In this tough economy, what can a CEO do? The more I think about it, the more I am convinced that a CEO’s options are limited. The CEO can try to increase revenue through participating in and supporting sales efforts; however, he cannot be everywhere and he does not control customer spending. In addition, there is the problem of information asymmetry. He must rely on sales and operations to provide feedback on revenue generation. The CEO has more control over costs and companies large and small have announced layoffs, wage freezes and reduced benefits.
However, the CEO also has the power to bring the company together to survive and possibly achieve competitive advantages in this tough environment. I have been thinking about an HBR article I read in my business school strategy class, “Leading Change: Why Transformation Efforts Fail” by John P. Kotter. It describes eight steps for transforming an organization and it is extremely relevant in today’s turbulent environment. It all starts with the CEO. She can form a guiding coalition that assesses the company’s problems and opportunities. In addition, her vision for how the organization can effectively react to the challenging economy will ground all of the company’s efforts. The guiding coalition may develop a list of plans, projects and initiatives but the CEO’s vision will determine the priority of the projects and keep everyone on the same track. Further, her vision will reassure employees as they will know where the company is heading. The CEO will need to reiterate her vision across multiple channels in order to empower others to act upon it. Change is hard and will almost certainly involve sacrifices. However, employees will pull together to help the company survive if they understand the CEO’s vision and are inspired by it.
This is a crisis too good to waste. CEOs can do more than just survive until the economy recovers by using this opportunity to transform their organizations.