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Why some leaders fail the COVID test

Recently, I shared the story HERE of a close friend who had been let go at the start of the pandemic. Their position had been made ‘redundant’.

As I continue to watch events unfold at their previous employer, it sometimes feels like I am watching a train crash in slow motion – one where each new decision is worse than the last, further compounding the earlier poor choices.

How can they not see the mistakes they are making?

It's all too obvious really – there is a critical failure of leadership, at every level of the organisation.

I’m sure many can relate to the example I am about to share. Sadly, we all know too well the type of leader I’m talking about. One who, even in face of an impending disaster, where all the warning signs are there to be seen, continues to press ahead in the misguided view that they are on the right track.

I wonder, do they see the error of the ways, even as the train hurtles over the cliff to no return?

Of course, businesses fail for many reasons. The most commonly cited reason today will be due to the pandemic, macroeconomic factors – those outside the control of any leader.

There is of course no playbook for running a business during a pandemic, however, this is not an entirely new business phenomenon either, and great leaders, during times like these will be modifying plans and chart a way out of the crisis. Leaders make a difference.

So why do some leaders fail this test? One that even secondary school business students are taught – that there will always be common macroeconomic factors which leaders need to plan for; recessions, wars, natural disasters, inflation, and business cycles.

Businesses will and do continue to succeed in bad times. Amazon, eBay, Hyatt, Burger King, Microsoft, CNN, QANTAS are only a few examples of wildly successful companies that started during a recession or immediately after a major world event – like a pandemic.

So in returning to my friend's previous employer for one moment. Here are some of my observations on why some businesses will fail the COVID test.

  1. A FAILURE IN LEADERSHIP

    Businesses fail because of poor leadership. It doesn’t matter how good your business was before, bad leaders quickly destroy value. The leadership must be able to make the right decisions most of the time. From financial management to employee management, leadership failures will trickle down to every aspect of your business. The most successful leaders are always learning, studying, and will reach out to others to improve their leadership skills. Poor leaders do not;

  2. WEAK MANAGEMENT

    Examples of poor management include an inability to listen, micro-managing, lack of trust, focusing on the wrong things, working without standard or systems, poor communication, and lack of feedback;

  3. LACK OF PLANNING

    Businesses fail because of the lack of short-term and long-term planning. Your business plan should include where your business will be in the next few months (to the next few years – even accounting for a pandemic). You need to include measurable goals and results. A good plan will include specific to-do lists with dates and deadlines. It is easily communicated and understood at every level of the organisation. Failure to plan damages businesses;

  4. NO DIFFERENTIATION

    It is not enough to have a great product. You also have to develop a unique value proposition, without you will get lost among the competition. What sets your business apart from the competition? What makes you unique? You must understand what your competitors do better than you. If you fail to differentiate you will become obsolete;

  5. IGNORING YOUR CUSTOMERS

    Every business will tell you that the customer is their number 1 priority, but only a small percentage acts that way. Businesses that fail, lose touch with their customers. I once asked the CEO of a recruitment company, what they thought about the negative customer reviews they had received online. They told me they didn’t respond because they are unimportant and irrelevant…. Wow!!!

  6. PROFIT

    Do not mistake revenue with profit. Profit is not the same as revenue. Great leaders are required to keep an eye on profitability at all times. Profit allows for growth. Celebrating revenue growth and promoting small business unit contributions from outlier departments means you are focused on the wrong metrics;

  7. POOR FINANCIAL MANAGEMENT

    Time and time again, I see creative accounting techniques adopted to ensure a business ‘gets over the line’ so that they make their annual sales results. Management gets their bonuses, ‘the can is kicked down the road’ another 12 months, and employees (who know the true scale of the problem) are left bewildered. Make sure you have proper, audited financial records. That they are truthful. It is also a wise investment to hang on to your CFO’s, and not to replace them every couple of years; 

  8. A LACK OF FOCUS

    Without focus, you have no competitive edge. Launching new initiatives and plans does not constitute focus. If in doubt, read point 3;

  9. SUCCESSION PLANNING

    The best leaders are planning their departure. They plan their succession. Future leaders should be identified in advance. Without an effective succession plan, your business is unprepared. The worst leaders, neutralise and remove successors who they see as a threat. It’s easy to spot – by the ever-changing merry-go-round of key executives leaving just as they get close to the top job;

  10. INABILITY TO LEARN FROM FAILURE

    We all know that failure is usually bad and has consequences, yet this is a great time to take stock and learn. The best leaders embrace this as a learning opportunity. They do not pin blame on others, divert responsibility, or go missing in action. 

Realistically, businesses that fail, do so for multiple reasons. Often leaders are oblivious about their mistakes. Learning from failures is difficult for all of us. There are of course many other factors for business failure; lack of capital, premature scaling for small businesses, poor location, inadequate inventory management, overexpansion etcetera, but without quality leadership, you do not stand a chance.

Returning to my dear friend and my earlier article, I am pleased to say they have accepted a CEO role with another upwardly mobile organisation. They are happy to have left behind a toxic relationship. Sadly, their departure marked the beginning of more to come. As COVID took hold, the business had nowhere to hide, and with no reserves to fall back on have done the only thing they can. They have cut deep, now taking out the very people they rely upon to generate and service their customers. However they dress it up, their future is very bleak indeed.

I’ve said it before:

When you work for a company that has lost sight of who they are – you are in trouble. When you work for an organisation, led by someone who lacks empathy, is dishonest, narcissistic, micromanages, is inconsistent, and takes credit for the success of others, you probably should have seen the writing on the wall. It never ends well.

For those of you who have also found yourself out of work like my friend, It may be difficult to see today but you will get through this – as they have. It could be a blessing in disguise. It could just be the beginning of something great.