The results were remarkable. We found four moments that happen in every organization that predict with incredible precision how well and how fast an organization responds to economic threats. Those who handled these four moments well were more than five times more likely to respond within days or weeks rather than letting responses drag on for months or even years. Furthermore, those who stepped up to these crucial moments effectively were more than ten times more likely to respond in a way that positioned the company for future success rather than making cuts that ultimately hurt its potential.
The Four Crucial Moments
1. Debate, Dithering and Denial. A crucial moment when the team is confronted with financial data that may or may not signal a crisis. Teams that are unable to discuss their differences effectively can delay action for weeks or even months. On the other hand, teams that are able to discuss disagreements about the urgency of a financial issue are twice as likely to act on it within hours or days, and, as a result, are nine times more likely to resolve issues.
2. Undiscussables. In this crucial moment, teams are hampered by the fact that some of the biggest opportunities for adjustment aren’t “politically correct” to discuss. More than three‐fourths of the leaders cite times when the biggest barriers to cost savings were politically sensitive cultural practices; even more cite times when the barriers were leaders’ pet policies or topics. More than half report that the inability to address these prickly issues delayed their response by weeks or months and more than a third said the entire effort was derailed by these taboos. On the other hand, about one‐fourth of managers were able to bring up these sensitive issues and were four and a half times more likely to act on the financial crisis within days instead of weeks or months; and nearly five times more likely to resolve it.
3. Silent Collusion. This crucial moment happens when decisions have been made, a plan has been put in place, and predictably, some team members go back on their agreements and when this happens, 89 percent of their peers and 73 percent of their bosses let them get away with it. Without this accountability, 85 percent of these teams end up off plan. Teams that hold each other accountable for commitments related to the financial crisis are six and
half times more likely to take effective action quickly. However, teams that fail to hold each other accountable are seven times more likely to have their boss pull the responsibility out of their hands.
4. Irrational Slashing. The final crucial moment is a result of failure to address the previous three. Senior leaders see (or simply expect) denial, avoidance, and collusion. They don’t trust their reports to make the hard calls, and they fully expect disingenuous support from the organization. In this crucial moment, when leaders are driven by mistrust, they can either talk it out or act out. Our study showed that fewer than 29 percent of leaders confront the trust issue head on. Rather than talking, they act out by demanding across‐the‐board cuts rather than intelligent reductions.
Leaders who exclude the team instead of confronting their actions are nearly three times more likely to undermine their own purpose by either undercutting their mission, making ill‐advised cuts, or resorting to uniform across‐the‐board cuts rather than implement a more tailored approach.
What Leaders Can do to Create Financially Agile Teams
Our agile teams are 250 percent more likely to say they “may miss a few opportunities, but generally do okay.” Our less agile teams are 360 percent more likely to say they miss hundreds of thousands, millions, or tens of millions of dollars in lost opportunities. So here’s what leaders can do to take control:
1. Model and Teach Dialogue Skills. Leaders must overtly foster the dialogue skills required to address these four crucial conversations. In the best organizations, leaders make sure they have the skills, and then take the lead in teaching them to others.
2. Schedule Regular Financial Workouts. These are complex conversations that require dedicated time to play out. Leaders need to commit regular and substantial blocks of time to address these four topics.
3. Publicly sacrifice a sacred cow. Sacrifice breathes life into new values.
4. Support decisions that favor timeliness over perfection. Most managers believe their leaders expect perfection. This tacit belief can create peril in bad times. The most agile leaders accept that their team’s information will never be perfect, help them determine the nature of the uncertainties they face, and encourage them to tailor their decisions to the information they have.
5. Create safe “sub dialogues.” Break the fiscal challenge into discrete problems and assign small crossfunctional
groups of peers to work in a time‐bound way to generate solutions.
Conclusions
The greatest barrier to financial agility is not a lack of intelligence or a lack of time; it’s a lack of focused and unified dialogue. While the need for financial agility is greater today than at any time in recent memory, the capacity to engage an entire organization in candid, timely and wise deliberation pays returns in any season. The present study shows that quality and speed are not at odds. If leaders invest in the skills, time, and support required to allow people to hold the four crucial conversations we outline here, they can generate both profoundly wise (10 times higher quality solutions as judged by their own managers) and surprisingly rapid solutions to their financial challenges.
