Leading through Disruption

Disruption is common in performance and restructuring assignments. Whatever the industry or geography, every company is facing a set of current and anticipated challenges it needs to navigate and, hopefully, take advantage of.

Looking at some of the most high-profile issues that companies face today shows they are not new. After years of efficiency optimization, supply chains started to show cracks over a decade ago. The pressures to invest in the newest technologies did not start with the release of Chat GPT. Geopolitical tensions have been visible for a while and are now surfacing more and more strongly. The sustainability agenda did not start with the energy crisis in 2022. Inflationary pressures and changing consumer behaviors existed before the pandemic.

However, if we take the challenges that already existed before the pandemic and then those that have been added in the past four years, unfortunately you have to say – yes, this is a particularly challenging time.

So, what to do?

Fundamentally, it is about the right mindset. There are basically two ways to face disruption – by being proactive or reactive.

At first glance it is quite tempting to delay. It can help to understand better which trends are really sustainable, to sound out assessments, to avoid overreacting, and sometimes the market provides an external excuse for necessary measures.

On the other hand, it can be very rewarding to be proactive. One has to take on the painful changes first, while the rest of the industry continues as before, hoping that next year everything will be better again. It also offers great advantages to act in a timely manner, internally and externally. Important resources are not wasted, and competitive advantages can be created.

Whenever possible it is advantageous to be proactive, working towards a goal that you set for yourself and not reacting to circumstances others dictate.

If you act proactively, then there is an opportunity for "performance as an attitude" versus "performance as a project". Often day-to-day business is allowed to continue undisturbed until it no longer works and then an intervention is necessary to correct the deficits. Once that is achieved, slowly first, everyone slips back into the old routine, before the next forced intervention has to happen.

However, if you take the opportunity to identify the key performance indicators that are most important in the crisis and integrate these factors into the relevant objective-systems, you create a systematically higher focus on performance, rather than needing corrective interventions – i.e. you start to create "performance as an attitude".

Besides the right attitude, a few other elements are crucial. Any performance project needs a clear North Star. A new business model, the way to get there, the measures, the cost effects, the financing, the adequate organization – all of this must be clearly defined. The decisive factor for all stakeholders and management is the destination. The hardest path becomes harder when you do not know where it leads. Conversely, you can achieve more together if you know where to go and why.

In addition, it is necessary to achieve buy-in, to take people in the company and stakeholders of the company on the same journey from the very start of the process. Through communication, through change management, through role modeling, and with the courage to be transparent.

The messages must be clear and honest. Self-confident, without sugarcoating. There must always be information, even if it is not always positive information. Ambitions and plans are fine, but communication should be about measures taken, rather. Align with all stakeholders behind the scenes but focus on implementation and improvement.

And finally, one key aspect – leadership. Not just management. Leadership – setting a direction, leading the way, facing up, listening, setting an example, not being cynical, but showing the belief in the common goal, even if it is difficult.

What we call disruption today has been quite normal in the history of industrial companies. There have always been technological paradigm shifts. They have always seemed threatening, overestimated in the short term and underestimated in the long term. There have always been geopolitical upheavals, trade tensions, political circumstances and unfavorable market conditions.

We should therefore try to also see leadership as the task of providing direction, cohesion and operational excellence to companies in permanent change.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.