How did Ford Motor Company manage to turn a record $12.6 billion loss in 2006 into a $6.6 billion profit by 2010—without a cent of government aid? What did it take for then-new CEO Alan Mulally to slash the product line by two-thirds and double investment in the remaining third? For him and his team to make such complex, seemingly contradictory decisions—massive restructuring alongside big bets? And how did they manage to pay off half of the $24 billion debt piled on to propel the turnaround?
Simple: bold leadership.
If ever there is a call for bold leadership and decision-making, it’s in times of uncertainty or adversity. Opportunity is ever present, particularly in tough times. With bold leadership, companies can not only prosper, but they can also exploit their competitors’ paralysis and make important, even game-changing moves that position them for enduring success. During the Great Depression, for example, companies such as Procter & Gamble, DuPont, and even General Motors took contrarian positions that turned out to be wildly successful. (See “The Great Depression: Time of Opportunity,” below.)
So what does it take to change the mindset and behavior of the team at the top? To shake them out of their risk-averse wait-and-see attitude, even when they know that inertia itself is risky? To inspire the requisite boldness so that they act ahead of the need, ahead of the competition—and before hardship or crisis makes action a necessity rather than a choice?
Often, as in Ford’s case, a company will bring in an outside CEO. Or the existing CEO will reshuffle the team and reorganize management, recruiting new blood and “retiring” established heavy hitters. That may signal change, but it certainly doesn’t guarantee it. Although change from within can be difficult (and without guarantees), the payoff from changing leaders’ behavior is potentially far greater. From a practical standpoint, changing leaders’ behavior—and grooming future leaders to equip them to face the new realities—may also be smarter, in light of the growing leadership deficit that companies are facing: of the 3,500 companies worldwide that The Boston Consulting Group surveyed recently, 58 percent indicated that they were lacking leadership for critical roles. (See “New Leadership Rules,” BCG article, May 2010.)
Consider the stories of two large companies and the strategies their CEOs used to overcome paralysis at the top and bring about vital change—by changing people’s behavior.