Matrix Management / People and purpose / Virtual Teams

Learning about leadership – 30 years of ups and downs

In our 30th anniversary year we’ve been reflecting on some of our learning around leadership at different stages of the economic cycle.

It’s easy to be a great company and be seen as an effective leader when times are good. Every time there is an economic shock there are some organisations who have never experienced one before, either because they are young, or they have never experienced a downturn in business before.

Managing a downturn is when you really express your true values, it is when you may have to make difficult choices that impact people’s lives and careers. How do you do this in practise sets a leadership legacy much more powerfully then what you say when times are good.

Some of the Tech Titans have experienced this reality for the first time in the last couple of years when they over-recruited during the COVID period and then needed to downsize. They will live with a cultural consequences of how they manage this period for a long time.

In some cases, how this was handled has demonstrated a lack of depth in people management skills You can get away with some of this when you have great benefits and soaring stock options, but when times are tough it can leave organisations very exposed.

From 1994 when we started the business to 2000 was a period of reasonably consistent global growth and economic prosperity but we experienced a series of economic downturns with some kind of challenge about every five years including;

  • Asian Financial Crisis (1997-1998)
  • Dot-com Bubble (2000-2002)
  • Global Financial Crisis (2008-2009)
  • Eurozone Debt Crisis (2010-2014)
  • Brexit (2016)
  • COVID-19 Pandemic and the pandemic and post-pandemic recession (2020-date)

Maybe this is one reason why over half of small and medium sized enterprises fail within their first 10 years. We are pleased to be part of the 20% that survived beyond 30 years and are still running the business for the long term.

Our approach has always been to dig in, find the customers who are doing well (there is always someone) and preserve the core of the business by protecting our people and staying true to our values, even at the expense of sometimes making a loss.

We do this, because we know that, when things improve, if we have retained our capability, we will quickly bounce back and get back on track.

However, if we lose key people, it can take years to recover and replace them.

When the economy starts to improve, and it always does, many organisations will need to rebuild their team spirit and culture.

They may need to revisit their purpose and values to give a more honest description of what they really believe and how they really act in practise. If you didn’t live up to the values you espoused during the good times, people will give much more weight to what you actually did than what you say – time to be honest.

It’s certainly an opportunity to build your bench strength in people management and leadership and establish real resilience for the future.

We can’t forecast the next downturn, but we can be confident it’s coming in the next 5 to 10 years.

It also seems likely that, whatever the state of the global economy, AI will bring a major shift in jobs, employment and careers which will require careful leadership. We will see an extended period of disruption from this source which will shape the future of our organizations and ways of working.

As always after a difficult period, we are now seeing a new wave of organisation becoming more matrixed and more integrated to share resources, break the silos and “operate as one company”. Matrix management always increases after a downturn and with the legacy of the pandemic it now needs to be exercised in a remote and hybrid environment.

  • Organizations – Build the skills and culture now, you are going to need them.
  • Individuals – prepare yourself to manage ups and downs every five years or so during your career, being able to manage these transitions and remain employable is very much in your interests – don’t leave it to your organisation alone to do it for you!

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