A plateau in business is really an invisible state of decline, unwittingly fuelled by those at the top. Leading out of it involves innovation, transparency, values-led decisions and sustainability, argue Khurshed Dehnugara and Claire Genkai Breeze
‘Hello… Is there anybody in there? Just nod if you can hear me. Is there anyone at home?’
Does the above quote from Pink Floyd’s hit Comfortably Numb ever resonate with you and your workplace?
We have defined this comfortable numbness as a ‘plateau’: when a business or economy reaches a certain point in its growth trajectory and, while not failing, has become stagnant.
Putting this into the context of a natural metaphor, a stagnant pond cannot support life; it is dying, poisoned, unhealthy and toxic. In short, both metaphorically and literally, the plateauing, stagnant organisation could be toxic as well.
Crisis versus plateau
Companies, operating in the volatile ‘new normal’ of the business world will face crises, opportunity, highs and lows. Threat is a now a constant reality and, as a result, businesses are becoming increasingly proficient at managing through crises.
In the short term, at least, crises can generate positive opportunities.
They bring a degree of drama which energises the leadership population and galvanises entire workforces into action. This crisis mentality can engage teams and spur their inner heroes, mobilising them into fight-or-flight mode, where the adrenaline is pumping and making them feel good about themselves. This often leads to great results. For the short term.
For most businesses today, however, there are the plateaus; businesses are failing to achieve growth. Many of these organisations remain in this state, with their only response being to keep generating modest profits through cutting costs; for instance, achieving a 0% sales growth but 2% or 3% profit growth each year, which keeps the city happy and the board and the all-important shareholders satisfied. There is no profit warning, so no real problem, right? Wrong.
This cost-cutting phenomenon is nothing more than a metaphorical anaesthetic, numbing the pain, dulling the ache, keeping the proverbial wolves from the door – but it is lobotomising the business of the innovation, creativity or passion it desperately needs.
Its people – and leaders – are internally dissatisfied; they see no way through this fog. They are comfortably numb.
This is a financial plateau. Often underneath this is a cultural plateau – in which employees are bumbling along in silos, disengaged and counting the minutes until home time. There may also be a leadership plateau – an habitual state of not focusing attention on real change and, quite simply, not feeling the need to.
Plateaus produce a compelling, but largely unconscious, dominant logic in the minds of leaders as well as employees. This creates a perceived safety zone between the pendulum swing of modest profits and cost cutting.
However, beneath the financial plateau is a plateau of the imagination.
In this instance, people in the organisation cease to be able to imagine another way of doing things, or a place of business where purpose, boldness, creativity and innovation lie at the core of the culture and are not the exception.
The cultural and leadership plateaus that cause, and result from, this failure of imagination are a threat to vitality, invention and wellbeing. They create a workforce of comfort seekers and cynics; they create an illusion of activity when really the business
is engaged in a sophisticated game of killing time.
Killing time for what? Killing time until employees can reach the top of the organisation, pay their mortgages, achieve promotion or just pluck up the courage to leave their job and focus on something that would genuinely engage them. If these feel like strong and unpalatable statements, they need to be. A plateau is really a decline.
The trouble with crises
It is easier to strategise around a crisis than a plateau because there is a consolidated and absolute focus on getting a problem sorted. A crisis is often more about recovering after a difficulty rather than maintaining or sustaining growth.
A case in point is Samsung. In October 2016, just weeks after launching its flagship smartphone, the Galaxy Note 7, the company had to recall more than three million devices after reports of overheating and exploding batteries. One clever PR strategy later and some Samsung super fans are still holding on to their Note 7s despite the risk. Given strong customer satisfaction with the product line, plus loyalty to other Samsung products, this customer base looks set to put the Note 7 fiasco behind it quite quickly.
Another example is Volkswagen. According to Harvard Business Review, less than two months after a scandal broke around Volkswagen cars’ high emissions in 2015, German consumers were already ready to forgive the company and look past its transgressions In a national survey, 65% of respondents believed that Volkswagen still built outstanding cars and that the emissions scandal was overblown. Less than a year later, the company had returned to profitability.
There is strategic merit in distinguishing crisis from plateau.
During a crisis, businesses experience the behaviour from their people that they would expect all the time: excitement flares up, employees shine, and then, as quickly as it sprang up, this enthusiasm fades away.
Businesses generate a lot of discretionary effort in crises; lots of high-level communications, collective responsibility, increased collaboration, more truth telling, more focus on customer, very high levels of support and a ‘can do’ attitude.
But some organisations ‘manage by crisis’ all the time due to the misguided belief that this management strategy keeps people mobilised. The tragic reality is that this is neither helpful nor sustainable over the long term. In fact, this type of initiative will run out of potency fast and, if leaders declare a crisis every few months, then the impact of it declines over time.
Boom and bust
Considering the logic of organisational history, companies in the past would typically move through a cycle of massive change, steady state, then massive change, then steady state. The aim was to get through these waves as efficiently as possible and businesses became experienced at catching up and repairing gaps, to return, eventually, to where they wanted to be. Corporates that were good at change management were celebrated, but change management sometimes equates to nothing more than an illusion to keep people active, productive and focused.
The low-growth environment of the past decade has partly contributed to an acceptance of plateaus in productivity and growth. But a plateau is a long burn; an unseen issue within the business that can be easily disguised. It is a major challenge, but it is insidious because its damage will only be noticed when measured over a long period.
A well-supported decline?
We’re going to throw a spanner into the works here, because after defining the plateau, we want to argue that the plateau doesn’t, in fact, exist. It is an artificial state of mind.
If the only way business leaders can generate any positive results is through cost cutting, then their business, essentially, is not plateauing. The ‘plateau’ is nothing more than an invisible state of decline – unwittingly fuelled by those at the top. It is an illusion – a cloak of artificial buoyancy that props up a lack of positive activity.
So, with that in mind, our definition of what has commonly been described as a ‘plateau’ in corporate life is, perhaps more appropriately, ‘a well-supported decline’.
This decline occurs when organisations stop challenging their limiting assumptions or constraints. They’re creating results through deficit rather than innovation and, in a psychological era of austerity, it’s understandable how this subconsciously unfolds within business.
The hollowing effect
If businesses continue in this stasis for long enough, they become hollow.
Their core values, purpose, culture is removed and this often manifests itself through people movement.
Senior executives typically remain in a role for no more than three or four years; they simply become part of the hollowing mechanism coming to believe ‘cost cutting is what we do here’.
In large organisations, whole generations of leaders often leave within months of each other, simply because they’re unable to shift or lead the business away from decline. In other words, instead of companies making difficult changes or hard decisions, leaders who don’t make a difference are moved on.
As a result, these businesses don’t disappear – the cycle merely starts all over again. Leading a business in a state of gradual decline is much harder work than leading a business through a crisis. Some leadership teams are ‘relieved rescuers’ when a crisis comes along, adopting the mentality ‘right we know what we are doing here, let’s roll up our sleeves and get on with it…’
Leading through a crisis
Waking up the organisation up in a crisis is easy – you don’t need to tell people too much about it as they usually already feel the heat from the metaphorical flames. The clichéd burning platform is screaming at you so there little analytical is skill required to diagnose the challenge ahead.
Crises respond well to the traditional hierarchy of status and power. Leaders want people to act immediately without too much deliberation when a command is given. So, divide up the tasks between the team, project manage, communicate quickly and regularly, and make sure everyone knows where you are up to by establishing crisis management teams for employees outside of their day-to-day work.
The leaders’ role is often to act as a container around the crisis in a bid to stop panic, keep calm and project an in-control image. The brief is to make the difficulty go away, recover and return to order with perceptions of security, as quickly as possible.
Leadership energy during a crisis is characterised by endurance: grit your teeth, get through it even if you have to collapse on the other side. This is one of the reasons that it isn’t a sustainable, long-term strategic choice.
Leading out of a ‘plateau’
Waking the organisation up to a well-supported decline, a ‘plateau’, is an altogether subtler act. It is an act of observation, looking differently at what is reality rather than what we imagine it or wish it to be.
This is an act of courage and responsibility; a process of leaders being comfortable with their vulnerability and saying ‘we don’t know’. The diagnosis here is mostly about identifying and surfacing the repeating patterns of behaviour that are keeping the business stuck and circular in its leadership activities.
Leadership action in a ‘plateau’ has an experimental nature to it: trial and error, probing, testing and learning; finding some data and bringing it back to the table for examination. It involves applying all of the organisation’s efforts to the day-to-day work, and not separating from it through analyses. The day to day is where the insidious patterns exert themselves and where they need to be disturbed.
Authority at this time emerges from how the system organises itself around the leader, how the individual is connected to others and how much they trust in their team, the culture and the corporate vision. This is because new performance needs leaders to disrupt the system and to disturb it first. After this, a leader needs to take a stand to achieve breakthroughs, bearing in mind that this tactic may be received by the establishment as something ridiculous that feels ‘out of sync’ with the way the business is currently tracking.
Leaders in a plateau display anxiety in a different way to what is needed in the crisis. They put themselves at risk, but at the same time need to create a sense of psychological safety so that others will want to step out and join them on the precipice. They must quickly become experts in dealing with disappointment, loss of hope, resignation, and perhaps most importantly, resisting invitations to return to the past.
So, in short, do we live in a business world led by people who love a crisis but are so comfortably numb the rest of the time that they embrace a plateau with open arms?
In terms of energy and ongoing momentum, anything that looks like a straight line on the balance sheet is actually a decline. The flat line causes a decline in energy, expectation, imagination, belief in possibility and desire. Over time (and perhaps unnoticed) all the people with any energy and purpose start to leave.
Those with more of a personal investment in the organisation will stay until their own needs are met, but ultimately the effect on the overall organisational system is one of intransigence and self-justification.
Austerity is the fiend that appears to be the friend of growth – when the real solution to leading from plateau to profit is innovation, transparency, values-led decisions and sustainability.
Retaining leadership energy in a plateau has a different feel to leading through growth or indeed crisis. And, if you’re reading this and you feel comfortable in your business performance, you should ask yourself if this is, in fact, merely a placebo effect of numbness?
Shouldn’t we, as leaders, always be uncomfortable? If not, how can we possibly be agile enough to innovate perpetually?
Now is the time for leaders to be savvy, strategic and take a sustainable, long-term view. Great plateau leadership will ebb and flow and leaders need to know when to rest and when to up the intensity.
But the challenge must be moderated by encouraging teams and peers, in order to keep up the momentum – because the cloaked nature of the plateau can make the finishing line seem a long way away.
Khurshed Dehnugara and Claire Genkai Breeze have been Partners at Relume Ltd. since 2000. Specialists in coaching senior executives to be challengers of the status quo, their clients are listed corporations worldwide.
They are authors of The Challenger Spirit – Organisations That Disturb The Status Quo (2011) and Flawed but Willing – Leading Large Organisations In The Age of Connection (2014).