Many business owners are worried about what happens after September, fearing that they may not be able to generate enough revenue to pay back their loans – or stay in business. The ambiguity and anxiety they are feeling remind me of what my friend, Jim Collins, calls the ‘Stockdale Paradox’: the need to balance an optimistic outlook with a sense of realism, then doing what’s necessary to move forward during challenging times, writes Dr Jana Matthews, Director of the Australian Centre for Business Growth.
The term ‘Stockdale Paradox’ relates to a story of survival during the Vietnam War. When Admiral Stockdale – one of the highest-ranking officers in the US Navy – and his men were captured, they were held prisoner for seven years. Stockdale never knew when his captors would pull him out of his room and torture him, in front of his men. With no news from the outside world, Stockdale had no reason to believe that his life would ever improve, but he never stopped believing that he would get out alive. However, he tempered his optimism with realism.
In his book Good to Great, Jim recounts an interaction he had with Admiral Stockdale. He asked Stockdale which of his men did not survive, and surprisingly it was the optimists – the ones who set unfounded goals based on what they hoped would happen. They were the ones who said, “We’re going to be out by Christmas”, and when Christmas came and went, they’d say, “We’re going to be out by Easter”. Easter would come and go. And then Thanksgiving, and then it would be Christmas again. When what they hoped for didn’t happen, hope died and sadly, they died too.
As a leader you need to have an unwavering belief that you and your company will make it through a crisis –-but at the same time, you need to assess your current situation, confront the brutal facts, and then do everything you can to make sure your company does make it through.
Henry Ford was right: “Whether you think you can or think you can’t, you’ll be right!”, In many ways, it is a mind game. But getting through the current pandemic requires more than a positive mindset, and much more than hope. In order to survive and rebound, business leaders need to have a vision, acknowledge reality, be willing to start doing new things, stop doing old things that no longer work – and quicken the pace of decision-making.
Some people are confused and think this combination of “unwavering belief that we will make it”, tempered by the “recognition of the brutal facts” is two-faced, or a repudiation of the existing plans everyone worked so hard to develop. In reality, the unwavering faith that a company will make it through is what empowers business leaders and gives them the strength to confront harsh realities, pivot to a new approach, accelerate plans that have already been made, and do what is necessary to come through the crisis even stronger. Belief and action enable companies to be able to rebound and grow again.
So, while you must have a positive mindset and keep believing that your company will make it, you must also be disciplined about re-examining your financials and understand how you make money. Review your product line and stop selling what’s unprofitable. Figure out why customers buy from you. Assess your people and identify what people you need to grow the business to the next level, Review the current marketing, communication and sales messages and strategies and revamp, as necessary.
Andy Grove, the founder and former CEO of Intel once said, “only the paranoid survive”, but too much fear can be crippling, and negativism can fuel feelings of hopelessness. Great leaders know how to strike a balance between maintaining hope about the long term, and being realistic about what is needed, in the short-term, for the company to survive, rebound and grow again.