Leaders always have to assume many roles, given the many changes in the business landscape. Recently, pro-growth leaders have found themselves preaching pro-austerity. While their role will naturally reverse again once the business upturn is felt, it is wise to hone the skills of role reversal as a corporate "self-checking" strategy.
By nature, leaders are pro-growth. However, following recent major busts, many have felt compelled to reverse themselves and to argue for opposing strategies of consolidation. From the sub-prime crisis back to the dot-com bust to the Asian financial contagion after devaluation, we should recognise that the austerity experts in the US and Europe, in particular, were in fact the same individuals who presided over the over-leveraging and expansion which precipitated the bust to begin with.
In concept, there is nothing wrong with allowing these individuals to analyse and judge the very ills that were brought about by their own doing. Business figures implicated in the bust even showed up afterwards as government officials, intent on designing new regulations to curb the next onset of trouble. These leaders may have overplayed their hands; overextended their empire and caused the collapse. Nevertheless, one must conceded all power to them for having escaped the bust without litigation while managing to end up in a new role that may be considered constructive for the recovery.
In defence of these leaders, part of the blame has fallen on the bubbly sentiment of the time. GM executives must have felt right about hawking oversized gas-guzzlers yielding rich margins some years back. But with no new automobile options on hand to cushion the sudden economic downturn, the once mighty empire unfolded rapidly.
During the boom there was overt overconfidence in expansionist executives. Recognition of risks and downsides were relegated only to the retinue of journeymen accountants and lawyers. With everyone caught up in the upswing, any caution or advice was not surprisingly drowned out or dismissed. The watchdogs did not, or could not, do their rightful jobs.
In hindsight, it is clear that companies should have made a conscious effort to give real credence to voices of caution in times of exuberance. Opposing views and orderly due diligence should have been handed to, and presented and defended by, officers of comparable stature to those caught up in the stampede. Companies are now, more than ever, compelled to assign and authorise such vetting voices to offer balancing views.
It is relatively difficult to find senior executives with such cautionary inclinations to round out the executive team. Companies may need to assign high-growth members to role-play the opposition. This concept of mandated role reversal may not be widely practised at present in the corporate world. But given the volatile and rapidly changing nature of business cycles, experience gained in role playing and role reversal could well serve as an important indicator to distinguish one executive from the next.
As businesses now have to move fast to cope with a fast-moving landscape, it is imperative that the executive team is not only well balanced in their abilities, but also that it members are capable of being sufficiently flexible to take up new, assigned roles. Ready or not, the time has come for many companies to look seriously at instituting this job-expanding role-reversal practice as part of corporate policy.
Don Bhasavanich is a councillor of the Thailand Management Association. Follow his articles in Hi! Managers on every first Wednesday of the month.