I recently read Adam Bryant's interview with Penny Herscher, veteran Silicon Valley board director and CEO. He asked Herscher about lessons for leading "in a fog" - i.e., in a highly ambiguous, unpredictable environment. Herscher argued that management teams need to consider the tough, uncomfortable "what-if" questions. She explained:
My observation is that many leadership teams aren’t comfortable doing broad scenario what-ifs. It makes them uncomfortable. On one of my boards, I asked, “What if XYZ happens and you’re out of cash in October? What are you going to do?” Just asking the question is so powerful for the leadership team. If you don’t ask the question, they don’t go through all the logic of how it might happen, and then think about how to prevent it by managing to other priorities.
It’s as if you have to ask the leadership team, “Are you comfortable asking each other these scary questions?” Because once you can name them, they’re not quite so frightening. I find that more conservative leadership teams typically don’t want to look at the bad possible scenarios. It’s easier not to think about it. But if you’re facing a difficult, scary situation, thinking through the worst that can happen helps you prepare to prevent that worst thing from happening.
I agree wholeheartedly with Herscher. I think many management teams want to avoid thinking about the worst. They believe in the power of being relentlessly optimistic. However, one can be bold and optimistic, and yet still be prepared for alternative scenarios. Some management teams talk about the worst in private, but they always sugar coat any discussions with a broader set of employees. They think that being too negative will hurt morale. However, playing to "close to the vest" can backfire. Employees can sense that the firm is operating in a very challenging and turbulent environment. They can see the risks ahead, the icebergs ahead in the water. If management only provides happy talk, then employees grow worried. They wonder whether management is truly prepared for what the future may bring. Employees may even lose faith in top management. The best leaders confront reality and don't sugar coat the situation and gloss over an organization's weaknesses. They name the problems and the challenges, but then make a persuasive case why the organization can and will overcome those obstacles.