Leading Through Uncertainty

When we’re not training investors and operators on interviewing skills, Matt and I are active interviewers (executive assessors) ourselves. Given the turbulence in the tech economy and the remarkable collapse of SVB, I’ll take a detour from interviewing content this week, and share some timely insights from our prior assessment work.

There are countless articles about adapting leadership style to business context. The qualities and traits needed to turn around a failing company are wildly different than those needed to optimize growth thereafter. There is also quite a bit written about matching leadership style to economic environment. Certain leadership qualities that drive success in bull markets are ineffective or even counterproductive in bear markets.

Let’s ask a slightly different question—are there leadership qualities that enable an individual to be effective when either business context or macro environment are inherently uncertain? What happens to a business when confronted with uncertainty, and what does this suggest about which CEOs and other C-level leaders are best positioned to thrive?

I had the opportunity to assess and/or coach a handful of CEOs and other senior leaders during two peak periods of massive uncertainty—during the onset of the 2008 Great Recession and the 2020 COVID pandemic. These experiences shed light on two skill sets that tended to correlate strongly with favorable business outcomes.

1. Emotional Acuity: Reading and Adapting to Others’ Emotions

Organizations are composed of individual humans, each with their own desires, passions, plans and (usually) families to feed. Economic or business uncertainty can be massively destabilizing to individuals at all levels. Of course, some are affected more than others, but in aggregate, high levels of uncertainty can substantially reduce the effective capacity of an organization. Even if everyone works just as many hours, many individuals will face a tax, in the form of distraction or loss of focus, when uncertainty triggers fear. Great leaders know this intuitively, and place a high priority on understanding and adapting to their team members' emotional states.

One CEO I assessed before and advised throughout the COVID pandemic had a real knack for putting himself in others’ shoes. Whenever I asked him about one of his team members, he would respond as if he was that person, really “trying them on.” He would frequently position his decisions in terms of how they would be digested by each member of his leadership team. When the pandemic hit, he was able to take decisive action regarding cost containment and remote work with surprising speed and with minimal internal backlash. With very few exceptions, his team did not miss a beat (unlike many of his peers in the portfolio of his PE investor). One key board member felt it was due to underlying confidence and boldness. One of his executive team members chalked it up to his empathy and humanity. Another key exec felt was his thoughtful, measured communication style. In reality, he was adapting his approach with each of his stakeholders during his 1:1s. He took the time to see the world through the eyes of the individuals he was beholden to, tailoring his communication to maximize his impact on each individual. In the coming months, he vastly exceeded his (revised) plan and ended up delivering a tremendous outcome to his investors.

2. Purposefulness: Having a Compelling Long-Term “Why”

If the only “fuel in your tank” is making next quarter’s numbers or achieving a certain valuation, business or macroeconomic uncertainty will be hugely destabilizing to you—and by extension, to your entire team. If you are deeply and legitimately focused on the bigger picture impact you are making in the world, nothing really changes when the waters get choppy—your destination remains on the horizon, and you’re comfortable moving the tiller to chart a different course to get there.

I worked very closely with a CEO who was remarkable in terms of purposefulness. The initial onset of the Great Recession directly threatened his client base, which included large financial institutions. Many members of his organization—especially newer hires—were nervous and dispirited by the parade of events that rocked global markets. Earlier in his tenure, his company-wide communication was consistently focused on the service his company provided, which directly impacted the lives of the company's clients and their countless millions of end customers. During those tumultuous months of early 2008, his communication stayed on point. Though the "means" needed to change, the "end" had not changed at all. Whenever he was in front of the company, his communication took on a “now more than ever” tone, rather than a defensive or apologetic one. His company actually grew during the Great Recession, and seized the opportunity to pull in great talent that aligned with their mission.

These two competencies are not comprehensive, of course. But in our experience, they are powerful offsets to the forces of fear and doubt that can destabilize organizations facing a crisis.