Leadership in the time of recession
Last week, six months into the coronavirus outbreak, the UK has officially entered recession, for the first time since the 2008 financial crisis. Economists define recession as two consecutive quarters of GDP decline. This year, they have seen a 2.2% fall in the first quarter, followed by a 20.4% fall in the second, making the Covid-19 recession the deepest in decades.
Since the start of the pandemic, the economic landscape has become more, not less, confusing, and business leaders now have to navigate unclear expectations and continued uncertainty. Recovery presents new challenges for leaders and teams, and many report having mixed emotions. Their sense of optimism and clarity is laced with withdrawal and doubt, even among leaders who have weathered the crisis well. Many leaders are starting to realise that the lockdown phase was in fact just the acute part of the crisis and they now have to focus on more profound and adaptive challenges in their leadership style and organisation.
Building long term resilience
Mathematical statistician Nassim Taleb, who created the term “black swan” to describe an unpredictable event with an extreme impact, recently stated that he doesn’t believe Covid-19 is one of those events. Quite the opposite – he believes, Covid-19 is a white swan, because the long list of epidemics over the last few decades should have woken leaders up to the inevitability of the crisis. To prepare for the next crisis, better strategic risk assessments should be built into the recovery plans, however managing risk needs to extend beyond the senior leadership team. Leaders at all levels should harness the collective intelligence and skillsets to create a new risk management infrastructure.
To build resilience in the long term, leaders need to actively prepare for multiple scenarios by creating options to manoeuvre. It’s tempting to plan for a route ahead, but if anything, Covid-19 has demonstrated its power to surprise and upend assumptions about how the world works. Leaders should also remember the dispersion in outcomes across countries and sectors and the opportunities for individual outperformance for those who can see them and mobilize around them.
Renewal, not return
It’s important not to think of the recovery phase as just going back to work and adopting old habits. They need to focus on creating meaning so they can understand what lessons they have learnt and how they can manage a crisis next time it occurs. As the pandemic evolves, leaders need to evolve too – through the emergency phase where they lead from the frontline, through the regression phase which requires a step back, to recovery that calls for a balance between leading their team into the new normal while rethinking the future.
Many disruptions and innovations may accelerate in the wake of the Covid-19 crisis. Automation and the shift to online channels could be among the most relevant accelerating developments across many sectors. As a result of it, some traditional roles and sectors might be declining, but there are many more that will be generated. At Acumen we have over 21 years of experience in designing and delivering leadership development programmes that give leaders at all levels the practical tools to help solve real life challenges. For more information about our programmes please contact Simon at firstname.lastname@example.org.