If You Want to Survive a Downturn, Invest in Leadership

user Andrew Blum

We are all starting to feel the effects of the downturn and I’ve seen a lot of survival advice published, especially among the tech and venture communities. They are saying, in short, that it’s going to be a long downturn and you’re going to have to survive before you thrive. The recommendations involve cutting costs, not expecting huge influxes of capital, managing headcount, and doing all the things we do to create efficiency.

If survival is about efficiency, there is one incredible driver of it that is often the missing ingredient in survival advice – effective leadership. This is the most important driver of efficiency because effective leadership leads to clarity of goals, high-quality decision-making, and motivated teams. THIS drives efficiency more than any other single lever.

How do you not just survive but move toward “Surthrival” as I call it? You do something counterintuitive – invest. Invest in leadership. Invest in coaching. If there is a headcount reduction, what is your offer to those who stay? Why should they bother putting their life energy into an organization that is shrinking? The answer is that you’ll continue to invest in them. You’ll continue to ensure that this is where they can learn and grow.

Culture Amp’s data shows that 54% of immediate retention is associated with companies that invest in their employees’ development and through that, the employees will help the company survive because they will be clearer on goals and more effective in interpersonal interactions. They will be able to handle the ambiguity and volatility that comes in these times. They will be leaders who engender trust. And because of that, there will be much greater efficiency.

This is the missing link. When organizations take reasonable measures to become more efficient on the cost side and significant measures to become more effective on the leadership side, they will come out of this era not only surviving but better positioned for ongoing success because they’re building cultures and capabilities that are sustainable sources of competitive advantage. The game isn’t to just get through this. The game is to get through this and come out better, stronger, smarter, and more capable. And that can only be done through investments in people.

Of course, we all need to be prudent about costs in an environment like this but let’s consider this question: “Where do we want to cut and where do we want to invest in these periods?” It’s an exercise in consciousness and intent rather than, “Let’s cut and try to make it through.” If you invest in leadership, I guarantee you that it will create efficiency on levels that is hard to even imagine sitting here now.

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