About the Crisis Leadership Forum

To better understand the leadership dimensions of crisis situations, the Center for Creative Leadership convened a forum with formal and emergent leaders who played a role in Hurricane Katrina. We overlaid this conversation between crisis leaders with the perspectives of discussants with expertise in disaster, terrorism, public health, and leadership. This blog site is intended to continue this conversation.

To read the report on the Crisis Leadership Forum, please click here.

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Sunday, March 15, 2009

Core Values and Human Capital: Keys to Success in an Era of Turbulence

Welcome to the “new normal.” That’s part of what management guru Jim Collins recently said in an interview with Fortune magazine senior writer Jennifer Reingold. And by the “new normal,” Collins, author of business classics “Built to Last” and “Good to Great,” suggested that the current volatility and instability in the marketplace is not an aberration. In fact, he opined that the stability we enjoyed from 1952 to 2000 was an anomaly. Simply put, economic turbulence is here to stay. So get used to it.

If that’s the case, though, what should business organizations do about it? To answer that question, Collins cited practices of some of the past century’s most-enduring companies, specifically, Procter & Gamble, General Electric, Johnson & Johnson, and IBM. For Collins, two particular aspects of those companies’ strategic approach have made them successful in the face of crisis.

  1. Strong core values: Because crises naturally challenge an organization’s capabilities, it’s crucial for managers to maintain a consistent focus on the organization’s central ideals. This entails continually reinforcing how you do business, in addition to what your business does. For example, Collins cited Procter & Gamble’s persistent focus on product quality as an enduring feature that has helped it succeed despite adversity.
  2. A continual focus on human capital: Quite simply, people matter. If managers choose to sacrifice attention to their human capital, their organizations will fail. Retaining—and yes, even hiring—good people during economic downturns should continue to be a top priority. Why? According to Collins, it’s high-performing employees that pull organizations toward success during crises. Additionally, in a labor market flush with talent, the time is ripe for organizations to bolster their human-capital advantage.

Finally, Collins proposed that executives should remember that “turbulence is your friend.” Despite current economic uncertainty, organizations with leaders who seek and exploit new opportunities will emerge from this crisis with a renewed strategic focus enabling them to succeed.

The worst action for executives, Collins contended, is inaction. Referencing his hobby of rock climbing, he said, “You don't just sit on the mountain. You either go up or go down, but don't just sit and wait to get clobbered. If you go down and survive, you can come back another day. You have to ask the question, ‘What can we do not just to survive but to turn this into a defining point in history?’” The place to start, as Collins suggested, just might be (a) reinforcing your core values and (b) focusing on your human capital. Because, after all, values and people do make a difference.

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