Time to Act
Charlie Goodrich 


Today's newsletter takes a look at leadership and, in particular, how to lead during times of crisis.
Read on as I explain two simple ideas for getting others to follow when the job at hand is more than you can do by yourself.

All the best for a happy and healthy 2014.
Your comments are always welcome. Just click "reply" to send them to me.
Charlie Goodrich 

Founder and Principal

Goodrich & Associates
December 2013 Vol. 2 No. 12
In this issue...
Lead When You Can't Get the Job Done Alone
Heard on the Street
About Us
Goodrich & Associates
[email protected]
Lead When You Can't Get the Job Done Alone

When it is time to act, often it is time to lead.

Why? Because if you need to get something done in your organization that requires the help of others, you must lead.

But don't worry - I'm not going to rehash the books, articles and so forth that have been written about leadership. You've already read them and besides, most of these focus on becoming a better or more effective leader.

What they rarely touch on, however, is just what leadership is.

Two simple things

Simply stated, leadership is getting an organization to move in a particular direction. And, since organizations are collections of people, leadership is getting people to move in a particular direction.

So step one requires setting a clear vision of what that direction is.

Step two comes from the word itself - leading, being in front of the movement so that everyone else can follow. There is no such thing as leading from behind - that's either pushing or manipulating.

That's leadership.
  1. Communicate a clear vision and make sure people know what they need to do to get there.
  1. Get out in front, visibly.
Why then is leading so scary, particularly for those who haven't led before? I think it has to do with evolution. If the human race were full of those who lead and refuse to follow, the human species would have killed itself off a long time ago. Most people are born to follow (even good leaders). It is human nature.

During a crisis, people are eager to follow

First time leaders are often worried that people won't follow. It's a reasonable concern, quite frankly, particularly among organizations in crisis. Refusal to change and set upon a new direction may explain why the organization faces its set of troubles in the first place.

In a crisis, however, just about everyone knows they can't sit still. The problem, usually, is that they don't know what to do or where to go. It's a perfect time to lead, because there are no alternatives but to take action.

For example, I was called on to lead at the request of a private equity firm. They were 10 days from the scheduled close of a public to private sale and it looked like the private equity firm would have to write a bigger equity check in order to meet the closing day loan covenants.

A bigger check meant an embarrassing conversation with the limited partners who were the ultimate investors and the private equity firm would rather scrub the deal than proceed. Senior Management, meanwhile, was absent from the Company, gambling away their expected winnings from the sale in Atlantic City.

By stepping forward and meeting with middle management, I laid out a path to get the deal closed. In this case, that meant bulking up working capital upon which the loan funding was based, by invoicing all shipments daily, receiving all goods daily (instead of during the end close) and cleaning up old receivables. (Yes, this company had so much cash, they did not worry about cash flow!)

Everybody followed. They all had stock options, so they wanted to get the deal done. The deal closed with cash in the bank and only 50% utilization of the working capital based loan facility.

It's rarely about job titles

Notice, by the way, that I have not talked about leadership roles, titles, or position in an organization. While organizational leadership often makes leadership easier and more effective, it is not necessary. In the above example, I was a consultant who wasn't even working for the company!

Staff and even consultants can communicate a clear direction and start taking visible actions along the path, so others may follow. As a crisis consultant, I lead all the time, even though I lack organizational and even legal authority to do so. In times of crisis, people follow because they know they have to move.

In another example, I was brought in as the Chief Operating Officer of a technology company. For various reasons, a Federal Judge prevented the owner from showing up on the premises and from running the business - the company had a flat organization structure and nearly everybody reported to him. One business was being sold to the winning bidder at an auction; another business was to be shut down.

The supporting technical infrastructure of the business being sold was intertwined with the business being shut down. There was no documentation, just the owner's knowledge (and he couldn't help). There were all sorts of external Internet-based attacks on the business being sold and customer service was a shambles. Meanwhile the owner was thought to be encouraging employees to obstruct the sale. The situation was untenable and all the employees knew it.

I laid out a path of the steps needed to close the sale of the business, appointed a new head of customer service who reported to me and elevated the key technical customer needs with engineering.

Yes, there was skepticism at first, but soon they all followed. With the strong leader physically gone, the employees chose my path to close the sale over the owner's desire to block it. The sale was closed and the other business shut down.

Leadership, while perhaps not a natural inclination for most humans, is something that many people are capable of. By laying out a clear path and providing a visible model for others to follow, leaders - particularly during times of crisis - can emerge from any number of locations and situations.

Heard on the Street
Carlos Garriga, Research Officer and Economist for the St. Louis Federal Reserve, argues that this time, the current boom in housing prices really is different.

Instead of being driven by increased demand for owner-occupied housing, the boom is being driven by investors buying houses to rent.

You can read the complete article here.

About Us
Goodrich & Associates is a management consulting firm. We specialize in helping our business clients solve urgent financial problems. Our Founder and Principal, Charlie Goodrich, holds an MBA in Finance from the University of Chicago and a Bachelor's Degree in Economics from the University of Virginia, and has over 30 years experience in this area.

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