Leadership Lessons from Low Tides
It’s true that high tides lift all boats. What about low tides? As leaders, we enjoy the time of rising tides and business fortunes, but experience increased complacency and expectations for the high tides to continue. The low tides provide leaders the opportunity to test their resilience, creativity, and inner strength.
Some examples of low tides:
1. A division in a cyclical industry generates $120 million in operating profit one year and loses $14 million the next.
2. A business owner believes that 100% of a day’s revenue is available to him for a luxury car purchase before it’s explained to him that 90% is already committed to employees and suppliers. His spending habits force him to sell his company.
3. A company loses its largest client representing 30% of its revenues and most of its profits.
4. A president whose forecasts are so unrealistic, the finance team uses operating profit as the revenue outlook for the division. The division closes a year later.
At high tide, when the lagoon is full of cash and profits, leaders learn things. But when the tide goes out and reveals the tree stumps and rocky bottom, leaders learn volumes about themselves and their employees.
Low Tide Lessons
1. We challenge assumptions. Things that we believed were self-evident may not be during low tides. A crisis requires leaders to challenge assumptions and, as importantly, permits them to do so.
2. Leadership becomes intensely personal. Jobs and the well being of employees and families are at risk. Some leaders, out of fear and overwhelm, retreat into meetings rather than reaching out to connect with people during a crisis. Our employees are always watching, but now, they need us to step up to another level.
3. Styles under stress are exposed. Many things are stress-tested during a crisis, not the least of which are behaviors. Take the time to focus on what you want and need when interacting during a crisis. A few thoughtful breaths may be the difference between restoring confidence and company-wide confusion.
4. Surprising people step up. People that previously worked diligently and quietly raise their hands to help. Whatever fear stopped them before becomes less important than the bigger purpose of supporting the turnaround effort.
5. Avoiding pain is a powerful motivator. Humans go to extraordinary lengths to avoid pain and loss. This emotion drives most leaders and employees to do whatever is required to get things back on track.
6. Some leaders freeze. Most of us think we know how we would react to a crisis, but until it happens, we don’t know for sure. Some leaders play a smaller, seemingly low-risk game to avoid making mistakes. During a crisis, leading to win is light years away from trying not to lose.
7. Process improvement becomes easier. With strong financial performance, the impetus to change is minimal — why change what’s working? When performance sinks, the urgency grows and, miraculously, we begin to find ways to simplify processes, lower costs, deliver better and faster, and hack our way out of danger. The constraints that kept the company from improving before are tossed aside now in favor of survival.
8. Values are tested. The values established during high tides are stress-tested during low tides. Everyone will see, as they experience the challenges, which values are real. A crisis is an opportunity for the team to emerge stronger than before, to identify improvement areas, or to become ordinary. In the end, the company is either stronger or weaker, but it’s never again the same.
9. Customers become real. To the extent customers were an abstraction as sales grew, the customer becomes concrete when the stakes are raised, and everyone realizes that customers were paying 100% of their salaries all along.
10. Focus sharpens. When the pantry is full, we don’t worry about hunger. We’re certain the next meal will be there. The high tide increases complacency. At low tide, lack and scarcity enter our awareness and our attention shifts to making sure we eat again. Low tides sharpen our focus and drive us to act.
11. Routine decisions are magnified. Leaders make dozens of decisions each day, most of them unchallenged. When results decline, every decision has heightened significance and scrutiny. That’s when leaders sharpen decision-making skills.
12. How we lead rises in significance. People are scared, nerves frayed, trust is low, and the stakes are high. Motive always matters in leadership, but low tide requires us to bring our best selves to work. People will be looking for signs that everything is going to be alright and that their leaders are up to the task. Words spoken and written will be picked apart for hidden meaning, so clarity of communication is critical during this time. How we engage with people during this period will largely determine our level of success and define the future company.
Takeaway: Paradoxically, taking the time to prepare for low tides in a business reduces the chances we experience them. If your organization is experiencing high tides right now, use these lessons as a cautionary tale and reminder to prepare. If you find yourself and your company in a low tide, these lessons may help you through it.
Call to Action
You can learn more about David Porter Advisors by visiting our website here. We‘re ready to talk when you are.