7 Lessons for Leading in Crisis | Bill George

Summary of: 7 Lessons for Leading in Crisis
By: Bill George

Introduction

In the ever-changing world of business, crises are inevitable. In his book, ‘7 Lessons for Leading in Crisis’, Bill George equips readers with the tools and insights needed to lead through such hardships successfully. This enlightening summary explores the pivotal role of exceptional leadership in navigating and overcoming crisis situations as experienced by renowned CEOs, from Warren Buffett to Jim Burke. Uncover the secret to accepting reality, asking for help at the right time, and getting to the root cause of problems as you pave your path to becoming a resilient and decisive leader.

Leadership in Times of Crisis

Effective leadership during a crisis is not a skill you can learn in an M.B.A. program. Crises have the power to make or break executives, highlighting their true leadership potential. While mistakes are inevitable, weathering the storm and keeping your company afloat can provide invaluable lessons for future emergencies.

Warren Buffett’s Leadership in a Crisis

In the face of criminal prosecution for “submitting false bids” to the U.S. Treasury, Salomon Brothers was at risk of bankruptcy. Warren Buffett, the major shareholder, took control of the company and demanded full transparency, even if it meant prosecution. This prevented a disastrous chain of events, and Salomon Brothers survived. The lesson learned is that denial is a bigger career killer than incompetence. Leaders must accept reality and acknowledge their role in contributing to the crisis, or minor issues can inflate into major ones. A crisis provides a unique opportunity to create transformative change in an organization and put a leader’s reputation to the test.

Leading Through Crisis

In times of crisis, CEOs shouldn’t shoulder the burden alone. Fostering a support system, relying on trusted colleagues, and remaining open and available are key to successful leadership.

CEOs often feel an immense pressure to bear the weight of their company’s problems on their own. However, this approach is far from effective during times of crisis. One prime example is the case of Morgan Stanley CEO Philip Purcell, who sequestered himself during a period of great turmoil. He neglected to turn to his colleagues for support and failed to provide the leadership his company needed. As a result, former executives united to remove him from his position.

During crises, CEOs must be willing to rely on their support systems. Trusted colleagues, friends, family, and even mentors are all valuable resources. By building a strong support team in advance, CEOs can avoid retreating into themselves and demonstrate effective leadership. By remaining open and available, CEOs can motivate their teams to rally and develop solutions to problems. In short, effective leadership during a crisis requires humility and a willingness to rely on others.

Effective Crisis Management

In 1982, Tylenol capsules were tampered with, resulting in three deaths from cyanide poisoning. Johnson & Johnson’s CEO, Jim Burke, promptly recalled all Tylenol. The company introduced tamper-evident packaging and soon resumed selling Tylenol. However, in 1986, another person died from poisoned Tylenol capsules. Again Burke pulled all Tylenol from the shelves and reintroduced it with a tamper-proof pill design. During a press conference, Burke was questioned about the death, and he admitted he wished they had implemented the solution four years ago. Corporate leaders often treat symptoms as problems, but the root cause remains, leading to repeated crises. To confront the most serious risks, leaders must bravely confront their fears and identify the root cause of the problem. This process is difficult yet crucial, even if the findings have unnerving implications. To deal with a crisis, leaders must gather all the facts with no sugarcoating, adopt a “trust but verify” approach and be prepared to take firm action.

Crisis Management Lessons

Never underestimate a crisis and its possible outcome till it is truly over. It is crucial to respond with fundamental changes if the situation demands it. Experience during the 2008-2009 economic crisis has taught us that it is easy to overlook the early signs, and we must be alert to any minor losses or associated risks and take corrective actions immediately. Leaders must keep a close eye on their business subparts, analyze their risks and take prompt action for successful crisis management.

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