2010 Leadership Forecast: Cloudy with a Chance of Clearing

2009 is in the rear-view mirror. For most of us that’s a good thing. Many businesses suffered. The strategy of the day was: cut costs, conserve cash, and strengthen the balance sheet. Growth was rarely on the radar screen.

And, things seemed to work out. 2009 was a banner year in the stock market. The DOW was up 18.8%; the NASDAQ 43.9%; and the S&P rose 23.5%. All is good in the world of business, right?

Well, maybe not. The strength of the stock market could be masking the hard work that has to be done. The 2009 fight for survival has devastated our organizations; they are no longer healthy and relevant to their customers. Here are a few scary research findings:

• A survey by the Centre for Work-Life Policy, an American consultancy, found that between June 2007 and December 2008 the proportion of employees who professed loyalty to their employers slumped from 95% to 39%. The number voicing trust in their employers fell from 79% to 22%.

• The lack of trust is confirmed in the 2010 January-February issue of the Harvard Business Review which reports that on a five point scale: employees have a general trust of 3.7; trust in a their firm is 3.0; and trust in their boss is 2.7.

• Another American consultancy, DDI (Development Dimensions International) recently found that more than half of survey respondents described their job as “stagnant”; and half of these planned to look for another job as soon as the economy improved. This is taking a toll on short-term productivity and long-term competitiveness: the people most likely to move when things look up are high-flyers who feel that their talents are being ignored

• And, the Brand Asset Valuator used by the marketing and communications company, Young & Rubicam tells us that trust in brands has fallen dramatically. Trust was running at about 52% in 1997, while it hovers around 20% today.

Well what can we take from these research trends? The conclusion is that customers are hostile and employees are disengaged. Great! Just at a time when we need our customers and employees most they are sitting on the sidelines. We have told customers that they are secondary to shareholder profits; and we have told employees that they are secondary to cost cutting.

So our leaders have to feel buoyant that the economy has survived as evidenced by the stock market; but they also have to feel angst about how to win back customers and employees; how to make their companies healthy and relevant again. What should they do?

The first thing they have to realize is that what got them here won’t get them to where they need to go. The last several years has been dominated by left brained, cause and effect, management thinking. The next several years will need to re-engage left brained, inspirational, leadership thinking.

The focus has to get back on our customers. We need to know what they know and we need to drive organization change from their perspective. So, what do they know?

1. Value for money. Firstly, they know they want value for money in products and services. When they put out money they want to be satisfied with the transaction. The 2009 recession has taught them how to buy differently. They know:

• they can buy down, or bargain for better prices;
• o that simple products and services trump “bells and whistles”; and
• o they can defer or spread out purchases.

Consumers know they can save. They know that unlimited credit does not mean that it has to be used.

2. Sustainability. Secondly, they know they want to deal with companies that “look and act just like them.” They want to buy from brands that will be around for the long term. They know they want to buy from firms that exhibit three characteristics:

• Moral Leadership: It’s not hard. We all know right from wrong – that standard doesn’t change just because “it’s business.” We all know when our actions feel wrong – that is the test on morality. CEO’s would never steal from the cash box – so how is backdating stock options any different? It isn’t. You can’t justify it to your mother.

• Social Responsibility. This comes down to being a good corporate citizen. It comes down to a commitment to “green” for the good of our world, and a commitment to our communities for the good of our friends. Green has to be exhibited in our products and services and we have to demand it from our suppliers. We need to sustain the communities that surround us by buying and hiring locally and giving back with financial support to businesses and time to community causes.

• Employee Commitment. Customers have had enough of companies who don’t treat their employees with respect. We have pay policies that do not adequately share profits; we have people in authority who abuse their staff; and we have severance policies that are disrespectful. Employees no longer work for companies; they work for customers. Employees who are disrespected will treat their customers in kind. If your not committed to your employees, your customers won’t be committed to you.

This concept of sustainability has been proven beyond small green companies our community niche companies like Whole Foods. There are great success stories like: Johnson & Johnson who puts “customer” at the top of its priorities and used this to recover from the great Tylenol scare; then there’s Research In Motion (RIM) who are so focused on the long term customer relationships that leaders are admonished for discussing quarterly financials in public.

2010 will be a great challenge for our business leaders. They have an opportunity to advance the value of their organizations. They can build organizations with a greater purpose than simply maximizing shareholder returns. They can give us organizations that sustain customers, employees and communities.

Our spirit and creativity are indomitable. Now is the time to clear away the clouds.