This crisis has created a host of opportunities to recover with more favorable and equitable terms for everyone.
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4 min read
Opinions expressed by Entrepreneur contributors are their own.
During times of crisis, it’s vital that we find ways to creatively keep employees on payroll rather than going on unemployment. America is known for its entrepreneurial spirit, but when the answer is to disaster is to mitigate corporate risk, there is a clear disconnect in what is best for this country.
I’m the head of a talent development organization that works with companies as small as 60 employees and up to the enterprise level. The instability of corporate headcount planning in companies that are 15+ years old with anywhere from 2,000-80,000 employees is real. Though there is less volatility than we admit, often times headcount is directly correlated to earnings because companies are still in the mindset of startup mode. What we need to accept is that we have more control, and companies of this size have enough maturity to forecast turnover to and the needs of the business to maintain status-quo — let alone projected business growth.
Related: Airbnb CEO: It Took Us 12 Years to Build, and We Lost Almost Everything in 6 Weeks
What if we incentivized CEO’s to maintain staff in a crisis and build reserves to sustain a company for an entire year or two to survive an economic downturn, and double down on research and development – i.e., ingenuity – during economic strife?
Take Apple, for example. In the 1980s they believed enough in their product and took a risk on the long-game giving equipment to schools, thus creating marketing demand for 20+ years down the road. That kind of leadership and foresight has led to them being one of the top companies of the age.
As we look at strategic investment in entrepreneurship, product development and overall economic sustainability, we need to think differently about how we develop the asset that propels our companies: people. States provide tax incentives to companies, and those incentives are typically tied to people development through job creation and local hiring commitments. We need to shift the mindset of these companies that look at those obligations as liabilities rather than opportunities. Decisions are often made based on the incentive and not on the available workforce.
Our current crises have created a host of opportunities on a global scale to recover in more favorable and meaningful ways than just economically. During this protracted window of uncertainty, companies should be doubling down on people investment. Retraining current staff for the cottage industries to come as a result of our new world order, researching products and services that help some elements of “the way things were” return and be sustainable while agreeing that not all of our old paradigm is worth preserving.
Related: What Does the Crisis Mean for the Sharing Economy?
As we think about what this new world will look like beyond face masks and distance, we have one opportunity to correct some of the prevailing inequities we’ve known existed in our hiring strategies but have been ill equipped to address:
Related: 5 Ways Entrepreneurs Can Rebound After a Crisis
The word recovery should be thought about more broadly – we shouldn’t settle for short tenure and loss of institutional knowledge – when looking for new tech talent. Instead, let’s create a happy middle ground. We are uniquely positioned, for perhaps the one time in a century, when we can create the dramatic and diverse changes needed to shift entire societal norms.
6 min read
Opinions expressed by Entrepreneur contributors are their own.
We’ve all known work martyrs. They’re the ones who flaunt their ability to toil tirelessly. You can spot them by their catchphrases: “I’m working ’round the clock.” “Burned the midnight oil last night.” “I’ve been at my desk since 4:00 this morning and didn’t stop to eat breakfast or lunch.”
Work martyrs may get ahead sometimes; it’s true. But in an age when everyone has good cause to be stressed out, they can also bring people down with their nonstop action and competitiveness. As a leader, you probably see the downfall of work martyrdom in your staffers, but what if the biggest work martyr at your company is the one in the mirror?
Related: Can We Finally Say Goodbye to the Work Martyr?
If you’ve spent the past several months eschewing work-life balance because of economic fears, you can be sure it’s having a negative effect on your crew. How can they feel comfortable taking time off, even when you say it’s OK, if you’re always texting, emailing and available? Your direct reports will inevitably follow your lead, even if it heads into risky, stressed-out territory.
Instead of inadvertently sending mixed signals to your employees, resolve to start practicing what you preach about wellness, health and off-the-clock time. You can temper your penchant for going gangbusters 24/7 by taking these four steps.
It makes sense to set up wellness directives and expectations during quarantine for workers who are struggling with their changing worlds. Just don’t forget that you’re a worker, too. Jeff Bettinger, Nu Skin’s chief employee experience officer, notes in a post to the company’s blog, “As leaders we need to prioritize self-care because individuals are looking to you as the example of personal and professional life balance. At Nu Skin, we recently mandated our employees an extra day off dedicated to wellness. We need to continue to remove the stigma from mental health issues.”
If you’re having trouble sticking to a more balanced lifestyle, consider talking about those difficulties with your team. Admit that it’s hard for you to fully unplug. Your openness could help take the stigma away from other personnel struggling with the same frustrations. Nothing brings people together like common problems. Plus, you might be able to hold one another accountable for adding much-needed downtime to your calendars.
Related: Startup Founders Can’t Afford to Ignore Mental Health
What if people still aren’t blocking off hours and engaging in non-work activities on a daily basis, even with you as their role model? Perhaps instituting a workweek that includes shorter hours of operation can get you all on board. Economist Rutger Bregman recently talked about his support of a four-day workweek with Business Insider. He added that the notion wasn’t new, as “all the major economists, philosophers, sociologists, they all believed, up until the 1970s, that we would be working less and less.” Unfortunately, many leaders still cling to the theory that more isn’t less; it’s more.
Actually, shortening the workweek may increase your team’s overall productivity, not take a bite out of it. Why? Essentially, no one will fret about what she’s not accomplishing personally, like housework and childcare. People tend to prioritize more thoughtfully when time is limited. As you test a shorter workweek, ask for feedback, and submit your own. When you feel yourself starting to overwork, pull away. The only way to know whether a shorter workweek can reduce everyone’s anxiety is to be part of the potential solution.
Related: How to Keep Your Team Motivated in the Midst of Uncertainty
With news breaking constantly on multiple intense topics, you might feel like your head is spinning. At those moments, pay extra attention to how fast you’re making decisions. Are you going for knee-jerk reactions? Do you keep wishing you’d been less impulsive? While it’s fine to sprint and pivot, you don’t want to move so quickly that you make avoidable mistakes.
A Harvard Business Review study showed that steady progress and problem-solving was key to higher profitability over the long term. In fact, companies that took more pragmatic approaches to change-making saw their sales figures increase 40 percent. That’s reason enough to remind yourself to take a deep breath when you’re surrounded by what feels like chaos.
Even before recent economic and social unrest, four-fifths of workers reported experiencing high levels of stress, costing American businesses billions annually. Those rates have only risen since the start of sheltering in place and remote work.
Set aside more time than you might normally do for fun or rewarding activities. For instance, bring in an expert — in person or via video conferencing — who can teach an interesting activity, like cooking a certain dish or learning an at-home exercise routine. Be present, and participate in every event. Your visibility will indicate that the activity is relevant and supported by upper management, which will take away worries that it’s just a frivolous attempt at reducing everyone’s anxiety.
Related: The Surprising High-Performance Habit That Entrepreneurs Can Use to Survive (and Thrive) During Any Crisis
If you feel like you’re in the spotlight more than ever, you’re right. Employees look for guidance in times of uncertainty. Strip off the work martyr costume, and just be yourself. When your workers see you taking your own health and wellness into consideration, they’ll feel free to do likewise. And that’s bound to improve engagement while boosting your workforce’s imagination, efficiency and performance.
Join us as we delve into practical leadership advice and the challenges and opportunities for entrepreneurs in today’s landscape.
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2 min read
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If you have ever wondered how a startup becomes a global phenom and gets acquired by one of the world’s biggest brands, you won’t want to miss this one. This leadership series is hosted by Comparably co-founder/CEO Jason Nazar as he sits down virtually for a fireside chat with Noam Bardin, CEO of Waze — the world’s largest crowdsourced navigation app (acquired by Google for nearly $1B in 2013). This “If You Knew Then…” conversation will delve into practical leadership advice, personal life philosophies and guiding principles, and the challenges and opportunities for entrepreneurs in today’s landscape.
Other topics that will be covered include:
Jason Nazar is co-founder/CEO of Comparably, a leading workplace culture and compensation site that provides the most comprehensive and accurate representation of what it’s like to work at companies. Under his leadership, the online platform has accumulated more than 10 million employee ratings on 60,000 U.S. companies to become one of the most trusted third party resources for workplace and salary data since launching in 2016.
Noam Bardin has served as CEO of Waze, since March 2009, building the company to become one of the world’s most talked-about startups through its acquisition by Google in June 2013. Noam continues to lead the global Waze team within Google to help Wazers around the world enjoy faster, safer drives, and launched Waze Carpool to enable drivers and riders to work together to end traffic.
Dave Cote just delivered the War and Peace of books on corporate leadership. The former Honeywell CEO’s Winning Now, Winning Later is such a rich, unusual entry in the genre because instead of running through his favorite management maxims, Cote provides a gripping, on-the-scene account of how he deployed a series of bedrock principles to transform a flailing conglomerate. The lessons come to life because the reader witnesses Cote, over 16 years ending in 2018, relentlessly putting them into practice to meet the biggest challenge in corporate America: balancing the short-term success demanded by investors with sowing the seeds for rewards that will only be harvested years hence, but are essential to achieving greatness.
Current and aspiring CEOs should pay close attention, because for Cote, many of America’s big companies are wrestling with how to invest for the future while still generating the quarterly results investors expect. “Businesses are little more than a collection of processes,” he says in the book. “And in most companies, the processes can go a long way towards becoming more efficient and effective.” For Cote, remaking those processes to get maximum results from people and assets requires achieving two seemingly conflicting things at the same time. It’s that 3D thinking that brought the big breakthroughs at Honeywell.
It’s fulfilling these “we can do both” imperatives that lifts enterprises to their full potential. And the most important is simultaneously achieving what many managers find vexing if not impossible, “making the numbers” while at the same time making the daring bets to ensure those numbers will be far higher five years from now. As his book’s title suggests, Cote swears the idea that CEOs must choose between winning now and winning later is wrong: They must find a way to do both. Thinking short- and long-term works since you need today’s profits to fund tomorrow’s hits. He shows how Honeywell succeeded in constantly improving its most lucrative existing products, from airline components to gas detection devices, to increase quarterly earnings, while simultaneously plowing billions into next-generation projects that took five or six years to harvest, then paid off big.
The book is packed with other examples of taking two actions that seem to butt heads and getting them to march arm in arm. While many companies think they need big inventories to ensure fast delivery to customers, Cote shows how it’s possible to both reduce stocks and lower shipment times by expertly managing the supply chain.
Cote also believes that companies should advance not in giant leaps but small agile steps. “It’s survival of the most flexible,” he writes. “Revolutionary change is not the key to short- or long-term performance. It’s a huge risk. Revolutions move in unintended directions. The best change is gradual change.” His goal is to stay just ahead of the market as opposed to betting heavily on future trends that may not play out, or falling behind so that only demoralizing, disruptive restructurings can save the company.
For Cote, it’s best to spread plant closures and layoffs over a number of years. Another tenet: Making lots of small targeted acquisitions is more profitable, and a lot less dangerous, than chasing the transformational whales. His contrarian thinking extends to personnel matters. Forget the “praise in public, criticize in private” maxim, says Cote. When a business head makes an inadequate plan for building his or her business, the CEO should uncork the likes of “This is unacceptable, go back and fix it”––and explain why––in front of the assembled peers to demonstrate that he’s setting a high standard.
The official publication date for Winning Now, Winning Later is June 30. But Cote gave Fortune an exclusive first look. I also interviewed him extensively to glean further insights. The overriding theme from both the book and these conversations is that this son of a rural New Hampshire gas station owner regards leadership as both highly intellectual, and highly hands-on. How many CEOs take full days, sans appointments, to think big and hatch bold new initiatives?
Yet Cote insists that “the idea you focus on strategy and outsource implementation to great people is wrong.” At Honeywell, he personally interviewed all candidates for the top 300 jobs, and for the first 90 days after making every one of its 100 acquisitions held monthly meetings to review their progress and quarterly reviews for the next year. At the same time, as one lieutenant put it, he showed the tenacity of “a big annoying bear threatening the livestock” in constantly monitoring the numbers to ensure that each business was adding sales faster than people, investing sufficiently while reaching the right balance in product enhancements and long-horizon projects, and generating strong and growing cash flow.
Winning Now, Winning Later opens by describing the deep-seated problems at Honeywell. According to Cote, the “short-termism” that plagued Honeywell is an issue many companies grapple with. The best argument that Cote’s formula can achieve the dual objectives in the book’s title is its spectacular success at Honeywell. From 2002 to 2018, Cote lifted Honeywell’s sales from $22 billion to $40 billion, took operating margins from 8% to 16%, and hiked the stock price fourfold, swelling the market cap from $20 billion to $120 billion, while spending $10 billion resolving environmental issues, including resolving asbestos claims, and fully funding the underwater pension plan. Here are five original concepts and strategies that formed the Cote blueprint.
In 1999, Cote left GE after a 25-year career, then served for two years as chief of TRW before going to Honeywell in February of 2002. Cote coveted the ultimate prize of running GE upon Jack Welch’s retirement, but departed when the legendary CEO said that Cote––then heading the appliance division––wasn’t a finalist. Had Cote gotten the nod instead of Jeff Immelt, it’s likely that GE would be a far more successful company than what it became, by constantly restructuring and shedding businesses it vastly overpaid for. The irony is that at Honeywell, Cote found some of the poor practices that he yearned to fix at GE. And it was by overhauling those crippling methods that Cote got Honeywell roaring while his alma mater sputtered.
Cote recalls that at GE, success was all about “making the quarterly numbers” at all costs. Any given year, the outfit where Cote was working would hire 1,000 people to grow sales. Then in October or November, the managers would discover that they couldn’t hit the targets for the following year without laying off 800 of the folks they just added. “Why, I wondered, hadn’t they thought ahead and only hired 200 people instead of 1,000? We didn’t think we had a choice,” he writes. The layoffs were highly disruptive and required big restructuring costs. For Cote, the better practice was what he did at Honeywell: getting his business heads and staff people to plan for the following year’s personnel and other financial commitments early in the current year, avoiding the need for this wrenching cycle of layoffs and rehiring.
At Honeywell, Cote found a mindset of what he brands “short-termism run horribly amuck.” Managers at the specialty chemicals, aerospace, automotive, and controls conglomerate would offer distributors special discounts at the end of a quarter to boost sales, a practice known as “distribution loading,” that enabled them to hit their targets. The businesses had to quickly inflate inventories to make the deliveries, but the shipping department often couldn’t keep up, creating bottlenecks and delays that antagonized customers. And businesses, wrongly guessing in advance what distributors would want, often filled warehouses with product their customers didn’t want.
Often, 25% of the revenues from aerospace, controls, and specialty chemicals businesses would come in the last week of the quarter. Instead of buying at regular prices in the early weeks, customers waited Honeywell out until the last few days, and in managers’ desperation to ramp up sales, the deals would get better as the quarter drew to a close.
To keep hitting the mark, the business heads would resort to more gimmicks such as selling good businesses to book quick profits, or securing one-time cash payments from suppliers in exchange for guaranteed future business. That locked Honeywell into deals with single vendors that forced them to overpay for components or services over long periods. To his horror, Cote learned as much as 20% of Honeywell’s reported earnings were coming from those one-time items known as “specials”: One plant manager in Louisiana even cut down trees in the forest adjoining the factory and sold the lumber to make the numbers––and received a performance reward for getting it done.
In aerospace, managers would compete for new contracts for wheels and brakes by providing the first hundred “ship sets” of those components for free. That’s standard practice in the industry. The difference was that Honeywell was capitalizing the cost of the ship sets and amortizing it over 20 years. “They did it,” says Cote, “because investors are much less alarmed by things that don’t go in the income statement.”
That wasn’t the only case of super-aggressive bookkeeping. Honeywell would capitalize R&D so that it spent the research dollars now, but spread the reported costs into the future. As a result, Honeywell’s reported profits kept rising faster than its cash flow, signaling that its facade of profitability was about to crumble. For the decade prior to Cote’s arrival, Honeywell was generating just 69¢ for every dollar in earnings, a sure sign of trouble.
It didn’t take long for trouble to strike. After Cote had served just a few months, the finance department revealed that earnings for the second half of 2002 would fall 20% below Honeywell’s forecast to Wall Street. “‘What the hell was going on?’ I asked,” writes Cote. “Their response, ‘Well, the financial goals we were trying to meet were never realistic to begin with.’” The finance chiefs brushed off managers’ complaints, telling them to “Just get it done.” Honeywell’s stock price dropped 25%, and an enraged Cote told everyone to drop the tricks––no more aggressive accounting, no more capitalizing R&D and ship sets, no more distribution loading, and no more “make the numbers” meetings hosted by the finance staff that drove all of those dysfunctional decisions.
Although the “make the numbers or bust” mindset was hammering Honeywell, Cote still believed that achieving regular quarterly gains in earnings––reaping a healthy crop today, no gimmicks allowed––was essential to success. At the same time, Honeywell would need to start investing now in new products, services, and processes, as well as international expansion, to secure its future, by planting seeds for tomorrow.
“We would have to win today and set ourselves up for tomorrow,” he says. “I realized we could do both at the same time. Short- and long-term goals are more tightly intertwined than they appeared. Short-term results would validate that we were on the right long-term path.” What’s more, he added to me in an interview, each goal reinforces rather than contradicts the other.
To get there, Cote vowed to follow three principles. The first was “Scrub accounting and business practices down to what’s real.” Second came “Invest in the future but not excessively” followed by “Grow sales while keeping fixed costs constant.” The theme was to plow current earnings into the long-horizon projects such as next-gen aircraft cockpits and new molecules for refrigeration that Honeywell was shortchanging, but not invest too much.
Honeywell would maintain sufficient quarterly earnings to demonstrate consistent progress. By expanding sales while holding the fixed costs, consisting primarily of labor, constant, Honeywell could generate the savings to keep raising its spending on both big, multiyear systems and enhancements to existing products and services and still generate the short-term returns investors expected. Those practices would get the flywheel spinning, and a “virtuous cycle” would take hold, which would allow Honeywell to generate even more cash to invest, which would lead to further performance gains.
Cote’s plan for restraining costs came in two parts. First, he immediately demanded that the four big overhead functions, finance, human resources, legal, and IT, representing about one-fifth of fixed expenses, hold their annual dollar outlays at 2003 levels, forever. “The goal was to double sales, so that overhead would fall by 50% as a share of revenues,” he told me in an interview. As it turned out, the costs of the four functions actually fell by 30% or $1 billion over 15 years, so that spending rose more like 30¢ for each dollar gain in revenues. “We used part of the savings to improve IT for all four functions, so that we needed fewer managers,” says Cote. “For every 10 managers who retired or left, we only had to replace about seven.”
In line with his conviction to achieve two seemingly conflicting things at the same time, he also demanded that the four functions demonstrate better service to their internal Honeywell customers, as determined by anonymous surveys. Cote also taught the Honeywell brass to take on broader roles, so that he could run the company with far fewer leaders. The leadership ranks over 16 years shrank from 740 to 650 even as sales almost doubled. “I did it for two reasons,” says Cote, “to save costs, but most important, because leaders create work for other leaders, and instead of focusing on markets and customers, focus on satisfying each other.”
The second initiative was an epic campaign to boost productivity in manufacturing. “If you can grow output much faster than you add costs, including for payroll and floor space,” says Cote, “you’re bound to generate the savings that both fuel new investment, and increase quarterly earnings.” In 2005, Cote dispatched a team to study Toyota’s celebrated Toyota Production System, at the automaker’s plant in Georgetown, Ky. Over the next decade, Honeywell gradually rolled out its Honeywell Operating System or HOS, largely based on the TPS practices of engaging workers to recommend and implement improvements in their factory-floor tasks that save costs and improve quality.
The initiative was so successful that Honeywell over that period increased its sales per employee by two-thirds. HOS also enabled Honeywell to keep shrinking factory space as it made more and more product. By 2018, Honeywell was producing far bigger volumes in only 70% of the plant footprint it was using in 2002.
Early in Cote’s tenure, Honeywell was manufacturing sensors in 37 small plants. Cote asked the managers to do a “white paper” exercise imagining the ideal footprint if manufacturing could be redesigned from scratch. The answer was more like 12 factories that each produced much bigger volumes. In a classic Cote “go slow to go fast” maneuver, the sensors unit spent 10 years making that blueprint a reality by packing all production into a dozen plants. “We did it laying off just a few workers a year so that we didn’t disrupt customer service,” writes Cote. “It was part of our philosophy of constant restructuring.”
Cote notes he reached his expense targets while still increasing the number of workers in manufacturing. “We started with around 60,000 in 2002,” he said in an interview. “And we hired about 20,000 or 30%-plus over 15 years. The key was that we doubled the size of the company, so the revenues grew much faster than payroll.”
Those cost-savings plans freed the cash for both short- and long-cycle investments. For Cote, the bigger challenge by far was finding the right mega-bets that would swell earnings anywhere from two to six years hence. “We were already getting lots of enhancements on existing products because people wanted to make their numbers for the quarter,” he says. “HOS enabled us to make those improvements a lot faster, but the big one was the seed planting.” He writes that prior to his arrival, Honeywell was spreading investment dollars across a broad spectrum of projects without carefully assessing their potential profitability, hoping that the more bets you made, the more would win. Cote moved to advancing fewer huge platforms that played to Honeywell’s greatest strengths, especially in aerospace, and that promised the biggest payoff.
One major hit was HFO, a new form of fluorine for industrial refrigeration. HFO was a breakthrough molecule that Honeywell developed in a quest to reduce the global warming caused by previous fluorine molecules. “That was really touch and go,” Cote told me. “It took five years, and there were two or three times when we thought it wouldn’t work.” HFO raises global warming 20% less than carbon dioxide and 1,500 times less than the previous molecule, and it has mushroomed into a highly profitable $1 billion business.
Another haymaker: Experion Orion Console, a monitoring system for oil refineries. “It’s like a jetliner cockpit for refineries,” says Cote. “It collects and processes huge amounts of data from the facility, and controls all the flows to ensure the highest possible productivity and safety.” It was Darius Adamczyk, whom Cote mentored and succeeded him as CEO, who shepherded the Experion Orion. Overall, says Cote, Honeywell now captures three-quarters of the big aerospace projects it competes for, up from half in 2002. And by the way, today’s hits are much bigger than yesterday’s.
Overall, says Cote, Honeywell’s strongest growth engine was the payoff from long-horizon projects. Of the extra $18 billion in sales generated from 2002 to 2018, $6.5 billion came from acquisitions, and the remaining $11.5 from its own products. And three-quarters of that organic growth flowed from Cote’s seed planting.
In Winning Now, Winning Later, Cote relates that in large meetings, he’d listen to the presentations and encourage everyone to talk. And when the open discussion ended, he’d request opinions on how to proceed from everyone in the room. He always asked the lowest level managers to speak first, and as they talked, he’d show no hint of agreeing or disagreeing. “If their bosses spoke first, the lower level folks would be tempted to just parrot what their bosses said,” Cote told me. “I’d never interrupt and wouldn’t express my opinion until the very end.”
For Cote, teamwork consisted not of the usual groupthink but ensuring that everyone in the room cited facts and expressed opinions. Then Cote, as leader, would make a decision and explain his reasoning. Cote wasn’t looking for widespread buy-in. “Consensus was not the goal. A good decision was the goal,” he says. However, Cote always explained his rationale, to guide the organization on how the leader wanted them to think about problems and let the people who disagree understand that he weighed their arguments and respected their viewpoint. Cote says his goal was to be right at the end of the meeting, which might be different from what he thought at the beginning. And the only way to get as close as possible to “right” was to keep participants from knowing what he thought and getting facts and opinions from everybody.
Once again, Cote thinks it’s constructive to call out a leader who presents a weak business plan so that all present understands what the boss accepts. “Organizations need to learn what is acceptable and what is not,” he told me. “If a business head presents a plan that’s not well thought through, or gives me a great story instead of results, I’ll call them to task. Everyone around the table needs to hear that the work product is not acceptable.”
His technique isn’t to personalize the problem. “I won’t call them an idiot,” says Cote. Instead, he’ll ask the executive to start over and come back with a much better proposal. “The leader will walk out thinking, ‘That wasn’t a good meeting,’” says Cote. “But it creates a good dynamic. It builds respect for you when you tell them what’s wrong. They may panic, but they’ll come back with something a hell of a lot better.” Cote adds that he would always suggest ways the executive could improve his or her plan. “I’d always say, ‘Here are four or five things you need to think about,’” he recalls. “I worked for bosses who’d give you no idea what was wrong and just say, ‘Do better.’ When your people respond to positive suggestions, their business gets better.”
During the financial crisis, Cote focused just as much on ensuring that Honeywell could roar back in the recovery as on lowering costs to preserve investment and profits. “An economist said that you’ll most likely come out of a downturn the inverse of the way you went in,” he relates in the book. “That made a tremendous amount of sense to me. If your sales fall 20% in the first six months of the recession, they’ll probably jump by 20%-plus to the same level when the economy bounces back.” Cote orchestrated his response to ensure that Honeywell could handle a huge surge in orders to capitalize during the inevitable recovery.
Cote laid off 3,000 workers, moving up reductions already planned. But for the rest of the 125,000-person workforce, he deployed furloughs to keep everyone employed at the same time his rivals were axing a big chunk of their workforces. Employees were furloughed without pay for four weeks a year. That move saved $200 million, but it wasn’t enough. Cote also reduced the 401(k) match by 50%, used HOS to keep trimming operating costs, and forced management to take some of the pain by scrapping bonuses for 2009. “We performed in line with our peers, with two big differences,” he writes. “We didn’t cut our long-term investment plans, and for the most part, we didn’t cut people. Recessions don’t have to destroy your foundation. It’s best to keep calm while everyone else is panicking.”
Cote pushed ahead with two key acquisitions: One of them, the purchase of bar code scanning specialist Metrologic, landed its leader Adamczyk. He also made special deals with suppliers to ensure that Honeywell got first priority on supplies in the recovery. “If airline hours decline 6%, you go down three levels in the supply chain for parts, and the suppliers cut their capacity by 50%,” he said in an interview. “Then when flights pick up, this avalanche of orders pours in, and you can’t get supplies.” Cote’s solution: Make advance payments to vendors in exchange for a commitment to serve Honeywell first when good times return, and guarantee big future volumes providing the suppliers give Honeywell first dibs.
The strategy proved a winner when sales took off in 2011 and 2012. His workers were ready to go, while rivals struggled to quickly rebuild their workforces and keep pace with orders, and stood in line behind Honeywell for supplies. Over those two years, its sales of aerospace parts soared 30% above pre-crisis levels, largely because the ever-agile Honeywell stole orders from its flat-footed competitors.
Believe it or not, this review only scratches the surface of this book, brimming with original strategies that actually worked. Cote swears that part of being a successful CEO is being a good teacher. Now, readers from around the globe can absorb his lessons.
6 min read
Opinions expressed by Entrepreneur contributors are their own.
The workplace is changed. As parts of the world begin to loosen coronavirus-related restrictions, organizations are emerging from COVID-induced hibernation. These transitions back to work are gradual. Uncertainty will remain for months as threats of renewed waves of coronavirus persist. We are anticipating a new normal — but what we need is a new now.
The radical change of these times demands empathic leadership to keep teams engaged, cohesive and forward-focused. Leaders must demonstrate a spirit of purpose and optimism to reinforce the idea that an uncertain future has the potential to be a better future. Here are nine steps for leading your team into an unknowable future.
In its recovery guide for organizations, Deloitte encourages leaders to imagine what post-recovery success looks like. Once you’ve clarified goals, reverse-engineer the next steps for quick and effective action. Envisioning what success entails frees up thinking about the present and can help teams identify quick wins.
As preparation for returning to work, leaders have an opportunity to review their organization’s operating models, expectations, standards, values and strengths. Reflect on what worked well during the recent period of isolation and let teams decide what they need to start, stop or continue doing to achieve goals.
“Trust is the glue of life,” says The 7 Habits of Highly Effective People author Steven Covey. “It’s the most essential ingredient in effective communication. It’s the foundational principle that holds all relationships.”
Related: How the Coronavirus Has Changed the Future of Work
Leaders must transition their organizations from a state of treading water to moving toward a restored future. Enable your teams to succeed by embracing trust. Like many business leaders, you’ve likely built a substantial reserve of trust from your teams through your navigation of the coronavirus crisis’s early stages. Now is the time to build on that foundation with acts that unite your team.
Today’s distributed workforce demands new thinking about organizing work. Establish clear boundaries to ensure sustainable working hours and productivity. Teams must discuss office hours, share tips on time-tracking and set clear expectations about responding to emails.
One benefit to organizations from the pandemic is the reduction of the number of meetings. Despite a traditional argument that face-to-face meetings are necessary, businesses didn’t grind to a halt when meetings ceased as a result of the pandemic. Going forward, meeting organizers should define the purpose, the necessary attendees and the amount of time every meeting requires.
Resuming work requires answers to questions such as where to begin, how to keep employees and customers safe and healthy, when to communicate and what the next steps are. PricewaterhouseCoopers developed a guide to returning to the workplace (PDF) with additional questions for leaders to address.
Related: 7 Tips for Managing Workplace Disruption and Maximizing Remote Workers
Whether it be leading and communicating change, prioritizing the health and well-being of team members, operating with additional demands or encouraging empathy, leaders should initiate discussions in the workplace around these critical areas as they develop plans to keep their people and businesses moving through a recovery. As an example, Tesla’s leaders designed a return to work playbook outlining the company’s plan to provide a safe and healthy work environment for its employees.
Organizations want their leaders to exhibit vulnerability and empathy. On a national level, the leaders who have most effectively dealt with the COVID-19 pandemic have demonstrated clear and consistent messaging, compassion, and solidarity with their constituents. Most of these leaders are female, from Chancellor of Germany Angela Merkel implementing testing from the get-go and Tsai Ing-wen in Taiwan implementing significant measures at the first sign of illness to New Zealand Prime Minister Jacinda Ardern locking down the whole country with swift and decisive action. And in a press event, Norway’s Prime Minister Erna Solberg spoke directly to her nation’s children, answering their questions about the coronavirus and letting them know it was okay to feel scared.
Leadership demands an emotional connection with your people. When leaders prioritize their people ahead of themselves, they elevate others and foster team well-being.
Expecting all employees to resume a so-called normal work life isn’t realistic. The COVID-19 crisis impacted everybody, leaving a stain on the fabric of your organization. Be mindful of the ongoing health concerns employees have for friends and family, the challenges of juggling childcare and homeschooling or the stress of navigating the crisis’s financial impact. Empathy will serve you well as a leader and provide your team an extra measure of grace as they return to the office.
When employees do begin to return to the workplace, they’ll be dealing with various emotions. People may experience feelings of loss, sadness and grief — emotions that will inevitably impact the way they work and how teams perform.
Related: How Leaders Can Help Prevent Emotional Exhaustion at Work
Leaders must help employees work through these emotions by providing access to support resources such as the Lifeworks-offered Employee Assistance Program and help them navigate sensitive and mental health conversations in the workplace.
As you re-open and reset your business, put your employee’s needs at the forefront. That means more than creating a physically safe workplace. According to a Harvard Business Review article on returning to work, here’s what leaders should do:
Remote working has exposed the costs and efficiencies of expanding a virtual working infrastructure. For many people, remote work eliminated commute time, allowing them more quality time with family — many employees won’t want to give that up.
You may need to look for new workspaces, renovate current spaces and shift your thinking about how teams collaborate in a shared office. Listening to your people with the purpose of understanding will be crucial in resetting work environments.
6 min read
Opinions expressed by Entrepreneur contributors are their own.
I’ve been in executive positions for about a decade now. Although it’s been an incredibly rewarding experience, I can’t say that it has always gone smoothly. I’ve made mistakes, including hiring someone who ended up stealing from my company.
Leading a company is a trial by fire, and you simply have to reflect and learn from your mistakes as you go. That being said, creating a few general rules can help guide you through difficult decisions. I’ve had plenty of ups and downs over the past 10 years, and I’ve learned a great deal from both the highs and the lows.
Here are the five rules I try to live by in an effort to be the most effective executive I can:
In the past decade, content I like to call “hustle porn” — motivational YouTube and Instagram videos — has become mainstream. The people in these videos constantly advise young entrepreneurs and executives to work 14 hours a day and hustle every minute of every hour.
That’s probably the worst possible advice to give someone in a leadership position.
Related: 22 Qualities That Make a Great Leader
Constantly working long hours without a break isn’t a recipe for success. It’s a recipe for burnout. And yes, there have been times when I had to pull all-nighters or work overtime for a couple of days. But that was because I was a young executive with no other options, not because I thought doing so was virtuous.
When you’re in a leadership role, you have to give yourself time to relax and recharge. Focus on the quality and thoughtfulness of your work, not just the number of hours you put in at the office. I promise you’ll actually get more done than if you spent seven days a week “hustling.”
The other night, I was at a busy restaurant that seemed understaffed. But I noticed that the managers weren’t standing at the kitchen door, barking orders at the waitstaff. They were actively jumping in, bussing tables, folding napkins and doing all the little things that are usually the staff’s responsibility.
That’s exactly how it should be in any business.
Leaders have to cultivate a positive work environment, especially when the job is manual or difficult. A tough job always presents its own issues for workers. Why would you compound those issues by spreading negativity and treating people poorly?
Related: 7 Ways to Become a Better Business Leader
I’ll always remember what my dad — who was an executive, as well — used to tell me. “Just because you’re the boss doesn’t mean you have to be a horse’s ass.” Yes, you’re in charge, but you can still treat people how you’d like to be treated.
Being a great executive who treats everyone well won’t matter much if you don’t instill those values in your management team. There’s nothing more toxic than ineffective middle management.
Good or bad management often comes down to promoting effectively. A lot of people think promotions are a natural thing — stay somewhere long enough and you get promoted regardless of leadership ability. The truth is, some people are really great at specific roles, but their ceiling is lower because they aren’t great leaders.
As the person making decisions, you have to be cognizant of that. A good way to observe who may or may not be great for a management role is by giving little tests. Let them run projects or take on more responsibility for a time and see how they do.
Some people will thrive; others won’t respond well. It’s up to you to recognize that and act accordingly.
To be a good leader and manager, you also need to understand the work your team is doing. The management at that restaurant knew the jobs their waitstaff performed every night to the point where they could hop in at a moment’s notice.
Of course, you can’t understand everyone’s roles in depth if you run a 50,000 person company. But a good executive knows what their employees do every day. They recognize the limits of their team’s work, what’s possible and what isn’t. Not everything can be done ASAP, so it’s important to have reasonable expectations.
Related: 7 Ways to Go From a Boss to a Leader
If you don’t think you have a solid grasp on what your employees do, then start learning. Part of being an effective leader is always looking for new subjects or concepts to learn about.
Far too many businesses fail at cross-company communication, and that can devastate efficiency and collaboration. For example, back when I was leading a call center, the industry norm was to only use email to communicate within a company. If someone had a question, they had to send out an email to everyone and hope someone got back to them.
But in our call center, our agents had access to a chat room. That way someone could ask a quick question and anyone who was online at the time could get them the answer. There was less delay, and it promoted a feeling of camaraderie in the group. Whether it’s among one team or between groups, you have to provide people with channels for strong communication if you want your business to operate efficiently.
These rules all really come down to one precept — being a boss is very different than being a leader. A title can make you the boss, but to be a leader, you have to turn your focus away from yourself and be able to empathize with the people who work for you.
5 min read
People don’t like being told what to do. There’s even a word for it: reactance.
“Psychological reactance is a negative emotional state that we feel when we’re not in control of our behavior,” says Jonah Berger, author of The Catalyst: How to Change Anyone’s Mind, and a marketing professor at The Wharton School of the University of Pennsylvania. “We have a drive for freedom and autonomy. Anytime we feel like someone else is trying to persuade us, or shape our behavior or actions or attitudes, we essentially put up an anti-persuasion radar. You can almost think about it like an anti-missile defense system.”
This can be useful in many ways. It’s the reason that advertisements don’t empty our bank accounts, and why we don’t (usually) fall for scams.
But reactance can also be counterproductive. A CEO may need to make necessary changes at a company, but employees don’t like being told to do something new. Public health officials may want people to wear masks, even though some people consider it an infringement on their rights.
So, what then?
Here are four ways to shift people’s behavior without triggering their reactance.
“At its core, what drives reactance is people don’t feel like they’re in control,” Berger says. “Any way you can give that control back, and let people persuade themselves, means they’re going to be more likely to go along.”
For example, when a leader gives people a mandate, people often think about all the reasons they don’t like the mandate. But if a leader gives them two options — say, Option A or Option B — their minds do something different. “Rather than sitting there going, ‘Well, let me think about all the reasons I don’t like A,’ the person sits there going, ‘Well, which one do I like better? A or B?’ And because they’re thinking about which one they like better, they’re much more likely to make a choice.”
How do you get people to work harder and put in more hours? If you instruct them to do it, they may resent you. And if you give them two options — work more, or work less — they’re unlikely to make the choice you want. So now what?
Berger’s answer: Present the problem, and let them develop the solutions.
He recently spoke with a startup founder who did this effectively. The founder needed his team to put in more hours, but didn’t want to demand it. Instead, the founder held a meeting and said, “What kind of company do we want to be — a good company, or a great company?”
“A great company,” everyone said.
“Well, how can we be?” he asked.
People proposed solutions, one of which was to work harder. Later in the meeting, the founder came back to that idea and said, “That’s a great suggestion. Let’s do it.”
“It’s going to be much harder for people not to go along,” Berger says, “because they came up with the idea themselves.”
Want to change someone’s behavior? Instead of telling them what they’re doing wrong, Berger says, “point out a gap between their attitudes and their actions — or what they are doing and what they might recommend for someone else.”
This worked excellently a few years ago in Thailand. The government was running an unsuccessful anti-smoking campaign, and couldn’t figure out how to break through. It hired the advertising firm Ogilvy Thailand, which executed a brilliant idea: It sent children into the streets with cigarettes, and had them approach smokers and ask for a light. In response, the smokers started lecturing the children. “If you smoke, you die faster,” one adult tells a child. “Don’t you want to live and play?”
Once the adult’s lecture was done, the kid would hand over a card and walk away. The card said: “You worry about me, but why not about yourself?”
Hidden cameras filmed the exchanges, and the ad firm then packaged the footage into a commercial. It quickly led to a 40 percent increase in calls to an agency that helps people stop smoking.
People may be stubborn, but they don’t often like to be out of step with their peers. “Just pointing out what the norm is — saying, ‘Hey, just so you know, this is what people are doing’ — can often be a way to get around reactance,” Berger says.
For example, tax collectors in the United Kingdom started sending letters to people who aren’t paying their taxes. Rather than demand payment, the letters pointed out that most of their neighbors pay their taxes. As a result, payment rates went up. “You’re just giving them information that makes them reconsider their own actions,” Berger says.
Want to understand how to change behavior?
For more insight into how to change people’s minds, click to listen to the podcast episode “Why People Hate Being Told What To Do”. Or, listen in the player below.
6 min read
Opinions expressed by Entrepreneur contributors are their own.
Seek and ye shall find — but only if you make the effort. An online course can monetize one’s expertise, expand influence and publish content that helps others. An expert on virtually any subject can leverage any of the following: PDFs, live Q&A sessions, YouTube videos, speeches, presentations, podcasts, published research and more.
There’s a serious challenge to this, though: Much like New Year’s resolutions that quickly get abandoned, most eager learners buy a course and never actually complete it. They take two steps forward and permanently stop, which may lead prospective students to question the course creator’s competency, communication skills and/or credibility.
For massive open online courses (MOOCs), the dropout rate can be extreme. A 2019 M.I.T. study found that 96 percent of students drop out of MOOCs over a five-year period. A different study in 2015 found the completion rate at a mere 5 to 15 percent.
Why is this, exactly? Well, would-be learners purchase a course based on desire or impulse, but many balk at hard work. This undermines an expert’s abilities. It harms reputations and future entrepreneurial undertakings. A corporate client won’t hire you as a speaker or trainer if audiences tune out, stare at their phones and rush out for lunch only to never come back. Moreover, a student who never finishes a course certainly won’t recommend it and won’t get the results they claim to seek.
People disengage for many reasons. Expectations change. They forget. Family gets in the way. Boredom sets in — there’s a myriad of excuses, really. As a course creator, however, it remains your job to answer the following: How can I make my course appealing enough to the point of widespread completion?
Fortunately, there are a few things you can do.
Many experts are tempted to “wing it” because of the vast knowledge they possess. However, doing things this way will make your course disorganized and unprofessional. And novices won’t learn as much as they could have if you would’ve properly prepared. If you truly want to help others, be more effective with your course’s preparation.
And I mean it — prepare your material weeks in advance. This includes talking points, slides, guest appearances, interviews, statistics, sources, etc. You also need to kick any non-essential content to the curb, so as to make your course more digestible. Many won’t understand unnecessarily complex ideas or jargon that audiences won’t connect with. Simplicity enables learning and engagement. Resist the ego’s urge to make things harder than they need to be.
Related: Take A Free Sneak Peek Into Our On-Demand Start Your Own Business Course Now
Students should continuously communicate and provide feedback. I recently spoke with Sean Castrina, an entrepreneur who hosts online business courses and advised, “Ask for questions in advance of new sections. If your next section is about team-building, ask attendees what they’re looking to learn. And after the section is over, see if they actually learned it.” In other words, check to see if you actually delivered on your students’ expectations.
Push for immediate feedback when sharing content live, as audiences are able to ask questions and make comments in real-time. Give attendees a course evaluation sheet so they can rate your teaching ability and lesson presentation on factors such as communication skills, quality of materials and availability. These will identify areas for improvement and hopefully strengthen your long-term reputation as a bonafide course creator.
Course facilitators work for course creators, but directly with students. If you have the budget, hire one. Facilitators provide one-on-one support, as well as observe how students are progressing. They really work wonders for enhancing the overall student experience and can hold students accountable, as well.
Furthermore, depending on your course’s format, it may be possible to hire a virtual assistant to help with engagement, such as answering emails and responding to students’ questions or comments on social media.
The skinny of the situation? When you engage, your “classroom” will, too.
Create opportunities for attendees to learn from each other via group chat. Students can answer each other’s questions, many of which — year after year, time and time again — will be repeated throughout the course. Satesh Bidaisee, a professor and assistant dean at St. George’s University in Grenada, shared this key advice for online teachers with Inside Higher Ed: “While you cannot replicate the in-person back-and-forth of a classroom, encouraging students to utilize social media channels or set up virtual discussion groups to work together can help mimic that collaborative environment. This will motivate students to succeed and allow them to turn to each other as they work through the material.”
Simple, easy-to-navigate discussion forums are made readily available through apps like Slack, Facebook, Quip and Zoom, bringing students together and creating a deeper, more meaningful sense of community.
Related: 3 Tips for Building an Engaged Community Around Your Business
The big takeaway is to remember why you created your course in the first place. Initially, it was probably because you wanted to leverage your expertise to help others — and create a new source of revenue, of course. To ensure that this happens, organize your course materials. Look for (and welcome) feedback so you can tweak and optimize your coursework as you go, as well.
And, of course, if your budget will allow for it, hire a facilitator to help answer students’ questions and encourage students to participate in discussions. They’ll answer each other’s questions, as well as bring up additional topics in class that could very well inspire a whole new course of yours for the coming months and years.
Remind people of the benefits of your online course, and hopefully they’ll come back for more.
8 min read
Opinions expressed by Entrepreneur contributors are their own.
The COVID-19 global crisis has forced thousands of companies to switch to a digital first working model — almost overnight. This dramatic rate of change, while painful, is by no means serendipitous. Most companies have had, over the past decade, provided most of their employees with the pre-requisite tools to work from home (like smartphones, laptops, cloud powered shared drives, collaboration apps and chat channels), but neither employees nor leaders in these companies found the will to make the switch to what is arguably a more efficient way of working — until now. Digital transformation change programs, which have historically held failure rates as high as 70%, are seeing a renaissance as success rates have crept up in a time where everything else seems to be falling apart.
It is not just global crises that make companies succumb to change. Any form of existentialist threat seems to be a great enabler for both leaders and employees to shift gears in a company. Apple in 1997 faced an overwhelming crisis — a drop in stock price to a 12-year low and a close brush with bankruptcy — which proved to be enough of a catalyst for its board to bring back Steve Jobs. Steve shifted the company’s focus from exclusively selling computers to selling music players and associated services (and eventually the iPhone). Marvel, on the other hand, did file for bankruptcy in 1996, which led to new ownership as well as a strategic reset away from comic books to a wider slate of entertainment properties. That’s what led to the now-legendary Iron Man film in 2008.
These companies could have changed direction prior to these crises hitting them — there was no lack of data and insight preventing them to do so — yet they remained in stasis until it was too late. While Apple and Marvel were lucky enough to survive their near-death experiences, others like Kodak, Nokia, Blockbuster were not.
RELATED: COVID-19 Will Fuel the Next Wave of Innovation
So why do companies need a crisis to change for the better? Are they not run by rational, highly qualified managers who are heavily incentivized towards detecting a shift in tides before it ever hits the ship? Are employees not continuously coached to embrace change and improve the company every day? One way of understanding this seemingly irrational behavior of companies is to compare it to the equally bizarre behavior of us humans, who too often wait for a crisis to hit before changing destructive habits.
The following are three common brakes against change for both companies and people:
In the 1950s, a research group called the Tavistock institute in London tried to understand people’s resistance to change. It had a breakthrough while observing nurses in wards. The nurses followed strict and repetitive medication and checkup procedures, even though that meant waking up patients from what would otherwise be much-needed (and doctor recommended) sleep. The doctors in this ward noticed the problem and gave the nurses new procedures to follow, but the nurses kept on following the old procedures—even though it was bad for the patients. Why? The Tavistock researchers came up with a hypothesis: The nurses were dealing with a very difficult situation, in which sick people could succumb to their illnesses on their watch, and so the nurses shielded themselves from this anxiety by clinging to rituals they were comfortable with. The doctors, meanwhile, hadn’t done any coaching or provided any support to help the nurses adopt the new procedures. The doctors had simply issued the new procedures… and then expected change to happen.
Fast forward to the modern-day workforce, and we see a lot of leaders behaving like those doctors. These leaders realize that a company needs to change in order to survive. However, in most cases, leaders simply dish out recommendations on how to ‘improve the situation’ to the nurses – expecting them to comply and make the ‘switch’. Older procedures (that helped contain anxiety) are aggressively berated while employees are asked to self-design brand new ones without much vision, sensitivity or coaching. This lack of support creates stress, and employees calm themselves by falling back on older processes and practices. That’s what looks like resistance to change.
Crisis changes all this. It creates a tidal wave of anxiety and urgency that’s far harsher than anything the organization faced before. Obsolete rituals are no longer any comfort. It becomes abundantly clear that new procedures and systems are needed. Suddenly the company, from its leaders to its employees, finds the courage, camaraderie, and momentum to change. If they are lucky and the timing is right, the company lives to fight another day.
Every year, in January, gyms see a sharp spike in memberships… only to see them dwindle in the later months. This phenomenon is both amusing as well as baffling. Why doesn’t the average adult invest a small amount of money and time every month to ensure that they have a long and healthy life? The answer to the question is simple: The consequences of not going to the gym for the average 30-year-old will only be felt 20 years down the road. This delayed reward of a healthier longer life in return for a painful session in the gym today pales in comparison to staying at home and binging on Tiger King.
The same holds true for companies. A challenger start up, a new business model, and a major technological breakthrough are all factors that have a measurable impact on the future of a company — sometimes coming in to full force only after a CEO is done with his or her stint in a company. However, bonuses, promotions and pats on the back are all linked to performance today. In theory, stock prices as an incentive should account for both the current performance and expected future performance of a company. However, in real life stock prices are quite volatile and can easily keep management teams focused on quarterly results, with a longer-term view taking a back seat.
A crisis wipes such a lopsided reward system clean. With no immediate bonuses and incentive programs to optimize against, thanks to a dwindling financial status and stock price, managers are forced to go back to the basics and think about the longer-term prospects of the company. Previously protected statuses of various departments become open for questioning. Budgets that have kept rolling along for years are picked apart and the vision and the mission of the company are brought under a microscope. The reward for overcoming the crisis by making fundamental changes in how the company operates and competes becomes overwhelmingly more lucrative thanks to the vacuum left behind by the previous reward system.
Companies, just like people, find their social status amongst their peers to be quite valuable. Press releases are published like clockwork, waxing lyrical about a company’s financial performance (no matter how incremental) as well as the intellectual prowess of the top leadership responsible for such average performance. Losing face, so to speak, is an uncomfortable prospect from a social value perspective and putting a company through a much-publicized change means owning up to the fact that something has not worked in the plan. The weight of years of carefully manicured public image is a sunk cost that is hard to ignore for most companies. By not owning up to the need to change, top leaders deflate any internal momentum set out by various change programs.
A crisis changes that. It dismantles the public image of a company very swiftly, taking away the burden of ‘saving face’ almost overnight. This holds especially true for the current COVID-19 crisis, where nearly every company is suffering and the shame of admitting that change is the need of the hour has gone away. Similar to seeing a news story about an unrecognizable, post-quarantine Kylie Jenner in sweats, companies have discovered social value and momentum in the knowledge that all of them are like Ms. Jenner in 2020.
The three drivers discussed are a strong lesson for entrepreneurs, leaders and boards everywhere. If you can actively manage organizational anxiety during times of change (instead of avoiding or suppressing it), reward longer term performance and not worry too much about the optics of your business, you can drive change before a crisis does it for you.