Top 5 mistakes leaders should avoid making

A monthly dose of business insight by Gregg Anderson, founder and principal consultant, VisionQuest Management Services Ltd. 

Even the ordinary citizen must look suspiciously at some of the gaffes made in corporate world when faced with a string of bad news.  

The global recession is forcing companies of all types to look at their spending and investment. And many organisations are focusing their efforts on explicit cost-cutting as the solution to their problems. Unsurprisingly, such actions usually fail to produce the desired savings because executives begin with the what vs. the how.  


Mistake 1: Knee-jerk reactions 

There is much truth in the old adage “Things done in haste are never done right.” This is also known as the “shotgun” approach of leadership. When leaders fail to collect the requisite information and critically judge the long-term effect of decisions, critical errors are made.  

First, take a timeout and breathe. Think long-term strategy. Be vigilant. Take initiative. Test your decisions by using, “Scenario analyses…. If this option… then this result…” so you can get a feel for it. The downturn should be used as a time to take a hard look at a firm’s strategic goals. In fact, firms should view the downturn as an opportunity, not a threat. Chaotic times are challenging for businesses but they also offer a huge opportunity to gain strategic advantage. 


Mistake 2: Meet with only the top brass  

First, answers to apparently intractable problems are often found at the ground level, not in the C-suite – managers do not have a monopoly on ideas. Employees should be given a chance to air their views – tap into everyone in the search for efficiencies and innovations. Engage your staff as colleagues, not as just employees. Managers should stop directing employees and, instead, engage them with questions. The old top down form of management will no longer serve firms in today’s economic climate. 

Moreover, if managers tell employees what to do, you’ve removed all feelings of responsibility and ownership. Developing transparency engenders trust and cohesiveness thereby making all feel that they are part of the solution.  


Mistake 3: Slash and burn  

Ever heard of anyone who downsized their way to greatness? In this challenging economic climate it is tempting – and indeed, sometimes unavoidable – to slash and burn. You can remove 20 – 30 per cent of costs from any business rapidly, but do you want responsibility for the chaos that follows? Indiscriminate termination of employees without considering the cost of underserved customers and work overload of too few people, or meeting cancellations when this is the time To convene and have candid talks are just two examples of surgical cuts that could have been effectively done instead of using a scythe.  

As for layoffs, if your organization or department can deal with this – assemble everyone and reveal the facts. Indeed, staff cuts should always be your last resort, not your first, as it significantly impairs your ability to bounce back as the economy recovers. The first thing you should look at is your infrastructure, the overheads and waste that have grown within the organisation. After a downturn there will be an upturn and as a company, you have to be in a position where you can emerge as strong as possible. 

Investigate and you will discover that employees may be willing to reduce work schedules, work half-time, and job share instead of having members of their team terminated. Whatever costs you choose to cut, keep your front-line managers with you, since they are the bridge between you and your customers. It is their attitude, motivation and loyalty that will determine whether their teams – and ultimately your customers – stay with you through a recession.  

This is an opportune time to be thinking about talent management — identifying your best people, developing them, making sure they feel they have a future with you. Bear in mind that the best people have mobility, even in a recession. Employees may have limited career options, but they may still move elsewhere. Leaders can easily forget that in a cost cutting mode. 


Mistake 4: Pursue new clients and customers  

There is so much talk about gaining new clients that it’s easy to overlook what it takes to retain the clients you already have. And in this market downturn, client retention can make the difference between having a successful year and a middling one. Unless your current customers have vanished because of poor quality products or service, these can be your best source of new revenue. Discover how you can convert them into champions of your product/service offerings. This is the time to be a good partner to your customers because people remember who was there for them in the bad times. Now is the time to show that you truly care. Customers may have less disposable income to spend, but they can still choose to spend it with your competitors.  


Mistake 5: Attempt to do more with less  

This mantra has been resonating for years. In most organisations, it’s often found that much of the more is work that provides no value at the end of the day. Examine every process; eliminate the sacred cows, fiefdoms and the egos. Convert every activity into a monetary value. One of the pitfalls is to believe that you’re doing the same for less. As a matter of fact, it is highly unlikely for organisations to do this – what’s really happening is that you’re cutting corners. And the end result can severely impact your bottom line. 


BONUS Mistake: Reduce the drive to innovate to save money  

Every crisis creates opportunities so leaders have to be bold. This is not the time to be overly cautious – you have to be bold in a thoughtful way, and carelessness must be avoided. Innovation is usually placed on the back burner when money is scarce, yet repeatedly, we see companies that put a premium on product and service e.g. Apple, BMW, LL Bean, SAS performing better during downturns and recovering faster in the upturns.  

Innovation can be the first victim of a recession because it is still misconstrued as a cost centre, an overhead when times are tough. Yet genuine, sustainable innovation should occur throughout an organisation continuously. I seriously doubt that Tim Cook is not thinking about Apple’s next market leader. What is required is to get customers to come out and buy. Don’t be mislead by the media stories that give the impression that there isn’t any money remaining. Trillions of dollars are still traversing the world economy, and you have to capture your fair market share. Goods, services and toys are still being bought by consumers, investors and governments. You have to make sure you entice these customers to buy the next thing. 

The global recession presents a window of opportunity that will decrease as the economy recovers. There will be a scarcity of resources and talent once the recovery starts. Moreover, the market share that is currently up for grabs will be determined now, not during the upswing.  

Organisations that capitalize on the opportunity to reassess and invest will have access to the financial, human, physical, and technical capital required to drive and maintain their desired growth. Companies that sit on the fence, however, will miss a valuable chance to position themselves as front-runners for the foreseeable future. 

We have been given an opportunity to really consider what is most important, to perform work that is meaningful to our customers and other stakeholders, and to cultivate, collaborate with, and nurture our key relationships. We have a chance to innovate, to regain our reputation, our integrity, and to shape our future. For leaders to let this slip by would be our gravest mistake.  


Gregg Anderson is founder and principal consultant of VisionQuest Management Services Ltd which provides clients with access to high-quality management consulting services including strategy, organisational change, business transformation and environmental sustainability, ie helping businesses improve their “green business strategies”.