While many companies are facing new challenges and increasing volatility, we’ve found that most leaders’ responses and outcomes tend to be unique. While quarantined with COVID-19, Todd Herman, author of The Alter Ego Effect, decided to interview 29 CEOs to hear how they described their circumstances.
Each company was experiencing a downturn. Herman analyzed each CEO’s word choice and language to see how they were reacting, noting the importance of a leader’s pronouncements: “words create reality.” He saw big differences in how executives were wired and reacted to the economic rollercoaster. His findings led him to divide the CEOs into three groups:
Fear-Focused CEOs – emotional, concerned, and overwhelmed. Tended to use negative future pacing words like ‘struggle’, ‘fear’, ‘hard’, or ‘difficult’. Spent the most time watching media or finger pointing rather than what could be done.
Unfocused CEOs – dismissive, uncertain, wait and see. Talked about getting a plan, but tended to use the word ‘plan’ in a negative or needs-based way.
Strategy Focused CEOs – take and use what’s given, focused on growth/opportunity. Positive. Spending time leaning into networks.
The Strategy Focused CEO
Looking at the Strategy Focused CEOs, they were:
- 9x more likely to be shifting their product or service offering
- 6x more likely to use the word ‘action’ or ‘opportunity’ derivatives
- 8x more likely to use the word ‘buy’ (i.e. buying other businesses, advertising, marketing, talent, etc.)
- 4x more likely to have spoken to other CEOs about plans for growth, sustainability or opportunities
Herman concludes “all of them said they wanted their business to be healthy, however, with time, more conversation and data, their words were expressing a far different psychology hidden underneath”.
Seeing the world through the lens of action, opportunity, and growth is a more powerful way to approach challenges. We’ve seen this time and again with InterimExecs RED Team, leading companies around the world in industries ranging from manufacturing to food production to nonprofit.
Interim CEO Creates Action Plan for Manufacturer in Crisis
An interim CEO leading a packaging manufacturer in California described his actions as the COVID-19 crisis unfolded and cut into revenues:
(1) Weigh the Options
With just 23 employees, the interim CEO and owner reviewed laying off the majority of employees. It made sense financially – it would save the company $150,000 a week. There were also risks. The plant was in an isolated area and they could lose their best workers. It also wouldn’t be a team play, which might risk losing hard earned trust. They decided to keep the workers on board, while outlining a hard nosed recession plan, held in their back pocket as a last resort.
(2) Embrace Surprises
The interim CEO described “surprises are also not all negative at this time.” The delay in pushing back production to a targeted end of April resulted in significant reduction in raw materials costs. The resins used in packaging were petroleum based, and with a price drop from 72 cents to 58 per pound, at 20 million pounds the savings went a long way to offsetting the revenue shortfall.
(3) Improve Process and Procedures
As an essential producer serving industries from healthcare to food, precautions and protocols needed to be put in place to ensure the safety of the workforce despite health risks. The CEO worked with the team to develop a written policy, questionnaire, operating procedures (i.e. wearing masks and gloves for everyone), training of supervisors to detect potential health disruptions, and clear procedures for coming back to work in the event a worker fell ill.
In Inspiring Ways Companies are Reacting to Coronavirus we reported various silver linings in times of massive market volatility. Temporary changes in how companies define their mission statement could become permanent. How much innovation will we see coming out of the current COVID-19 crisis?
For owners and company leaders, there could be opportunity within market madness. It could actually be that this is the best time to do a full business reassessment – where you are today and what changes make sense right now. Ready to take action? Now you are thinking like a Strategy Focused CEO.
InterimExecs RED Team is an elite group of CEOs, CFOs, and CIOs who help organizations through turnaround, growth (merger, acquisitions, ERP/CRM implementation, process improvement), or absence of leadership. Learn more about InterimExecs RED Team at www.interimexecs.org/red-team or call +1 (847) 849-2800.