How to lead for good when times are bad

By Randall S Peterson , Tammy Erickson , Ioannis Ioannou , Freek Vermeulen , Dan Cable and Selin Kesebir

As we enter a new year filled with doubt and uncertainty, one thing is for sure: good leadership has never been more essential. We asked London Business School faculty for their evidence-based tips on leading for good in troubled times.

1. Engage with ideas constructively
Randall S Peterson, Professor of Organisational Behaviour and Academic Director, Leadership Institute

The world needs you to lead for good, more now than ever before. To do this effectively you will need to engage with ideas, including those that are quite different from your own. Here are four simple rules for how to discuss and debate ideas:

• Ensure psychological safety – name calling and bullying need to be off the menu; attack ideas, not people.
• Majority rule and minority rights – do not exclude anyone, even those who are offensive to you; when people have nothing to gain by following the rules, they also have nothing to lose by breaking the rules and attacking the majority.
• Approach the difficult discussions with a growth mindset – when someone says something you are shocked by, it is possible they did not mean it that way; keep an open mind and ask questions before jumping to conclusions, and sometimes people can change for the better.
• Do not get addicted to moral outrage – there is much in the world that feels unfair, unjust, and wrong; but work to resolve those injustices rather than “flaming” or “gaslighting” others – it feel good in the moment but also ensures that they will never listen to you.

To quote Nelson Mandela “If you want to make peace with your enemy, you have to work with your enemy. Then he becomes your partner.”

2. Rely on your team
Tammy Erickson, Adjunct Professor of Organisational Behaviour 

Almost everyone I know who has taken on the responsibility of leadership feels the weight of obligation deep in their bones – to the founders, owners, customers and, perhaps even more viscerally, to the employees and families that depend on the company for their livelihood. 

So it’s no big surprise that in times of uncertainty many leaders feel added pressure to personally make the key play. Given the changes and challenges companies are facing today, many executives are shouting “give me the ball.” This instinct is understandable but dangerously wrong. 

Significant research has shown that groups make better decisions than individuals: there is wisdom in crowds. Rather than personally grabbing the ball, now more than ever leaders need to tap into the wisdom and energy of the entire organisation. 

Focus on creating an environment that encourages everyone to contribute to the organisation’s success by doing these four things:

• Ask great questions. Challenge your organisation to meet goals that are intriguing, complex and important. Don’t narrow the focus to the mundane or over-specify the way teams should approach their challenges. Articulate a compelling intent – something that, in the language of complexity theory, will serve as a “strange attractor.”
• Build relationships and trust deep in your organisation. Don’t cut out meetings, intensify the competition among internal teams or reduce investments in learning. Increase your firm’s collaborative capacity by building relationships and encouraging knowledge exchange.
• Challenge the status quo and welcome diverse ideas. Insure that your team has regular on-going exposure to disruptive insights through diversity and external forays. Don’t cut travel or fall back on the old “tried and true” team. Bring in new people and new ideas – and take them seriously. Get outside your business sphere. Encourage brainstorming and the use of scenario analysis.
• Talk about why your organisation exists. Meaning is the new money – the greatest motivator today. Tap the passion of people by asking them to help achieve the organisation’s purpose.

Today, rather than trying to tighten control and hunker down, find ways to help your organisation become more spontaneous, innovative and reflexive. Pass the ball. 

3. Lead responsibly
Ioannis Ioannou Associate Professor of Strategy and Entrepreneurship 

In troubled times it’s critically important that business leaders make strategic business decisions by carefully considering the demands and expectations of all of their material shareholding and non-shareholding stakeholders, and in so doing, regain society’s trust. There are two key requirements for becoming an effective responsible leader during such times. 

First, rather than a one-person crusade, responsibility needs to be structurally embedded in the organisation – both in its board of directors’ responsibilities and governance practices, incentive structures, values and culture and in the corporation’s transparency towards society and its accountability practices towards its stakeholders. 

In addition, responsibility has to be translated, operationalised, measured and monitored throughout the different organisational functions including supply chain management, human capital management and capital allocation decisions. Moreover, corporate policies need to be based on rigorous science (e.g. climate science) rather than on populist opinions and fads. 

Second, business leaders’ personality traits and soft skills are absolutely crucial for leading a responsible organisation that creates value and a positive societal impact. Responsible leaders must demonstrate that they can make decisions with integrity, empathy, accountability, transparency and honesty and by considering a longer-term time horizon, providing a credible and feasible alternative vision to the prevailing troubled times. 

Leaders need to develop trust with and an in-depth understanding of their stakeholders’ expectations but also, they should be unafraid to empower, encourage, motivate and inspire their employees to become responsible themselves in the way they work and the way they engage with society. 

There is no doubt that in troubled times, leading responsibly is particularly challenging. Leaders have two options. They can choose to shrink their commitments, reduce investments in stakeholder relationships, entrench and save their way out of a crisis. Or, they can invest in their stakeholders, genuinely commit to responsible practices, and emerge stronger, more competitive and more responsible on the other side of the crisis. 

For responsible leaders, there is no question about which option is the right one.

4. Combine top-down clarity with bottom-up initiatives
Freek Vermeulen, Professor of Strategy and Entrepreneurship

Good strategic leadership is especially important in turbulent times, when people are looking for clarity and aren’t sure what the right direction is. Creating strategic clarity through making a set of choices and communicating and implementing them in a top down fashion is the first half of good leadership.

Leaders need to set a clear strategic direction that involves a set of consistent and mutually reinforcing choices. It is the responsibility of top management to make these choices and communicate them to the rest of the organisation, as well as choosing whatever organisational structure and incentive systems, processes and systems fit this strategic set of choices. 

For example, the leadership of the innovative hotel chain citizenM made a clear set of choices: they would offer affordable luxury to travel-savvy individuals who wanted a comfortable bed and a good shower but no fuss or conference facilities. So they could keep prices low, but make sure everything is comfortable and smooth, with high quality furniture, good interior designs, power showers, comfortable surroundings and well-trained personnel. 

The second half of good leadership is that there also need to be bottom-up processes that fit this top-down set of choices. So it is also a company’s top management’s responsibility to create the context and culture that motivates people to contribute to the strategic direction in terms of local initiatives. 

Sadler’s Wells theatre in London has a very clear set of choices that constitutes its strategic direction: to be the centre of innovation in dance. It has no artists on the payroll but operates a platform strategy to attract outside companies and artists to perform on their stage. In addition, the company has created all sorts of resources so people can innovate – from dinners where people from different art forms can meet and network to studio time and budgets so people can try out new performances. 

The top management doesn’t determine what performances are going to be developed and put on stage; they have set the strategic direction in a top-down fashion, then created the circumstances in which people lower in the organisation can come up with initiatives and develop innovations that make that strategic direction come true. 

Good managers realise that in turbulent times they will not have all the answers. To account for this, they also need to design clever bottom up processes, where local initiatives from people lower in the organisation can be scaled up, enabling the firm to adapt on an ongoing basis.

5. Create psychological safety and meaning
Dan Cable, Professor of Organisational Behaviour 

The speed of change can be scary. We have no idea what new technology and expectations we will have to respond to in five years. And this can feel like a threat. 

But here is one good thing: When things change fast, fear-based leadership doesn’t work any more. If leaders want people to bring their best to work and help you innovate, they will need to serve employees as they explore and grow. 

Because what works in high-change environments is leading with humility and prompting curiosity. 

We’ve known for a long time that the way most leaders treat employees isn’t nice. The repetitive, disconnected tasks that many of us feel obliged to do are not humane. But with the world innovating and disrupting so fast, firms lose the ability to adapt if employees are not innovating, being proactive and trying new things. 

This is why, and how, you can lead for good during these troubled, high-change times. Leaders who win in the future will create psychological safety – not threat — in their teams. Humble leaders don’t demand perfection. Instead they acknowledge that they too will fail, and we have to change and learn together. If we can’t surface our unique ideas and create an environment where people feel safe to try, they won’t try. They’ll wait to be told. Which is a problem if they’re the ones who can quickly find solutions to the new challenges your business faces. 

This is my hope that stems from the increasing changes affecting organisations: Leaders will have to start giving people a gift that money can’t buy – the feeling of caring about their work, so that it is meaningful and exciting. And as leaders create workplaces that are more exciting and meaningful for employees, they will feel better about their own work. 

6. Read your way to better leadership

Selin Kesebir, Assistant Professor of Organisational Behaviour 

What qualities must a good leader have in trying times? Vision, clear thinking, good judgment, good communication skills, self-knowledge, emotional intelligence. So how can you cultivate them most effectively? I’m going to suggest that there is a single activity that will not only develop you as a leader but will also be a pleasure in itself. This curiously underappreciated tool of leadership development is reading. 

Reading is spending your time with the finest minds, alive and dead, at their most thoughtful. It connects you to distant times and places and gives you access to knowledge unattainable through personal encounters. If you read non-fiction, you will get fresh perspectives, information, and insights. You will expand your knowledge base, as well as your ability to think systematically, broadly and creatively. If you read fiction, you will see yourself and others more clearly, develop your self-understanding, emotional capabilities and interpersonal sensitivities. Altogether, reading will save you from self-absorption and provincialism, showing you the world in its breadth and complexity, making you a better thinker and decision-maker. 

Don’t limit yourself to business books. Any good book will enrich you as a human being, and a good leader is first and foremost a good human being. Read philosophy, science, sociology, psychology, literature and biography. Don’t let your choices be made for you by the current best-seller list and the marketing executives. Browse bookstores, ask well-read friends, search online. And don’t feel you have to read a book to the end if it’s not nourishing you. Keep looking, until you find something that you absolutely enjoy: that book certainly exists.

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This article has previously been published on London Business School Review.