Three Leader’s Strategies in a Down Economy

The beauty of a down economy is nothing is sacred. It allows government and corporations to make truly visionary decisions. I’ve said it before, but I think the downfall of the US is the Cost/Benefit Analysis. The example I like to use is the case of the cellular phone. The technology was there way before it gained major adoption? Why? Because it had to play ball with the install land line base. Getting it aligned to a similar but technologically different communication device slowed it tremendously. Now look at India. It has a cell phone penetration that is both faster and deeper than the US. Why? Because it didn’t have to deal with a legacy system. But no Cost/Benefit Analysis is going to come back with a suggestion that is visionary. It is a safe tool.

OK, that is the long way to get to my three summaries.

Jim Collins of Good to Great: Why Some Companies Make the Leap… and Others Don’t is taking the current situation to remind people of the importance of talent. A Postcard piece by Patricia Sellers called How to thrive in turbulenttimes describes Collins as emphasizing that before you can get the bus moving in the right direction, you have to have the right people on the bus. This isn’t really about downsizing or becoming lean. This is more about getting like minded individuals all moving in the same direction. Often in corporate life, there are motivations that are not aligned. This causes leadership issues and slows effective change. If the leadership team is unified in the goal, which is often the case in distressed companies, then driving results gets easier since there is nothing but support from peers and executives.

IBM, often a forerunner for identifying markets, is investing heavily in data and information capabilities. Sam Palmisano, the CEO, realizes that problems for humanity – wasted energy, insufficient health care, poor distribution of food and water, and snarled traffic for example – aren’t going away just because the economy is poor. If anything, he believes people will pay more attention to them. IBM has expanded mightily into the worlds of metadata and business intelligence, knowing the margins, if done right, are huge.

Remember the summer when you were 10 years old? For many people it meant being part of three different sports leagues. One was probably baseball or softball, another was soccer, and the third was perhaps basketball. You knew each person on each team and some overlapped. When the school year started you had all these different networks of people you knew through the leagues. Some people counted on you because you were one of the better players at baseball, while some knew you just because you were on the 15th man on the soccer team. This same paradigm is happening at Cisco Systems. During the last recession (2001), Cisco realized it took entirely too long for it to change and accomodate new economic environments. Cisco responded to the self evaluation by installing team oriented programs. If you are familiar with how internet traffic is routed then you know it is a big web. That way if one node goes down, the whole system can handle its absence. It is the same concept for their organization – a web of boards, councils, and subgroups. Each populated with different personnel to ensure diversity of thought. To reinforce the idea, compensation is now tied to these teams productivity. And it is paying off. Silos are broken down and decision making is improved and faster.


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