Monday, February 25, 2013

On Dealing With The Unexpected

As a leader more often than not you have to deal with the unexpected.  Face it, also as a leader you know much less, than you might think you do. Yet, your people you lead are looking at you, are waiting for you to lead. You must develop this awareness of what you truly know, and even more what you don’t know ... cannot know. Your decision making, the quality of your decision making depends heavily on that. You must know when to make a decision for taking action, and you must know when not to decide for action, in any case, you decide! 

Imagine this situation:

February 1982 in Mexico. We were just at our office when the President of Mexico made his announcement. He was informing the nation that the country was dead broke ... that this was the fault of the international corporations ... that therefore the oil industry will be nationalized ... the entire banking sector will be nationalized ... that the rest of the industry will be under tight government control, especially pricing and importing goods ... that international traveling will be restricted ... that accounts in USD or other foreign currencies will be exchanged into Mexican Pesos at an arbitrary exchange rate ... that having foreign currency may be penalized ... and those were just the big points. How do you handle such a situation as a leader in your company? It feels like all alarm bells ring at once ... including the master alarm ... and you have not much time to react ... you must assess the damage and quick ... you must decide without having the essential facts for good decision making ... what do you do? Employees and workers were at the brink of panic, looking at us in leadership positions ... desperately waiting for being told what to do. The Titanic was sinking and rearranging the chairs on the deck would not be good enough ... 

That was the day, and I was a very young area controller back then, when all my naïveté suddenly fell off me ... when I realized that neither I, nor my top leaders had ever been prepared for something like that. We met in an emergency meeting with our Managing Board and went through our options ... well, you could barely call that options ... and one person was remarkably calm: our CEO ... a former U-Boat captain and used to the unexpected ... we assessed the damage, main problem was our cash reserve under these circumstances, then made some tough decisions right away: We had to lay off 15% of our workforce immediately, had to size down production levels to one shift only. And then the most important decision was made: with the cash we had we would pay first the salaries of the workers, then employees, then managers, and if there would be still something left top managers would be paid. We wanted to make sure that even facing the lay offs people would know and understand that we wanted to keep as many of the as we could. Keeping the knowledge and knowhow on board was crucial for the turnaround waiting for us. 

There was a moment when the discussion went towards shutting down everything and then just wait ... saving money through dramatically reduced cost. But reason kicked in and the understanding that you cannot save yourself rich, so to speak. The operation had to go on to avoid the sinking. We made all those decision for action we had to make right away to keep the company alive, and we postponed all those decisions we could to gather more data / facts and then decide actions to take. All that we discussed and decided in a matter of hours. 

What would you have done?

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