How can an organisation survive and be sustainable? What makes a leader resilient? How can a leader execute the three C's (care, connect and create)?
In this podcast, Luis Vives, Deputy Dean for Programmes at Esade Business School, Terry Agnew, a non-executive chair director and former CEO of RAC in Western Australia, and Manolo Márquez, an advisor and chairman of Esade’s MBA Master project, share with us their insights on how to lead in times of crisis. Terry and Manolo have had the opportunity to lead different companies in times of crisis before.
This podcast is a recap with main tips and highlights from the live Stay Connected webinar. Watch the full live webinar and find more public broadcasts here
Luis Vives: Welcome to a session in which we will discuss leadership in times of crisis. My name is Luis Vives, and I'm the Deputy Dean for Programmes at Esade Business School. We have today two experienced executives who will share with us their insights on how to lead in times of crisis. We will be connecting with Terry Agnew, who is a non-executive chair director and an advisor. He was recently the CEO of RAC in Western Australia. At the same time, we have Manolo Márquez. Manolo is an advisor and chairman of our Esade MBA Master project, as well as executive in residence at the ESADE strategy department.
The idea of this talk is to learn from their insights. You both have had the opportunity to lead different companies in times of crisis. Which crises do you most remember and why?
Terry Agnew: I have sympathy for CEOs facing the current challenges with Covid-19. It is a health crisis, which hopefully, we will be largely through in 12 months. But then I think we will have a long-term economic crisis that could last three to five years – or more. So, it's actually getting through one crisis then into another. My involvement is as a director of organisations, and having been through crises before, I think my experience is useful when sitting around the board table, but it's a tough gig for the CEO.
When I was a chief executive there were two crises very close to each other. One was the global financial crisis, with all the sort of impacts that Manolo mentioned, when financial services were significantly impacted – and then just a year later, our insurance business was hit with a billion-dollar hailstorm in the city I live in, and that was the seventh-largest insurance global catastrophe that year. We had a million strong customer base and revenue of about 600 million, but we had to deal with both crises. The reason I remember them and why they're in my mind is, firstly, because they were crises where you were dealing with impacts that were bigger than you're normally used to dealing with in a business. Secondly, in this instance, it was back-to-back. It's a bit like the current challenge of having to deal with a substantial health crisis, but even when that's complete, or largely complete, there is a longer-term big economic crisis. And just to compound issues, in the crises that I'm talking about, we had only just made a very big acquisition, and we were part way through a major IT transformation. It was almost – but not quite – a perfect storm.
Luis Vives: Actually, regarding your experience in different crises, we would like to ask you about your top three key learnings from managing in those times.
Terry Agnew: The first thing is that in a really big crisis, the existing systems and processes don't work. So, you almost don't have a rule book. And so you need to be flexible and agile in the way you respond, because the processes that worked well during ‘business as usual’ will not work in a substantial crisis.
The first thing is that in a really big crisis, the existing systems and processes don't work. So, you almost don't have a rule book. You need to be flexible and agile in the way you respond
The second one is people. Engaging with your people through communication, and being visible, and seeing people as core to what you're trying to achieve, and not seeing them as excluded – that is critical in terms of maintaining those links to your customer base. People are also critical and they are your core capabilities for when you come out of the worst parts of the crisis, and when you are looking for what to do post-crisis. The third learning is the post-crisis phase. It's easy to be subsumed with the challenges of the current moment. But you need to keep an eye on the future, and make sure you're well positioned for it.
It's easy to be subsumed with the challenges of the current moment. But you need to keep an eye on the future, and make sure you're well positioned for it
Luis Vives: Thank you, Terry. What about you Manolo?
Manolo Márquez: My first learning that I would like to share with you is that the leader has to really shake up the organisation. They need to expedite the need for change across the company. My second learning is that the most urgent thing you need to do – before even planning for the future – is protect the present. This means you have to put cash management as a key priority, and at the very centre of your agenda. My second learning is that during a crisis, a leader needs to be as much an operational leader as a strategic leader. Thirdly, you need to be extremely agile. I always regretted not having taken some actions earlier, rather than being forced to take those actions later. The main question that you have to ask when you see a potential action is not ‘why’, but ‘why not’. The winner after the crisis is not the brightest, but the quickest. You have to engage with all your stakeholders. Obviously, your people, but also your board, your clients, your suppliers, and your shareholders.
A leader needs to be as much an operational leader as a strategic leader
Luis Vives: There's a lot of discussion going on right now about scenario planning. How do you handle scenario planning? What's the use of scenario planning in a situation like the one that we're facing right now, or the one in which you were managing companies in previous crises?
Manolo Márquez: You have to gather your team. You have to rely on outside experts, but you have to bring courage and resolution; in other words, you examine the risk collectively. But you have to take your own decisions, and for scenario planning you can think of three buckets of actions.
- The first bucket, I will label ‘stop-the-bleeding’ and these are the actions that help you protect your cash and bottom line. My recommendation, however, is prepare for the worst and hope for the best.
- The second bucket of actions, I label as ‘get-back-in-shape’ actions. These allow you to build resilience under a potentially prolonged adverse scenario, and my feeling and advice here would be to act sooner rather than later.
- The third bucket is the one that encompasses the actions that allow you to be prepared to win, and for these ‘prepare-to-win’ actions you think strategically to envision what will be the new normal after the recession.
You have to gather your team. You have to rely on outside experts, but you have to bring courage and resolution; in other words, you examine the risk collectively
Crises also bring opportunities and you cannot miss the chance to benefit from them.
Luis Vives: Excellent. Terry, you are facing now a crisis from a position as a chairman and working with executive teams. How do you address this scenario planning? What are your learnings?
Terry Agnew: One of the things is typically that the leader, or the CEO, dives more into operational matters and I’m finding a couple of instances where I'm now the chair, and I have two very capable CEOs, but I'm spending more time on understanding ‘what's the worst case and how do we respond?’ I see that scenario planning is really important, and it's important because it gives you a framework to make decisions. You are not doing it as an academic exercise, you're doing it to help you make decisions. It is ultimately around your cash position, and your solvency, and the key is: don't run out of cash. If you run out of cash, you do not have a business.
Luis Vives: Manolo, how do you keep people motivated in such a stressful and difficult situation?
Manolo Márquez: We sometimes think that people listen to what the leader says, but really they observe what the leader does, and in a crisis more than at any other time, you have to lead by example. You may have to switch frequently between a directive leadership style, and a coaching leadership style. You have to work with your middle management, coach them, train them, develop them, and sometimes replace them. You have to keep on communicating directly with them. Ensure that your communications are frequent, and simple, and consistent. The second thing that I would recommend a leader does is to personally address the bad news, be sensitive with the people that you let go, and be generous. The third thing that I would recommend is ‘don't think about one-way communications’, engage in bottom-up communication, give your people a voice, and listen to their problems. Try to understand their feelings. Try hard to create a true sense of shared ownership of your company’s future among all the ranks.
You may have to switch frequently between a directive leadership style, and a coaching leadership style
Luis Vives: Okay, I'm going to challenge you with a set of questions – and I will appreciate it if you can provide answers in 30 seconds or less. The first one coming from LinkedIn is: how do you push your CEO to move with agility when he or she is stopped? Terry, what do we have to do? What would be your advice?
Terry Agnew: It's important that your views are reflected to the CEO. How you do that may be a mix of how well you know the CEO personally and can talk candidly, or maybe in parallel, finding someone you know who is a trusted advisor to the CEO, and discussing the issue with them. Like any communication, find more than one way to get the message through. But you must try to get the message through – and then it's really a case of whether the CEO acts on it or not.
Luis Vives: Manolo, would you say that breaking the normal structure of a company and empowering individuals so they can create their own task forces could help bring resilience to a company?
Manolo Márquez: Yes, but you need to go very fast in a single direction. You have to be very careful when you do that. This is the double act where you always have to involve your people, but you have to provide them with directions. You have to switch between a coaching style, and being directive. That's part of the art of leadership.
Luis Vives: There is another question that I would invite you to reply to: how can we overcome denial as a leader? Is there some advice for doing that?
Terry Agnew: I think the simple answer would be look at the facts and look at the evidence. But if there's still denial, I think the answer is finding ways to get the leader to get input from a range of sources – as Manolo said – whether it's listening to your people, your frontline, whether it's getting externals, or listening to the board, but at the end of the day, it's up to the person to take that information on board and change their view.
Manolo Márquez: And I would add that when people are in denial, that's when fears and threats are overcoming the rational aspects. In my experience, it's impossible to get anyone out of a denial situation with rational points. This is where you have to identify role models. People who have been able to cope with a hard situation and have been successful, and you have to show those examples to the people – so that they feel that they can make it. There is no other way in my view.
Luis Vives: I would like to give you the opportunity to share with the audience a final piece of advice and insight.
Terry Agnew: I'd come back to just highlighting some of the things I mentioned. Your people are critical, they are your link to your customer base, they link to your future in terms of capability. You need to find all the ways to engage. Secondly, your key objective is to ensure that as an organisation you survive, and that you are sustainable, and don't run out of cash. Thirdly, be ready for when you come out of the crisis; and fourthly, find ways to look after yourself as a leader. You cannot afford to have the leader fall over. You need to be a resilient leader. You need to be self-aware and look after yourself.
Luis Vives: Thank you, Terry.
Manolo Márquez: I'm not trying to give a single recipe, but I would recommend that you execute the three C's: ‘care, connect, and create’. Care for the people close to you. But also care of your community, and care for those most in need. This is a time for solidarity, for generosity, and fraternity. My second advice is connect, involve broadly your teams as we have said, engage in bottom-up dialogue, secure a true shared vision, and a true shared sense of ownership of your company’s future. Thirdly, create and use this opportunity to advance systemic change in your organisation. And remember the future is not this current threat, the future is what you want it to be, what we collectively want to make of it.
Luis Vives: Excellent. I would like to close this podcast by saying a huge thank you both to Terry and Manolo for sharing their insights. There is a quote that I personally like, and I know both Manolo and Terry also enjoy. Napoleon once said: "the leader’s role is to define reality and then to give hope." I think this is very important these days. We need to be able to face reality. We need to be able to explain to people what's happening, and then provide hope, be agile, be able to create the future as Manolo was explaining. Thank you very much!
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