How leadership can make or break companies during a crisis

Crises can make or break companies. While some go extinct, others help reshape the political, technological, and social structures. I saw this when economic conditions in Mexico significantly declined after the currency crisis in 1994, and again in 2008 after the global financial crisis. The current COVID-19 crisis is no exception.

In all crises, leadership is critical not just for survival, but for long-term success. MIT’s EMBA program teaches students how to become innovative leaders who make a positive difference in the world. We learn how to tackle complex problems and make better decisions using the science of management. This means using frameworks and lenses to analyze situations — as well as ourselves as leaders.

What do you do at work?

More than half of what many managers (bosses) do at work involves controlling people. In comparison, almost no time is spent on developing employees. This focus on control results in self-interested dominance behavior. Leaders spend too much time focused on title, power, and authority, which negatively impacts any organization. This type of focus can also damage culture by reinforcing the wrong concepts and creating waves of confusion and fear. It can create barriers to clear communication, inhibiting the establishment of an open and dynamic collaborative process.

Rather than recognizing leaders based on title, they should be recognized for their thoughts and actions. As authority is earned, their followers empower them. A leader must pay attention to the needs of others while they rise to higher levels, which requires a humble and empathetic attitude. This is the key to establishing open communications and encouraging collaboration.

Clarify your purpose and communicate your vision

Leadership requires clarity of vision even during times of crisis and change. Leaders must have a strong resolve to make difficult decisions and to stand firm on what is important, valuable, and meaningful. Leaders must convey a higher sense of meaning to achieve what seems impossible. They must provide a narrative about that higher purpose to help overcome challenges.

Some important questions leaders should continually ask themselves are: What is my goal as a leader? Why am I doing this? By spending some time on self-reflection, they will realize their true calling and be better able to communicate their vision.

Fear and failure

Fear and failure are toxic and can erode functionality, transparency, and collaboration. Yet, they are all too common among leaders who derive their sense of purpose from the desire to control and short-term incentives. This type of behavior can also undermine innovation and motivation, which will condemn any organization to fall apart. These forces can kill creativity and permanently damage an organization.

They also can lead to many organizational erratic behaviors.  The origins of a fear — — and blaming others for failure — can be linked to a high ego. This puts the organization in a risky position because it can cause blind spots. Managers lead on the basis of what others might think and the desire to always be right, even when someone proves them wrong. This type of behavior is dysfunctional to any group because it punishes the possibility of making mistakes, which is an inevitable result of doing something new and different. This fear of failing leads to the perceived safety of repetitiveness. This in turn manifests in creating only slow and marginal improvements and competitive blindness. When this happens, the organization is on the path to becoming obsolete.

Trust

Trust is required to counter the control-fail-fear syndrome.  Leaders must realize and emphasize the importance of others. This does not mean putting yourself down as a leader, but rather lifting others up and recognizing that the team is better than the individual. Trust and confidence empower people to believe they can discover, solve problems, and deliver great results. This inspires them to focus on what is important and meaningful. Leaders should be examples of what they want to implement. It is important to walk the talk and be consistent about the organization’s culture.Leadership is a lifetime endeavor. It involves developing others for achieving greater things.

Sergio Humeda Gomez, EMBA '16, is CEO and founder of Salterra, a firm focused on providing real estate finance and business management consulting services as well as industrial operation solutions for the material handling industry.