This article, authored by Ronald Heifetz, Alexander Grashow, and Marty Linsky, notes that while the immediate economic crisis will pass, it will likely leave behind a sustained or permanent crisis of serious and unfamiliar challenges. Strong leadership through such a sustained crisis will be imperative. Crisis leadership consists of two phases. The first emergency phase is focused on stabilizing the situation, which many leaders are capable of tackling. The second phase, the adaptive phase, is even more challenging as leaders must address the underlying causes of the crisis and enable organizations to thrive in a new reality.

Adaptive Leadership

The risk in the current crisis is that leaders might try to solve problems with familiar short-term fixes such as tightened controls, widespread cuts, and restructuring plans. This risk could be compounded if leaders treat a recovery from the current economic downturn as a return to normalcy and allow it to reduce their sense of urgency. High stakes and uncertainty will remain, but a lack of urgency could prevent leaders from focusing on the need for adaptation. However, organizations will need to adapt in order to meet new and different challenges. By using adaptive leadership, the current crisis can be used to change key rules of the game, reshape parts of the organization, and redefine the work people do. While adaptation will lead to the loss of some jobs and familiar methods, the process is as much about conservation of what works as it is about reinvention.

New Leadership Skills Needed

Executives will need to exercise a new set of leadership skills to deal with the challenges of adaptive leadership.

Foster Adaptation

Executives today face the competing demand of meeting today’s challenges while developing methods to excel in tomorrow’s world. In considering practices needed for the future, it is necessary to distinguish the essential that must be preserved from the expendable that should be left behind in order to move forward.

Embrace Disequilibrium

A certain amount of disequilibrium helps fuel change in an organization, but too much can cause people to fight, flee or freeze. Likewise, too little disequilibrium does not provoke people to ask uncomfortable questions and make difficult decisions. Companies must find the right balance so that disturbance is productive rather than destructive. Depersonalizing conflict is important to maintaining the right level of disequilibrium. Disagreements should be focused on the issues, but it is important to understand the viewpoints of interested parties as well. A culture of courageous conversation should be instilled so people feel free to discuss difficult topics. By allowing this conversation, dissenters can provide crucial insights and executives will hear more varied viewpoints.

Generate Leadership

Corporate adaptability most often comes from the accumulation of small changes occurring throughout the company. Leadership should be used to generate more leadership deep in the organization because organizations are highly interdependent and it may not be the executive team alone that identifies the best way into the future. Distribution of leadership responsibility can allow an organization to effectively draw on its collective intelligence. Everyone in an organization should be mobilized to generate solutions by increasing information flow so independent decisions can be made and lessons learned can be shared across the organization. Diversity should be leveraged to generate new leadership and innovative ideas because the breadth of views will give the best picture of the changes facing the business. The environment should be such that everyone is motivated to innovate or take the lead in creating value.

Best Buy, Beth Israel Deaconess Medical Center, and Egon Zehnder International are profiled in the article as organizations demonstrating these adaptive leadership skills.

Achieving Leadership Aims

Leaders need to take care of themselves to succeed in achieving their leadership goals for their business. There are several actions leaders can take to accomplish this:

  • Be both optimistic and realistic to avoid denial or cynicism.
  • Find sanctuaries to reflect and regain perspective.
  • Reach out to confidants external to the organization.
  • Bring more of your emotional self to the workplace.
  • Do not lose yourself in the role.

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ERM Enterprise Risk Management Initiative 2009-07-01