Stephen H Baum Leadership

It is almost two years since the peer advisory board of CEOs I chair began explicit planning for the storm on the horizon. They have made not only the easy moves and the challenging moves, but acted on the list of measures they thought they would never invoke unless survival of the enterprise were at stake.

Where are we now? What are CEOs doing and feeling this summer? You may find valuable first a partial list of activities which are their focus now. Then there is a gut check you must do to avoid a major behavioral risk that is observable in July of 2009.

Having taken every conceivable measure to cut costs, having cut capacity, there is now greater leverage in incremental volume, other things being equal. The current focus is therefore on:

– More aggressive pursuit of market share, targeted by competitor and customer

– Upgrading and expanding the sales force

– Stepped up headcount devoted to client/customer retention (phone and visit “touch,” call reports,

– New approaches to connecting with all the key people at client organizations (client, users, contracting officers) where friendly contacts have been laid off and new people are often seeking supplier concessions to prove their own worth

There is also investment being made, but highly selective and focused:

– technology that supports the core services

– experts in continuous process improvement who are reducing errors and cycle time

– uses of the web to attract new, smaller customers at low acquisition cost

– refreshing selected products and services where competitive differentiation is possible

– upgrading key positions because the talent available at reasonable cost in the marketplace has soared

Finally, there is the hard work of critical thinking, now involving the entire senior team, and of preaching and teaching — showing up to reinforce the belief in the future and the need to stay focused on the blocking and tackling.

– challenging every assumption on which the business is based

– getting more granular in forcecasting month by month P&Ls as an input to selecting where to spend money

– holding regular updates on the business, improvement and outlook

– giving recognition and reward to employees who have done something exemplary (non-monetary and “light-monetary”)

In a few cases, this is leading to strategic investments by those with the capital to do so.

But even with all of the improvement that the above has generated — and many are seeing significant improvement in margins and EBITDA — there is a virus in the air. Small business owners and some corporate CEOs identify personally with their businesses. Given the still high level of uncertainty in the economy, the new thriftiness (miserliness?) of customers, the intense competition (sometimes at unsustainably low prices), there is a great deal of anxiety.

The anxiety leads to fear which strikes at the survival instinct defensive (fight or flight) part of the brain. What does this do? It puts the ego in the way of desired outcomes. In this emotional state, people are quicker to see a comment as a criticism, even an insult; to see expression of concern as whining or defection. The leader must hold herself or himself to a higher standard. Each time he shows up is an opportunity for the leader to learn something, to teach and preach, to reinforce confidence and focus.

For myself, I try to take my ego out of interactions with others, especially those I coach. But I know, for example, when I am driving on the highway, my ego gets involved in judging the driving behavior of others and having negative thoughts. I know I am not alone in this regard.

So, do a gut check: what is your mood each day and during the day? Are you consistently showing up the way you should? Or do you find yourself saying and doing more negative things these days? Leaders are surrogate parents at work. The family wants the parents steady, confident and encouraging.

That’s my view. What’s yours?