Business Transformation Post-Crisis: The 5 Phases of Leadership
May 20, 2020
Things aren’t the same after a crisis. These are the 5 key phases your leaders need to experience to drive the business transformation you need.
This pandemic may be a totally unique moment in history, but it also shares common themes with other crises. And here’s the big one: It will force business transformation.
By now we’ve all realized that things won’t go back to the way they were. Life and work are forever changed. That means getting down to the business of operating in a new future.
Working with our clients over the years, we’ve helped many executives and their teams through many crises. Some were unique to their businesses, such as leadership scandals or safety accidents, while others stretched across an industry sector, or even the entire economy. But no matter how broad the crisis, when companies recover, they are permanently changed.
Through this work, we’ve identified five key phases leaders go through on their way to business transformation after a crisis. We’ve also looked at the risks and opportunities of each phase. And most importantly, we take a look at what leaders need to do to be successful in each of them.
Phase 1: Crisis Response
Immediately following the triggering events, leaders jolt into reactive mode. People may be in shock, and leaders have to act quickly to minimize damage.
What great leaders do: Great leaders take immediate action, first and foremost, to protect their employees and the public from harm. They stay steady, making decisions based on facts rather than panic. Perhaps most importantly, they communicate regularly and transparently, focusing both on facts and feelings. And lastly, they engage people. Most employees want to help during a crisis, and strong leaders know how to engage their teams to do it.
The opportunity: This is often a moment that can make or break a company’s reputation. We’ve seen both scenarios. If leaders react well in this phase by taking care of their people and doing right by the public, it can go a long way to build trust. Whether good or bad, people remember how leaders respond to crisis. This will set the tone for the company’s long-term recovery.
The risk: Companies can’t stay in crisis mode for long, although its common to become paralyzed here. After the initial shock, it’s tempting to press the pause button on everything, waiting for more certainty. Leaders may begin to think only in the short-term. In the current pandemic crisis, many are still in this phase. But companies that stay in a holding pattern for too long run the risk of getting stuck. They need to pivot quickly toward business transformation.
Phase 2: Strategic Refocus
As the effects of the crisis stabilize, organizations take stock of the impact, what has changed around them, and assess new risks and opportunities.
What great leaders do: When the most immediate concerns of the crisis have been addressed, leaders must take a hard look at the impact. It’s not a time for blind optimism. Great leaders confront the reality of the effect on the company, as well as the market, customer demands, and economy around them. Armed with the facts, they quickly identify and address new risks, while looking for the strengths they can leverage in the new landscape.
The opportunity: In this phase, there’s a short window of opportunity to re- focus employees and customers toward things that have positive impact, and away from everything else. If the company moves fast enough, both employees and markets begin re-shaping toward a new vision for the future. How the company pivots here will drive business transformation financially and culturally.
The risk: Decisiveness is critical here. Often companies must shed significant components of the business, repurpose others, or reallocate investments away from ventures that are no longer safe bets. Staying rooted in the past is perilous. Strong leaders make clear and confident decisions to focus on a new future, and they do so with speed.
Phase 3: Reprioritization
With a new or revised strategy in place, leaders from the C-suite to the front line need to quickly re-prioritize.
What great leaders do: One of the most challenging parts of business transformation is to stop current activities to focus entirely on new, more important, priorities. Leaders need to act with courage and clarity to communicate new priorities, and align their teams to create coordinated effort. Clear, simple metrics of success are now critical to ensure that every action is moving in the right direction.
The opportunity: Companies with strong measurement and execution cultures have an advantage here because people are accustomed to watching the “scoreboard,” and it now needs to change to reflect new areas of emphasis. The simpler the better. If leaders can quickly get their teams to focus on new metrics, they will move much faster toward progress.
The risk: It’s far easier to start something new than to stop something long-standing. But the risk is that obsolete projects will sap the energy you need to move in a new direction. So at the same time you’re creating effort toward new work, it’s equally important to stop work on projects out of alignment with the new strategy.
Phase 4: Execution
With new strategies and priorities in place, it is now essential to have crisp execution plans, and a simple, visible way to not only keep score, but to inspire teams to crush their targets and restore a winning culture.
What great leaders do: In the execution phase, great leaders focus relentlessly on the new “scoreboard." But it’s not only about the business metrics. The scoreboard helps leaders engage people by showing how their effort is contributing to future success. Great leaders obsess over the metrics, and communicate constantly about team progress. They recognize great work, take action on sub-par performance, and stop to notice when critical goals are achieved.
The opportunity: This phase is an opportunity for new stars to shine. Leaders should use these new execution opportunities to empower people to take on new, bigger assignments and expand their contributions to the “new” organization and its refocused agenda. Those who excel in this phase may become your high-potential leaders for the future.
The risk: During the execution phase, vagueness is the enemy. It’s common for leaders to set the new strategy, but fail to clarify roles and assignments. As a result, little gets done. Or worse, effort is duplicated or even counterproductive. Rapid progress on a newly-formed strategy requires clear accountability.
Phase 5: Restoring Confidence and Cultural Health
This is not an entirely new phase, as the rebuilding has already begun in the previous four phases. In fact, getting people back to winning is the best medicine for a wounded culture. But it’s also important to monitor confidence and company values moving forward.
What great leaders do: To restore a damaged culture, great leaders stay focused on a few key things. They celebrate success. They learn from mistakes. And most importantly, they continue to communicate. Great leaders help their teams make sense of what happened, and how their collective actions created a better future for the company.
The opportunity: By this point, you will have seen how your people have changed, grown, and stepped up to new challenges. Now is the time to celebrate and reward these achievements. The achievers are your high-potential leaders for the future, and your opportunity is to start thinking about how to develop them for further success.
The risk: As you settle into the new post-crisis normal, be cautious of the temptation to stop or slow communication about success. The scoreboard may seem less critical, and sharing results may feel redundant. But when business transformation produces real results, something special has happened, and great leaders don’t allow that to go unnoticed.
It’s not a linear path
While we’d all like to think recovery will be a clear, neat path, we know better. Different parts of your company may go through these phases in different ways or at different rates. And sometimes, you may regress to a previous phase when things aren’t on track.
But what’s important is that leaders are persistent in charting their path forward, especially those at the top of the house. Crisis is chaos, but great leaders learn how to control and leverage that chaos toward a brighter future.
A crisis can define a leader, for a while. But great leaders get the last word. They make the most of crisis to create a new, better future. Don’t waste your chance.
Learn more about how DDI can help you drive business transformation.
Matt Paese, Ph.D., is Senior Vice President, Succession Management & C-Suite Services at DDI. He leads DDI’s Executive Services group, where he and his team help CEOs, boards, senior teams, and executives enhance leadership to grow business, cultural, and personal success.
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