As CEO, I lived through four tail-risk events, three global recessions, and every industry went through a rough patch. Business cycles and crises are hard, but the big mistake is to hide.
In this era of volatility, you will see things that you’ve never seen before, that you hadn’t planned for. I had never seen a true tail-risk event until 2001. Since then, I’ve seen several: 9/11, Hurricane Katrina, the Global Financial Crisis, Fukushima earthquake and Nuclear Disaster, BP Oil Spill … from the front seat of the car. And now, the coronavirus.
It takes courage to survive the dark years. The big tendency is to retreat into old habits, to hide or to wait for a return to normal. This is a time for leadership and action. This is what I learned.
Know that time resets. Much of what you thought you know is changing in real time. In that regard: every minute is a day, day a month and month a year. Make a plan for a period of time you can handle. During the Financial Crisis, we planned week-by-week. Don’t be afraid to make decisions; don’t be afraid to change your mind. And, learn to say “I don’t know.”
Pace yourself, because a crisis will come at you in waves. Don’t expect a rest period. Keep a few actions in reserve. Remember that you can make mistakes in two directions: lack of action and overreaction. So, don’t panic. After the 9/11 tragedy, it appeared that the commercial aviation industry would never return to strength. But it did, resulting in a 15-year bull market for commercial air travel.
You need a strong and flexible point of view about the world. This will allow you to develop a set of fluid contingencies. This informs what counts: the decisions you need to make, and when you need to make them.
In the case of coronavirus, you should seek a macro perspective on how long the economic impact will last. The good news is that China seems to be getting back to work; the bad news is that this is the first time we have shut down the entire global economy simultaneously. There is no model. During a crisis, there are a multitude of opinions and few facts. Get some intelligence you can trust.
You need to work “two truths” at the same time. What is the worst case, and where are the opportunities? Protect the areas of your company that are not in the danger zone, while also defending the future. In the midst of the financial meltdown, we had an industrial company to run. So, while we were shoring up GE Capital, we were also making huge investments in technology and globalization. For example, we had to approve billions in engine commitments during the financial crisis. Don’t let the fear spread. Crisis is a great time to shift market share or add talent.
Make decisions (get more cash) and don’t worry about criticism. Don’t be afraid to cut cash burn, or pull your bank lines. Understand what cash is restricted and available. Unfortunately, we never know as much about our balance sheet as we should. You will regret not doing more when times were better. But things can still get worse; in fact, it is tough to model “the worst-case scenarios.” Get cash.
This will frequently require tough decisions about your cost base and your customers. Especially in crisis, if you insist on waiting until the skies clear, you will never do anything at all. After 9/11, we loaned billions to the airlines without a clear picture of the future. Constipation is bad leadership, but inaction can feel safer because the minute you act you open yourself up to criticism. Often your best moments of leadership will be second guessed. Don’t let it rattle you.
In the end, focus on what you can control. There are no “style points” in a crisis. Do your best every day. During the Financial Crisis, the GE team conceived and executed a $15B equity raise in a weekend. It was teamwork at its best. For this, we were publicly criticized. But we know we did the right thing, and we all took pride in a team effort.
Communicate constantly … inside and outside the company. Stay fluid. Kill the PowerPoint. Conduct frequent meetings with your executive team to update your point of view. Hold your team together. Communicate constantly, even if you have nothing new to say. People don’t expect you to be perfect, just make progress. Remember, the crisis is no one’s fault, so don’t pass blame. In a blaming culture, people stop working in order to cover their own asses. If you can nurture an ethos of all-for-one and one-for-all, it can save your bacon. Everyone wants a sense of purpose. Good people will stand alongside you in a righteous fight, emboldened by your mission. When you have a strong team, you can weather any crisis. Without that, you are lost. At times, you will need to fight for your reputation. Communication is not for the faint of heart. The media doesn’t always get it right. You can't counter inaccuracies – neither factual errors nor contextual ones – with silence. Fight the bad stories with good ones.
Find a way to help. After 9/11, GE was the first company to donate money to the Twin Towers Fund ($10M). After Fukushima, GE donated $5M to the Red Cross in Japan. During the Financial Crisis, GE was the only lender to access broad sections of the economy, like recreational vehicles. People want to be a part of their company’s mission during a crisis. They want their company to have meaning, so find a way to help. Treat your team with compassion.
See who keeps their cool. This is a great time to judge your team. Let’s face it, most people haven’t seen tough days for a decade. Crisis reveals character. You will find that more work is done by fewer people.
The best leaders absorb fear. This skill has often been described inaccurately. I'm not talking about soothing people by blowing smoke or giving false assurances. Authenticity and transparency are important, but not about everything. You should talk about the things that your team can actually do something about.
Importantly, cheer for good government leadership. They were great partners to the private sector after 9/11 and the Financial Crisis. I’m sure they will be a partner now.
We will get through this. Don’t retreat, or hide, or wait for a return to normal. This is a time to lead.