managers can do to avert the initial drop in revenue that seems to be sweeping across North America. But, evidence from past downturns indicates compellingly that there is much we can do to avert an avalanche of cascading drops. The main factors in minimizing the plummet are (1) careful analysis and risk containment, and (2) avoidance of catastrophizing, a style of thinking wherein we predict a future disaster and begin shaping events in that direction.

It turns out that a good antidote to catastrophizing also helps contain risk. Borrowing from Jim Collins's book, Good to Great, we advise leaders to focus everyone's attention on identifying the "brutal facts" of the school's situation, especially including critical vulnerabilities; e.g., sharply lower charitable giving, higher-than-budget energy costs, or soft return on invested funds. Then, armed with an unshakeable belief in the value and viability of the school's mission, focus action on mitigating the risks. The important thing is that risk mitigation not just be about tightening the organization's belt. While belt-tightening is both prudent and necessary in tough times, it is innovation--new programs, services, and ways of delivering existing ones--that really builds optimism and future viability alike.

More will be coming in Part 2.