Editorial
Are you feeling disoriented yet? This is not your parent’s economy — or world.
We’ve been through a lot in the last few years. Cambridge Analytica. #MeToo. A global pandemic. Wars. A sudden shift to Hybrid work. An insurrection. The meltdown of FTX. NFTs. The rise of fascism. Environmental disasters. Culture Wars. ChatGPT. Strikes. Weekly mass shootings. Receding human rights. A second Gilded Age. Sinking Cities.
It is a lot for any of us, but it is especially overwhelming for leaders, or anyone with responsibility for others. If you are a parent, you likely feel this to your core. If you lead a large group, community, organization or company, it is almost impossible to contemplate.
The economy has also confounded even the most experienced macro-economists and financiers, who predicted a recession that never happened and faced interest rates not seen in their professional careers. Their lack of ability to predict with any confidence has shimmied cautious executives, who have defaulted to just pocketing the gains rather than taking the risk of investing in major strategic initiatives.
Reflecting on and absorbing all this strains the most resilient among us. Add to that the complexity of organizations, and executives can be forgiven for not knowing how to proceed – but as Gorbachev said, “If you don't move forward, sooner or later, you begin to move backward.”
CEO Fight, Flight and Freeze
I see executives reacting like any of us do to threats: fighting, fleeing or freezing. We may not recognize it as such because it looks different in an organizational leadership setting, and executives have generally perfected a neutral communication style, which intentionally masks anxiety. As a result, they may not even recognize how anxious they are themselves.
Here is how anxiety typically shows up in executives:
Fight: These executives try to keep up with the pace of change and are particularly susceptible to the hype from the tech sector. These are CEOs who rush to implement AI, funnel vast sums of money into politics, and invest in exploring outer space to find alternate habitats. Their behavior communicates that they believe they can master their environment in the way they have always done — by having their organizations work ever harder and faster.
Flight: CEOs are resigning in record numbers, with 22% retiring and almost a third leaving with no reason given. Enough said.
Freeze: CEOs in freeze mode retrench, which can be seen in demands to return to the office, unwillingness to take big bets and a focus on cost-cutting — anything to keep things as they were. The more time that passes, the feebler this approach seems.
Fawn: CEOs in fawn mode talk a good game and even fund some activities to demonstrate their ability to adapt — like redesigning offices or adding HR programs to connect employees — but this is far too little to meet the moment. It amounts to moving deck chairs on the Titanic.
While executives themselves may not agree with this characterization, that they are acting in these ways demonstrates their humanity – and makes them just like the rest of us. It is not surprising, and it does not justify criticism. We live in unstable times. Nothing is clear. Like the rest of us, they are doing the best they can.
More than anything, the rapid changes in society are exposing weaknesses in our organizational systems and assumptions. We have conflated, obscured and ignored too many systems dynamics. We have tried to control the uncontrollable. We have attempted to standardize what can never be standardized. We have prioritized things over people. We have misdiagnosed the critical indicators of progress. In a slow-moving world, these cracks in the system can be overcome, but as speed increases, they become fault lines that put organizations at risk.
Things are not slowing down, however, and the more time that passes, the more CEOs lose credibility, trust and respect. More critically, by deferring or outsourcing incremental risks, CEOs have unwittingly exposed their organizations to existential risk. This seems to be what happened to Boeing, which was slowly — and is now rapidly — losing the trust of its market. By focusing too much on profitability and cost-cutting, it ate away at a culture of excellence and trust.
This push to defer risk is driven by short-termism that is driven by market performance and is the logical consequence of the Jack Welch School of Companies-as-Financial-Instruments. Today’s CEOs spend more time consumed by financial discussions than discussing products and customers. It is a big part of why ambiguity in the economy is causing executives to feel trapped — even if their own organization’s financials are healthy.
Related Article: When Should a Founder Relinquish the CEO Role?
What’s an Executive to Do?
The answer to reducing anxiety as individuals is to recenter ourselves in the present. The same is true for executives. That means first stepping back from chaotic and conflicting streams of information to reflect on the fundamentals, the value the organization generates, who benefits from that value and the experience of all of an organization’s stakeholders.
Some questions executives can ask themselves or explore with teams:
- What do our mission and values mean to us, our customers, and our employees?
- What energizes us about the work we do? Why?
- What matters to the organization? To me? To us?
- What is most frustrating to me? To employees? To customers?
- What would make customers and employees wildly happy? What value would that have collectively? What is keeping us from offering those things?
The post-pandemic hangover has led most of us to think differently about what matters. That means organizations also have to think differently about their value proposition because what matters is what has value.
Second, anxiety is often a symptom of feeling out of control. Take back control.
The Jack Welch School of Companies-as-Financial-Instruments led to the hollowing out of organizations. So much of the value of an organization has been outsourced, which has reduced risk, but it has also stripped work of meaning. It has also, ironically, put organizations at the mercy of suppliers and contractors, who have no incentive to think differently in order to do more with less. It is why executives feel powerless in spite of their role.
In so many organizations, the only people with discretionary budgets are the very top tier of executives, who hold contracts with partners who do most of the work. It has dramatically decreased the organization’s ability to innovate. The competitive differentiator for organizations is shared knowledge and context/history across product and operational groups, which creates agility, speed and innovation.
This outsourcing leaves employees with mostly administrative and project management work, which, while no longer literal paper-pushing, is often joyless. Joy comes from learning, experimenting and creating. That comes with some risk and variability, but that is where meaning and motivation lie.
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So, bring creative work back in-house. Get closer to the value and the customer. Engage and challenge employees to find new possibilities and approaches. It will bring back meaning, joy and agility – and executives may regain their motivation as well.
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