Smart leaders act strategically in tough times. While they do focus on cost cutting and other means of conserving resources, they also operate five key strategic levers to focus their attention and to engage their staff.

1. Five things Smart Leaders s
Part of the "Living Organisation"
do in Tough Times
Smart leaders act
strategically in tough
times. While they do pay
attention to costs, they
also operate five key
levers to focus their
attention and to engage
their staff
Dr Norman Chorn | norman.chorn@centstrat.com | www.normanchorn.com
We all seem nervous
As I write this article, business leaders in Australia seem nervous about the future. The
media is filled with reports of layoffs, postponement and cancellation of projects. Even the
much vaunted mining and resources sector - the so-called saviour of the Australian
economy - is showing signs of a slowdown in growth.
But the fundamentals of the Australian economy seem sound, at least in comparison with
the rest of the developed world. What is causing this tentativeness in business leadership?
Perhaps we are simply uncertain about the future, or lack confidence in the leadership
shown within the political arena. Whatever the reason, we are entering the usual round of
cost cutting and job shedding as enterprises try to prepare for the uncertainty ahead.
Ironically, this simply adds to the general malaise and slowdown in economic activity.
So what can smart leaders do in these tough times? Rather than simply repeat the more
obvious measures many of you are already taking1, I have focused on five strategic levers
that smart leaders can address when times are tough.
Knowing and doing
It is important to focus on what you KNOW as well as what you DO in times like these. And
this focus should address both the PEOPLE and the THINGS that relate to the
organisation. Diagram 1 below depicts this focus.
1 These include things such as managing cash flow, reducing unnecessary expenditure and lowering debt.
1

2. Knowing
Strategy(as( Ra.onal(
Love( op.mism(
People Strategic) Things
intui,on)
Engaging( Rapid(
the(mob( prototyping(
Doing
Five strategic levers
Using the model above, we can identify five strategic levers that smart leaders can pull
during tough times:
1. Define strategy as LOVE
Most strategic plans are based on the assumption of “warfare” - ie that we under some
form of attack and that we have to win in order for the business to be successful.
Potentially, this mindset can be extremely limiting, because it puts competitors at the
centre of your thinking. And if you do that, then there is a tendency to watch your
competitors and use them as a benchmark.
But what if there was a different way of thinking about strategy? What if we thought about
strategy as LOVE instead of continually thinking about strategy as WAR? What new
insights would that afford us? For a start, it would remind us that customers - not
competitors - are the centre of of our business. It is customers’ problems and unsolved
needs that we need to focus on, particularly when times are tough. This focus and attitude
will resonate with staff more deeply than cost cutting or improving the return on assets.
2. Be a rational optimist
It’s easy to understand why quick fixes and short-term solutions are rife in tough times.
Leaders want results - and they want them quickly. But we can only generate value for our
organisations if we take some time to understand what is really going on before acting.
Correlation does not imply causality. While your sales might increase as the market grows,
it does not mean that the market growth has caused your increased sales.
The key is to understand the wider system of which you are part and to identify the
leverage points. Rational optimists believe that they can and will make progress by pursing
a bold, but sensible, approach. It is a balanced understanding of the whole system.
Rational optimists develop a realistic view of the market and their situation, but their
defining point of difference is that they don’t give up on themselves.
2

3. 3. Do rapid prototyping
As we move into tougher and more complex times, the relationship between “cause” and
“effect” breaks down. Best practice ceases to be a goal for which leaders can strive.
Usually, there is no ONE answer or best way. And so, the only sensible way forward is to
experiment, observe, learn and adapt. Beta, better, best may be the catch cry in this
scenario!2
There are some powerful emotional barriers to be overcome in this practice, however.
Firstly, most leaders are wired to finish tasks before abandoning them, and are hard
pressed to admit failure. It is obvious that we may have to kiss many frogs before we find
the prince! Secondly, organisational systems are not geared to support multiple initiatives,
each with many points of learning and adaptation. Our organisations prefer a few well
defined projects where we can predict the outcomes with some accuracy.
These are barriers we will have to break down if we are to move forward in these tough
times.
4. Engage your smart mob
This is about engaging your staff in your tough journey. Engagement is achieved by
building a community around an agreed purpose. There are several elements to this
exercise:
a) Clarify your purpose: As mentioned above, this is best done around something staff
can identify with, such as creating customer value
b) Generate some activity: Identify some concrete things that the organisation can do
in order to create this customer value
c) Develop some content around the activity: Provide some rationale as to why this
activity will create customer value, and how the additional customer value will assist
the business
d) Engage staff with the results: Provide a transparent metric that will demonstrate the
progress being made towards the creation of customer value.
The Continental Airlines example 3 of the late 1990’s provides a good illustration of this
approach. When Gordon Bethune was appointed CEO in 1994, he was faced with a poorly
performing airline and highly alienated staff. While he had to make obvious expenditure
cuts, he was acutely aware that he needed some way to engage staff to join him on this
journey. Traditionally suspicious of the metrics and public information generated by
management, staff were unlikely to believe any internally generated data. And so Bethune
chose the “on-time departures” figure that was regularly generated by the FAA.
By demonstrating that on-time departures would create real customer value, Bethune was
able to engage staff in an effort to lift the performance of the airline. He also arranged to
have this figure (generated by the FAA) visible to all staff. Moreover, he promised a $65
bonus to all staff each month that the performance of the airline showed improvement. The
improvement in performance was significant, as was the level of staff engagement.
5. Use your strategic intuition
Strategic intuition is the ability you have to solve unfamiliar and challenging problems
with a flash of insight - usually after a period of mulling it over. Strategic intuition is a
combination of rational thinking and creative imagination, and is generally evoked when
2 I first heard this term used by Geoff McDonald, the BookRapper
3 I was introduced to this case by Steve Major of Trusted Authority Partners
3

4. you face an unfamiliar challenge and allow yourself time for reflection. This is contrasted
with expert intuition, which occurs when an expert encounters a familiar situation. In
these cases, the expert is able to make make a snap judgement because of their vast
experience and the familiarity with the situation4 .
Strategic intuition occurs when you recognise the situation is new - and turn off your expert
intuition. This is an important distinction, because expert intuition is often the enemy of
strategic intuition.
Releasing your own strategic intuition depends on a number of factors. But an important
aspect is the ability to develop the so-called “beginners mind” - i.e. where you deliberately
push aside what you know from previous experience and open yourself up to new insights.
As we know, existing paradigms offer efficient solutions to common problems, but they can
restrict our willingness to see new and different solutions.
Tough situations often represent new and complex challenges where there is little
precedent for how to respond. This is precisely the situation in which smart leaders allow
strategic intuition to play a part.
Smart leadership in tough times
There is great temptation to knee jerk or seek quick solutions in tough situations. After all,
humans are wired to avoid pain and discomfort in their environment. But smart leadership
in tough times demands more. It demands a more strategic approach to deal with the
external and internal challenges faced by the organisation.
The smart approach to dealing with tough times is about:
• Viewing strategy as love rather than war, so that you place the customer at the centre
of the business
• Understanding the whole system within which you operate, so that you can probe the
leverage points with rational optimism
• Experimenting and building rapid prototypes of new products and services, so that
you can learn and adapt rapidly in a complex environment
• Engaging your staff with a clear purpose (not profits or expenses), compelling
rationale and transparent metrics - so that they work with you through the challenge
• Using your strategic intuition to address unfamiliar and complex challenges.
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4A good example of expert intuition is the paramedic who is able to make instant decisions when she arrives
at the scene of an accident because she has witnessed many such scenes before
4