MANAGING THE LEADERSHIP CHALLENGE IN A DOWNTURN

1. MANAGING THE LEADERSHIP CHALLENGE IN A DOWNTURN Address by LARRY ETTAH, Group Managing Director/CEO, UAC OF NIGERIA PLC to Senior Managers at the UACN 2010 Business Retreat

2. INTRODUCTION • You are all welcome. • We are uniquely opportune to once again take a very frank look at our company, businesses, processes, systems, procedures and people. • This has been made imperative by the current state of the Nigerian economic and business environment . • What are the key issues for business leaders? 2

3. WHAT IS LEADERSHIP? • I don’t intend to engage in show and tell about leadership, but we must remind ourselves of what it is and what it is not. • As leaders we need to be clear, simple, direct and organised with a vision and plan, that seeks to inspire our people to align themselves with our way of thinking. 3

4. WHAT IS LEADERSHIP? (CONTD.) • We must also remember that to be a successful and effective leader, it is important to develop or adopt a style of leadership that is appropriate to different situations you find yourself; one that is appropriate to the organisation you work for, your employees, colleagues, friends and family. So the leadership approach of past years may be anachronistic for the exigencies of today. 4

5. WHAT IS LEADERSHIP? (CONTD.) • What do we need: • Self-belief and the conviction that you can achieve the objective set. • Ability to inspire aspiration and capabilities in subordinates. • Evolving appropriate behaviour in relation to the task,, group and individual needs relative to the overall situation. 5

6. LEADERSHIP CHALLENGE • We live in a critical and challenging economic and business times where the roles of leaders are more important than ever. • Leaders must therefore be ready to adapt our style of management/leadership to suit the tasks and the situations that arise in business on a day by day basis. • Beyond gut, leadership must make use of knowledge and skills acquired from studies, observations and experience. • Hence this retreat 6

7. FOCUS OF LEADERSHIP • Performance of the company and its future should remain the key focus of leadership, which in turn ensures the commitment and interest of all the company’s stakeholders to its plans and strategies. • As Jeff Immert recently told his leadership team at GE: “keep your company safe, but keep building the future” 7

8. FOCUS OF LEADERSHIP • The current economic climate both reveals and accelerates the need for innovation. • The need to become the experimental in order to test out core strategy issues. • Identifying new forms of collaboration. 8

9. LEADERSHIP COMPETENCIES • Understanding and using overall strategy to achieve goals and objectives; more so we need to execute more than to strategise. • Ensuring clarity of roles, the goals and/or targets and criteria for success; • Establishing, maintaining, and inspiring the team’s passion and determination; • Engaging with others • showing concern for the needs of staff; • Empowering them by trusting them to take decisions; • Listening to others ideas and being willing to accommodate them; 9

10. LEADERSHIP COMPETENCIES (CONTD.) • Finding time to discuss problems and issues despite being very busy; • Supporting others by coaching and mentoring; • Inspiring all staff to contribute fully to the work of the team; • Actively promoting the achievements of the team to the outside world. 10

11. HARD CHOICES • A downturn provides an occasion to make hard choices. • Companies can also harness a downturn to prioritise which corporate initiatives really matter. Corporate ‘priorities’ tend to proliferate during a boom. • This excess of objectives consumes not only cash, but also diverts managerial attention from what truly matters. • In a downturn, the leadership should consolidate their major initiatives into a single list and select a handful that is truly critical. 11

12. HARD CHOICES (CONTD.) • To ensure everyone gets the message, we should communicate the key priorities throughout the entire organisation, including a list of initiatives that are no longer objectives. • To force hard choices, we can ask ourselves series of questions: 12

13. HARD CHOICES (CONTD.) • What initiatives, businesses, products, markets and so on, have a call on our scarce resources? • Can we rank order them in terms of value creation potential? • Where should we draw the line that marks the truly critical from the nice to have? 13

14. CHANGE MANAGEMENT • Downturns provide an ideal opportunity to re-invigorate an ongoing transformation. It can be an energising experience if well handled. • We can harness this downturn to renew a sense of urgency, justify unpopular decisions and overcome complacency or resistance to change • The questions to ask are: • Which large-scale changes did we start prior to the downturn? 14

15. CHANGE MANAGEMENT (CONTD.) • Which do we still consider critical to our long-term success? • What changes would we have to make even if this crisis had never occurred? • How can we harness the crisis to accelerate these changes? 15

16. DOWNTURN OPPORTUNITIES • All the economic bad news can eclipse the crucial reality that every downturn has an upside. • Unilever’s Chief Executive in a recent reflection on the global meltdown in October 2009 stated that: “managers should never waste a good crisis”. • To make the most of that upside, we must recognise opportunities during hard times and muster the courage to seize them. 16

17. DOWNTURN OPPORTUNITIES (CONTD.) • In a downturn, it is easy for us to focus exclusively on managing threats, and thereby lose sight of golden opportunities. • To counterbalance this, we should ask ourselves the following questions: 17

18. DOWNTURN OPPORTUNITIES (CONTD.) • Are competitors retreating from opportunities that we can seize? • Should we double down in growth markets, rather than retrenching to our core? • Does our customers’ or competitors’ pain create an opportunity for us? • Can we snap up key resources at bargain prices? • Seizing the opportunity requires a creative deal to help ease another company’s pain. 18

19. HOW WE HAVE FARED • As a Company, we had proactively deployed some defensively coping strategies to yield business sustenance and growth in some of our businesses. • We focused on cost reduction, better cash management, business mergers/closures, operational excellence, review of customers/suppliers portfolios taking into account risks associated with geographies, market, industry, sectors and on people we have to declare redundancies. 19

20. HOW WE HAVE FARED (CONTD.) • While coping strategies are mostly about managing the short term, as business leaders we must acutely be aware that we have to run a parallel track of strategies which will safeguard the long term interest of the company. • This will include doing the following: 20

21. FINDING A BALANCE - PEOPLE • We need to balance the need to cut cost with longer term issues of growth, morale and talent retention. • We must be committed to identifying, growing and nurturing talents in spite of the challenging economic environment. • This is the mindset that we have to adopt and adapt throughout the business. 21

22. FINDING A BALANCE - NEW PRODUCT DEVELOPMENT AND R & D • The issue of innovation and product development must be put on the front burner, where slowing these areas of funding will lead to the company being underprepared when the inevitable upturn in business kicks in. We must rethink growth and realise that we have to shift from sales growth to volume growth. • R&D, which is often the starting point for making strategic moves for growth in the long term must be sustained and executed with operational excellence, while considering all the risks and changing scenarios. 22

23. FINDING A BALANCE -COMMUNICATION • Uncertain times impact people negatively. • In the absence of clear, transparent and frequent communication from the leadership on the state of the business, people grow fearful and uncertain. • We have a major role to play in keeping the company focused and aligned towards managing the downturn in the most effective way. • In the current scenario, we have to keep talking and talking to our people. • We may even have to communicate our plan and progress to stakeholders at frequent intervals. Increase in management intensity and frequency of control. 23

24. FINDING A BALANCE - LEADERSHIP STYLE • Operating in a crisis-recovery mode also calls for us to “get our hands dirty” with the daily nitty-gritty of the business, far more than what is warranted in normal times. Need for more involvement in the details of operations. • Find time to go across and meet key customers frequently to “show the flag” and keep the relationship energised in difficult circumstances. • Lend a helping hand to your subordinates. 24

25. CONCLUSION • The worst of the downturn may not have been seen, we have gather sufficient experience so far to see us through. • How do we make the most of emerging opportunities and accelerate our own growth in a sustainable fashion. • We can do it through the following: 25

26. CONCLUSION (CONTD.) • Retaining the gains – we should not revert to profligacy of the past, but retain prudency as our business way of life. • Agenda setting – The board will continue to set the strategic agenda and avail us of the rich experience and combined wisdom of members. • Looking beyond the number- keep track of key economic drivers and market forces that are pertinent to our industry and spot approaching turbulence ahead of time. 26

27. CONCLUSION (CONTD..) • RAM CHARAN in his book “Leadership in the era of Economic Uncertainty” list the following important behaviours and traits that characterise a good leaders’ approach for managing in a downturn. 1. Honesty and Credibility: No one can be certain about business environment and its direction. Your authority derives from your ability to facilitate understanding and solutions. Level with people, tell them how you see the world, acknowledge the limits of your understanding and ask them for their views. 27

28. CONCLUSION (CONTD..) 2. The Ability to Inspire: People are anxious, jobs savings, trust are at risk. Hope is stretched! Inspire your team to inspire the rest of the organisation. Inspire team to focus on new priorities, making decisions for incremental successes. 3. Real-time Connection with Reality: In a downturn with pervasive uncertainty, reality is a moving target. Keep updating the picture, monitor change and impending change continuously. Put all concrete external info on the table no matter how bad, encourage all your people to do same, discuss it among yourselves. 28

29. CONCLUSION (CONTD..) 4. Realism Tempered with Optimism: Unadulterated pessimism is no more realistic than unbridled optimism. Focus your people on a vision of what is possible, and energise them to search for the actions that will realise the vision. Bring touch of optimism that taps psychological reserves to deal with bad news and transform fear into action. 5. Managing with Intensity: Your hands on participation is essential in these times. Dig into the right details with much higher frequency than ever before only through such involvement can you acquire the needed ground level intelligence. 29

30. CONCLUSION (CONTD..) Rely less on memos and proclamations, share more and discuss with team so that can act with speed that is required in a volatile environment. Be interactive – listen, explain, answer questions. 6. Boldness in building for the future: Faced with necessity of cash conservation and survival resist the pressure to short-change the future. Place strategic bests yet on the future; no point limping to the finish line! 30