Priscilla Cale and David Tate are the authors of “Sink or Swim: How Lessons from the Titanic Can Save Your Family Business.” Cale is an author, lecturer and adviser with broad experience in the private sector and academia. Her work focuses on family business governance, succession, leadership development, strategic growth, globalization, and entrepreneurship and innovation.
Tate, is a licensed clinical psychologist and an assistant clinical professor in psychiatry at Yale University. His areas of practice expertise include coaching and leadership development, conflict resolution, team building, succession planning and promoting healthy organizational development.
As information surfaces about the Costa Concordia cruise ship incident, invariably, parallels will be drawn with the Titanic: the panic amidst uncertainty, the lack of clarity around protocol, the absence of leadership in face of chaos, and the courage of everyday heroes. Whether the alarms were sounded too late or that the Concordia’s management overlooked key safety procedures, risks taken by the leaders of both the Concordia and the Titanic continue to be taken every day by business leaders.
Assumption of risk is inherent in business ownership; but if business leaders can overcome the five crucial challenges outlined below, they can safeguard their businesses against the unintended consequences of risk — and come out on top.
Crucial challenge No. 1: Overconfidence
Some business owners believe that their leadership abilities will allow them to perpetually manage a business in the face of increasing global complexities or that the worst-case scenarios played out on the evening news won’t happen to them. Whether overconfidence relates to individual abilities or organizational reputation, minimizing dangers and failing to respond appropriately can sink any business.
Safe-passage strategy: Those firms that strike a healthy balance between confidence and overconfidence innovate (understanding that complacency will never suffice) and build bench strength to meet future challenges. Train, cross-train, and invest in educating employees — and don’t be afraid to try something new.
Crucial challenge No. 2: Ineffective leadership
Some leaders are heroes and some leaders are zeroes. Business owners face a host of leadership challenges every day — ranging from providing clarity around roles to making courageous decisions to building competencies in employees to letting go and clearing out of the business. Don’t be a zero.
Safe-passage strategy: Communicate, listen and develop your emotional intelligence to become a transformational leader who keeps everyone’s focus on primary goals. And when you need help, reach out to objective advisers who can counsel you and help get you moving in the right direction.
Crucial challenge No. 3: Lack of planning and preparation
Everyone has heard the old adage that “failure to plan is planning to fail.” But for business owners, just being aware that some event will occur is not preparation in and of itself.
Safe-passage strategy: Business owners should be planning for aspects that are both expected events (those associated with strategy, estate, succession, retirement, wealth, etc.) and lower-probability unexpected events (those related to contingencies, catastrophic events, and other risks specific to one’s industry hazards). You may never know when the next strike, flu epidemic, natural disaster, or bacterial outbreak will happen — but you can determine how you will respond to it if it does.
Crucial challenge No. 4: Frail architecture
Architecture can be both tangible and conceptual; and more often than not, for entrepreneurial and family-owned businesses, even the best ideas can flop when “construction precedes architecture” and businesses are left to grow unmanaged.
Safe-passage strategy: Business owners must do the hard work of developing an intellectual blueprint that leads to the development, maintenance, and protection of policies and procedures necessary for business survival. Whether transferring management or transferring ownership, these policies and procedures provide the infrastructure that allow the business to stand under the weight of family expectations, competition within industry, and employee divestment.
Crucial challenge No. 5: Team fragmentation
Conflicts among team members can arise as a result of misalignment of goals, competition, generational values or personality differences (among other reasons). Oftentimes, this rivalry can lead to cliques and organizational silos — with little communication passing across the walls.
Safe-passage strategy: When team fragmentation occurs, deep-seated issues related to trust and fairness are often at the core. Develop a common purpose, ensure competent membership, promote cohesion, communicate regularly and celebrate your wins.