In Times of Volatility

Friends,

 This week, a man in his early 80s told me that he thought this was the most uncertain week he had experienced since he was a young man during World War II.  He pointed to many aspects of this great volatility: Hurricane Ike, Lehman Brothers’ bankruptcy; governmental takeovers of Fannie Mae, Freddie Mac, and AIG; another volatile, toss-up presidential election; the Detroit mayoral mess; crazy fuel prices, rising unemployment, the ongoing mortgage crisis, and a nearly crashing Wall Street.  Yikes!

 Perhaps in your local world, you could point to added uncertainty and volatility.  Our lives change and get crazy.  In bunches, come graduations, marriages, illnesses and death, layoffs and sweeping changes at work.  What would you assert to be the key guiding principles of leadership in highly volatile times?  I’d suggest these:

 1.    Be more visible.  I remember running at night in downtown Savannah last fall.  I got clear directions from the concierge, but my confidence fell away and uncertainty swirled as I took my first steps in a dark and strange city.  I quickly found patrol cars circling the streets like bees at a cider mill.  My anxiety level fell completely away.  Likewise, the presence of Treasury Secretary Paulson this past week has been important for (as the candidates love to say) “Wall Street and Main Street.”

2.    Interpret reality in a larger context.  President Bush has continually tried to put the insecurity (and suffering) of Iraq into some sensible context.  It hasn’t been credible to all, but he has been consistent and vocal.  My wife continually worked to assure people during the Detroit mayoral crisis that there was a legal process, and that it would be followed.  Parents explain to children in divorce that there is a bigger picture, and that they will still be loved.  Explanations are not easy to hear in tough times, but they are essential to lower anxiety so people can continue to function and attend to their work.

3.    Focus people’s attention on things that make a difference.   This is perhaps hardest.  During crisis people want their authority figures to protect them – to be visible and to be reassuring.  People look for painless, external, authority-created answers – what Ronald Heifetz calls “technical fixes” in his book Leadership Without Easy Answers.  Buying 80% of AIG is a technical fix.  But, beneath the technical problems and fixes are almost always difficult issues that must be faced.  And in this financial crisis, there’s plenty of work to go around: for labor and management, for borrowers and lenders, for regulators and the regulated.  Great leadership points people to do that work.

 You might gauge the level of uncertainty and volatility in the places you lead.  If it’s high, you can bet people are distracted from the work.  And it falls to you to be present, to interpret, and to focus them back on the work at hand.  Let me know what you think, as you…

 Lead with your best self,

Dan

 

 

11 responses to “In Times of Volatility

  1. Thanks Dan,
    I agree with you when you say that leaders needs to be visable, paint a bigger picture and focus people on what is working. But, I would like to add that strong leaders also need to give clear direction.

    I think our present financial crisis is just to complicated for most of us to understand. People are asking a simple question, What Should I do? I would like to hear more concrete usable advise.

    1. I agree with your assessment of his financial crisis being complicated. One thing that is not complicated, though, is the greed manifestation by the CEO’s and other high level management idividuals associated with these malfeasances. An example we see daily relative to criminal activity, is a forfeiture of assets obtained through impropriety. We have yet to see leadership in Washington state that the accumulated assets of the “horders” are going to be retained as collateral.

  2. ‘Good times’ don’t last forever….yet, people want to believe they do.

    Like the turkey who believes good times are common place until the third week of November, most people expect the good times to roll on. And so, they only see what they are looking for. Even their stockbroker won’t tell them that “when in doubt, get out.”

    Yet, if you understand that there are business cycles, you look for the unexpected and thus see the unexpected when it surfaces….long before others do.

    What comes next could be scary. When the social mood trend changes from optimism to pessimism, creditors, debtors, producers and consumers change their primary orientation from expansion to conservation. As debtors and potential debtors become more conservative, they borrow less or not at all. As producers become more conservative, they reduce expansion plans. As consumers become more conservative, they save more and spend less. A downward “spiral” begins, feeding on pessimism just as the previous boom fed on optimism.

    The resulting cascade of debt liquidation is a deflationary crash.

    Last summer while on vacation in Maine, I purchased a $.25 well-used book from the Great Cranberry Isle library. This best-selling book was written in 1972 and targeted to young Baby Boomers to help them understand the political health of their country and what they must do to get the country back on track.

    Here is the author’s Foreword to the bestseller “Captains and The Kings” in 1972:

    “This book is dedicated to the young people of America, who are rebelling because they know something is very wrong in their country, but do not know just what it is. I hope this book will help to enlighten them. The historical background and the political background of this novel are authentic. The “Committee for Foreign Studies” does indeed exist, today as of yesterday, and so does the “Scardo Society,” but not by these names.

    There is indeed a “plot against the people” and probably always will be, for government has always been hostile towards the governed. It is not a new story, and the conspirators and conspiracies have varied form era to era, depending on the political or economic situation in their various countries.

    But it was not until the era of the League of Just men and Karl Marx that conspirators and conspiracies became one, with one aim, one objective, and one determination. This has nothing to do with any “ideology” or form of government, or ideals or “materialism” or any other catch-phrases generously fed to the unthinking masses. It has absolutely nothing to do with races or religions, for the conspirators are beyond what they call “such trivialities.” They are also beyond good and evil. The Caesars they put into power are their creatures, whether they know it or not, and the peoples of all nations are helpless, whether they live in America, Europe, Russia, China, Africa, or South America. They will always be helpless until they are aware of their real enemy.

    President John F. Kennedy knew what he was talking about when he spoke of “the Gnomes of Zurich.” Perhaps, he knew too much! Coups d’etat are an old story, but they are now growing too numerous. This is probably the last hour for mankind as a rational species, before it becomes the slave of a “planned society.” A bibliography ends this book, and I hope many of my readers will avail themselves of the facts. That is all the hope I have.”

    Taylor Caldwell

    Now 35 years later, Baby Boomers are the best educated of all former generations. However, they need to read or re-read “Captains and The Kings” to better understand how their countries are being weaken through politically created wars and inflationary monetary policies.

    Boomers are valued and needed to exercise their responsibility, serious work ethic, “can do” attitude and competitiveness in stopping the bankruptcy of their country. They need to exercise their leadership capabilities in finding, promoting and voting for political candidates in 2008 who are for free markets, sound money, reasonable tax policies, and ready, willing and able to fight terrorism the way Canada, Sweden and Switzerland do.

    1. My concern is the way Bush has ruled. He has ruled by giving the people fear and insecurity in their lives. He wanted to be the war president and he has succeeded. People get what they deserve and the American people truly deserve Bush in all his glory and splendor.

  3. The word volatility cones from the Latin word volo, to fly. When things are flying around, followers take hope from the stability, the rrotedness of the leader. A mother shows calm to keep her children from being afraid. She finds strength in her love for them, and that love roots her. So if we’re gonna be visible, for goodness sake, we need to know our foundation, and entrust ourselves to it. Others may desire to discover it for themselves, and share the leadership without our becoming bottlenecks or controllers or workaholics.

  4. For many Americans, things have been bad for a long time. No jobs to be had, unemployment running out, savings dwindling. So they go camping instead of to Aruba, or to Zehnder’s Splash Village instead of Disney World.

    Even in this troubled economy, thousands of people went to Renaissance Village last weekend and spent lots of money on period costumes and food and trinkets–things they don’t need, perhaps, but they’re fun!

    As you drive past “restaurant row,” or stop in for a bite, surely you notice that the parking lot is full, or there’s a line at the drive-thru.

    Am I in denial, or are they finding joy in what they can? Do our greatest times come from buying that Hummer or in getting back to nature and getting together with family and friends?

    The October ’29 crash didn’t hit middle America til the 30’s, and then it was a “soft fall” because many more Americans lived on farms, and many Americans were willing to share soup and sandwiches with the army of hobos looking for work.

    Today, lots of people are on unemployment. Lots of nonprofits are offering food pantries and soup kitchens and free clothing. Lots of government agencies are offering vouchers for housing or clothing or minimal health care.

    I’m not saying it’s good; I’m just saying that naysayers and doomsayers may be overdramatizing a bit. Maybe Americans need a paradigm shift to get back to what’s really important–not a vacation home, steak instead of hamburger, not your 72nd pair of shoes.

    I’ve been convinced for a long time that the banks will fail, that investments will dry up and maybe governments, too, as the results of this paradigm shift cascade down to local units of government whose land tax revenues decrease because you can’t get blood out of turnip and you can’t get tax dollars from empty and abandoned homes foreclosured on and now rotting with unremediated mold and flooded basements because sump pumps don’t work when the electricity’s been cut off.

    Does any of that matter? Does money matter? What if we had to start catching our own fish and trapping pigeons and squirrels to eat? I’m not saying I have the skill to grow and preserve my own food and yet maybe in some ways we’d be better off being more self-reliant.

    Sometimes, in order to get to an attitude of gratitude, we have to entertain the worst possible scenario, accept that, and move forward to prevent that and then, do what we can. Most of us are relatively powerless to change what happens on Wall Street or in DC, except for voting. This year, I hope everyone will vote as if it matters, because it does!

  5. I believe the situation the USA is currently in is the failure of the American people to exercise their intellecutal curiosity and question the policies of our government. There is a vast amount of information available but it requires personal initiative to pursue and evaluate. The leadership running this country has been absent and a failure. But when the public accepts things as reported and buys into something that is repeated over and over is it any wonder why we have the crisis at hand. How often have we listened to or heard about the shortcomings of the Governor of Michigan? How inferior American cars manfactured by the Big Three in the United States are? Yet, the enormously postive things the Governor has achieved and the incredible quality of Cars made by Ford, GM, And Chrysler are hidden form public scrutiny and can only be discovered by reading and listening to more than two or three media outlets that only provide the public information that suits their own agenda. Certain interests have created the instability and turmoil we are going through and it is these interests that control major media outlets which control and determine the type of information the public receives. I am not the least bit surprised about the mess this country is in. When you start a war that costs a trilion dollars, ignore the escalating cost of energy, hide the real cost of living from the American consumer and glorify an economic system that rewards executives who get millions of dollars for being successful failures how can we not fault ourselves for failing to lead as indviduals in a society that permits participation to determine our political and social structure. One cannot be a leader sitting in the stands as a spectator. Leading with your best self mandates personal committment to be engaged and pursue knowledge in affairs at the local, state and national level. The application of time of time is minimal but the information and insight to the issues of the day could result in huge dividends on the time invested.

  6. Many thanks for a much-needed pep talk. I am doing some work with a youth-serving not-for-profit right now, and it is in serious financial trouble. Altho, I only agreed to a three-month stint, I’m finding I may want to stay on a bit longer; your “light at the end of the tunnel” approach helps me think further out – for them and for me.
    Kathy R.

  7. Strategy in any enterprise or endeavor lives in the context of “vuca” conditions as described by a growing cadre of leaders … conditions that are volatile, uncertain, complex and ambiguous. Strategic leadership responds to “vuca” realities in different ways, providing organizations with the pathways to get “prepared and resolved” for both challenges and opportunities, and the upside that comes with every set of threats and concerns. More foresight, more insight and more courage … these are part of the arsenal of strategic leadership in these goofy times. More focus on results, less shock and blame, more sense of options and less whinefest … these behaviors are embodied in strategic leadership. Read The Upside by Slywotzky and Get There Early by Johansen for a little perspective. Leadership navigates the unclear and the uncertain, and followers learn by taking cues from leaders who can function well in “vuca” environments.

    Daniel Wolf
    Author,
    Prepared and Resolved.

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