Remember the fuss about Y2K? The predictions that computer systems would fail -- and life as we knew it would come to an end -- as the clock ticked from 1999 to 2000?
As it turned out, Y2K passed quietly enough. But change was coming. And soon, we were fretting in earnest -- and about much bigger problems than a phantom computer bug. In the past 10 years, the world has seen a global financial meltdown, ongoing wars, an increase in terrorism, and epic natural disasters. It's enough to bewilder anyone, including leaders and managers trying to run organizations amid constant change.
A small hospital in the middle of U.S. could now be competing for customers with a new facility in Singapore.
The Gallup Management Journal (GMJ) has tracked it all, from the crisis of September 11 to the first inklings of problems in the housing market and everything in between. Insights from 10 years' worth of analysis, research, commentary, and expert advice have been assembled by GMJ Editorial Director Geoffrey Brewer and Managing Editor Barb Sanford in Gallup Press' recently released book, Decade of Change: Managing in Times of Uncertainty.
Brewer and Sanford sat down to talk about the articles they chose for the book, how those articles reflected the tumultuous decade, why they chose them, and the actionable insights they offer executives. Most importantly, they wanted Decade of Change to be more than a look backward; they wanted it to be a roadmap for what lies ahead. As they discuss in the following conversation, the first decade of the 21st century was just a prelude. Rapid change has become a constant, and leaders should be prepared for managing in chaos.
GMJ: Why do you call 2001 to 2010 a decade of change?
Geoffrey Brewer: You know, I was just thinking about this. The Gallup Management Journal was launched in March 2001. What timing to launch a publication: Almost from the day we started, everything began to change. In the U.S., the decade prior was a period of tremendous prosperity, with a strong economy and relative peace. But everything changed with 9/11. In the decade that followed, there were multiple wars, the worst financial crisis since the Great Depression, natural disasters -- it seemed that if something could go wrong, it did. There were profound business, leadership, and executive implications to these changes, which were felt everywhere.
Barb Sanford: The resulting uncertainty changed how people viewed the world, and it definitely had an impact on the morale and spirit of employees and customers. The financial collapse of 2007 had enormous ramifications for businesses, and the resulting layoffs and downsizing seriously affected employees, especially the ones who lost jobs. The "new normal" pattern of consumer spending affected companies' relationships with customers. Leaders and managers had to react to all these changes.
GMJ: How do the articles, and the people and the ideas in the book, reflect those changes?
Brewer: For one, we have an interview with Gallup's chief economist who, in June 2007, explicitly predicted that the subprime mess would take down the economy and affect everybody. But some of the stuff is more subtle. We have an interview with Nobel Prize winner Daniel Kahneman about the growing impact of behavioral economics, a field that challenges and sometimes upends classic economics. That's a very, very significant shift, but it's not the kind of thing that grabbed the headlines like 9/11 and the financial crash.
Sanford: Another change we've seen accelerate over the past decade is globalization. In some ways, it opens up new markets for companies, which means you can look outside your own local area for customers. But the flipside of that is that other companies are doing the same thing, so you may be competing in ways that you never anticipated with organizations halfway around the world. This is particularly noticeable in healthcare: A small hospital in the middle of the United States could be competing for customers with a new facility in Singapore if the facility in Singapore has a better deal on a knee surgery. As the world gets smaller, businesses are forced to think in new ways about how they compete for customers, employees, and talent.
Brewer: Another major, yet subtle, challenge of the last decade: the growth in healthcare costs. People of various political stripes can come to different conclusions about the immediacy or the severity of the problem, but almost everyone can agree that healthcare costs siphon off tremendous amounts of essential capital from the economy. So we brought two executives together to talk about behavioral and programmatic changes that companies can make to reduce their own healthcare costs. An emphasis on employee health, fitness, and well-being not only helps companies lower their own healthcare costs but also lowers costs for the country.
GMJ: How will a look back at the last 10 years help business leaders look forward?
Brewer: We were determined that this book should not be read as a retrospective. Some of the best ways you can learn about how to solve problems is to look at people who've done it -- look at what they were thinking about and how they solved problems in the middle of a crisis.
Managers must accept uncertainty and fear and perhaps slow growth for a number of years.
The interviews with [retired Lt. General] Russel Honoré provide compelling insights about managing in a crisis. When General Honoré got off the helicopter in New Orleans after Hurricane Katrina, it immediately seemed like there was a chance to gain order in the situation. In his interview, General Honoré said that when you're in a crisis, there are certain basic principles you adhere to, such as keeping dissenters close because they provide a valuable perspective and managing the media to get your message out. Are the problems of New Orleans solved? No. But General Honoré was a person who walked into a situation and brought a sense of order to chaos and pushed New Orleans on the right path.
Sanford: A look back will also help companies move forward into the "new normal." The economy is still shaky, so managers have a tricky balancing act: They have to worry about whether their workforce is the right size while keeping employees engaged, motivated, and focused. When it comes to consumer spending, people are still trying to get their household debt under control, which changes what they buy, how often they buy, and who they buy from. Companies with a history of engaging their customers will have more success in the new normal.
GMJ: Who are some leaders who are doing this right?
Sanford: Douglas Conant [CEO of the Campbell Soup Company], for one. He walked with his eyes wide open into a company that was in trouble and helped Campbell turn itself around. He looked at what the company did best and how he could maximize that, but he also saw what the company could do better. He made the right strategic adjustments to lead the company forward.
Brewer: Ray Anderson [founder and chairman of the billion-dollar carpet manufacturer Interface, Inc.] is another exemplary executive. While other government and business leaders were mired in the climate change debate, Anderson set a goal to make his manufacturing company truly sustainable. From the mid-1990s to the late 2000s, Interface cut its net greenhouse gas emissions by more than 70% in absolute tons; the Kyoto Protocol called for 7% reductions by 2012, and many said that was impossible, but it wasn't for Interface. During the same time period, the company increased its sales by two-thirds and doubled its earnings. Anderson and his company figured out ways to be sustainable and profitable.
GMJ: Looking forward, what issues should leaders be prepared for in the next decade?
Brewer: Rather than try to point out which specific issues managers should focus on, I would say, simply: accept uncertainty. Accept that there's a measure of uncertainty and fear and perhaps even low or slow growth coming for a number of years. Continue to look at what smart people have been doing in recent years. Concentrate on engaging employees and winning customers. It might be a while before we return to prosperous, optimistic, upbeat times.
Sanford: Changes will come, and we have to react to change. But how we choose to react to change will make all the difference. That's one of the most important things we've heard from the business leaders we've talked to. Good leaders keep their ship on course by always considering the fundamentals: How do I keep my employees engaged? How do I keep my customers engaged? What can I do as a leader to keep people focused on the things that are most important to our business, even when everything around them seems to be falling apart? The business leaders with the right answers to those questions will help their companies thrive in the midst of change.
-- Interviewed by Jennifer Robison