In the early 2000s, The LEGO Group was on the verge of collapse.
It sounds hard to believe today, since the company is one of the largest and most successful toy sellers in the world. But in 2003, the Denmark-based company was on the brink of insolvency, with massive debt and a negative cash flow of DKK $1 billion.
LEGO needed new leadership. It promoted Jørgen Vig Knudstorp, a former consultant, to CEO. Along with Chief Financial Officer Jesper Ovesen — a former banker — Knudstorp gradually righted the ship by instilling organizational discipline and forming a strong financial foundation for the company.
The new executives were brutally honest with LEGO’s board and employees about the challenges the company faced. To survive, everyone needed to focus on turning things around, correcting the company’s problems so they could plan its future.
That required clear thinking and a dose of reality.
“Before LEGO could even begin to reignite a sense of what was possible for LEGO, they first had to persuade people that decades of unfettered growth offered no assurance that the company would ever get its groove back,” writes David Robertson in “Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry.”
Crises come in all shapes and sizes. They can be small and isolated in a single company, like LEGO’s need to refocus itself after years of mismanagement. Or they can be caused by broader, external factors that affect industries and economies.
No matter the source, crises call for strong leadership. The coronavirus pandemic is just the latest example.
Carla Harris, vice chairman of wealth management and a senior client advisor at Morgan Stanley, shares what leaders today must do to weather the current crisis in a discussion that kicks off Microsoft’s Envision Virtual Forum for Financial Services.
First, great leaders are visible, says Harris. “There’s something powerful in being able to see the person that you’re following.”
They’re also transparent and empathetic. Employees and other stakeholders “want to see empathy, but they also want to see confidence and positivity,” she says. It’s an uncertain environment, and we’re all feeling a wide range of emotions due to the health and economic consequences of this crisis.
“One of the biggest learning moments for me as a leader was watching financial services leadership during the financial crisis. There were some leaders who didn’t really say anything to their people, and there were some leaders who were out front every day,” she says. Harris has spent over three decades on Wall Street, joining Morgan Stanley in 1987. “There was a regular cadence that people came to rely on, and that was frankly empowering.”
While the unfolding crisis is unique even among crises, with an especially broad range of potential outcomes, leaders have arguably never been better equipped from a technology standpoint to take action. Companies may be locked down for the most part, with employees largely working remotely, but leaders can still communicate directly with staff. For example, Boston-based State Street Corp. uses video conferencing technology to host virtual forums where employees can interact with senior executives to get answers to their questions.
Harris also recommends that leaders be flexible in today’s environment and open themselves up to input from diverse viewpoints. Strategic goals may shift in response to the Covid-19 environment, or leaders may need to consider new ways to achieve their objectives. “Don’t have rigid views of what you think things are going to look like on the other side” of this crisis, she says. “This is the time now to be an inclusive leader, and the hallmark of being an inclusive leader is to solicit other peoples’ voices.”
I’d suggest one addition to the actions Harris outlines, based on my conversations with business leaders like Horst Schulze, the co-founder and former president of the Ritz-Carlton Hotel Co.
Lead with purpose.
There is no one-size-fits-all personality for leaders, and leadership skills are developed over time. But all great leaders share one trait: They have a vision and inspire employees to achieve it.
“We need leadership,” says Schulze. “Leadership implies, ‘I have a destination in mind.’ It means, ‘I show my people the destination, and I show them how it’s beautiful for them, how it’s great for them, how it’s exciting for them, how they should join me in reaching that destination.’”
Great leaders are rare. But in times like these, they can be the difference between surviving a crisis or thriving despite it.