It would be difficult to overstate the tumult we all face at work, in our local communities, and in the world at large. Not since the 1930s have leaders in all walks of life – business, government, NGOs – faced the double-barreled uncertainty of impending war and global deflation. Moving an organization forward in such circumstances would be challenging enough, but in these difficult times we must also factor in the threat of mass terrorism on an unprecedented scale.
The natural reaction in such a highly uncertain environment would be to overreact to external events or to be frozen into inaction by fear of the unknown and unknowable. At McKinsey & Company, we are more convinced than ever that the great leaders in times like these are the ones who can retain perspective and provide a steady hand so that their people can do the right things and maintain the organization's momentum. And it is crucial for keeping that positive momentum to focus on the fundamentals of what you are trying to accomplish – going back to the basics such as generating cash.
Risk management: building for the future
Because the level of risk in the world around us has risen so far so fast, another important element of strong, steady leadership is to insist on rigorous risk management. We cannot control the dangers we face, yet we can manage for them at all levels so that risk management becomes a way of thinking that permeates an organization. This does not mean that decision making should be recentralized; it is important that organizations are empowered and fairly flat.
But leaders must focus more than ever on making sure that nothing is done which mortgages the future. That said, it would be a serious mistake to consider the challenges we face something simply to be survived through excessive caution. Tough times also create opportunities. As former IBM CEO Louis Gerstner recently said, "When the tide is lifting all the boats, it's very hard to differentiate yourself. When things get tough, that's when market share moves. That's when leaders are created." Leaders who grasp this challenge, as Gerstner himself demonstrated at IBM, must define what the organization stands for, what its values are, and what its value proposition is. That then opens the way for taking intelligent advantage of the opportunities created by crisis.
A collection of insights
In order to help launch this year's dialogue among those of us who were privileged to attend the World Economic Forum, we gathered some of the most interesting thinkers we could find – inside and outside McKinsey. They have focused on how we can do more than just survive in this tumultuous era. My colleagues explore ways to implement effective corporate governance, tame financial markets, develop long-term corporate performance strategies, discover winning digital strategies, and boost the performance of non-profits.
We are also pleased to include suggestions for a new agenda for business leaders by Jeffrey Garten, Dean of the Yale School of Management.
Rather than shrink from the tests that we face, we must embrace them as the opportunities they present for us to demonstrate our inner strengths and talents. As Dr. Martin Luther King Jr. wrote, the "ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy" (Strength to Love, 1963).
