Leadership in Crisis Daniel Slater



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Leadership in Crisis

Daniel Slater


Leadership and Organizational Dynamics

Dr. Etido Akpan

11/29/2012

To say that leadership is a talent doesn’t quite capture the spirit of leadership. It occurs in nature, as in the “Alpha” in a pack of wolves, or the male lion in a pride. While some people: men, women, and frequently even children are predisposed to leading, there are many people that learn to lead. Often a leader may rise to the occasion during within a situation or people may take classes and apply their lessons to their environment. But true leadership is forged by crisis. This paper will explain how a select few have led their organization through a crisis, and emerged as stronger leaders. The first example is Lee Iacocca and how he arrived to Chrysler at the brink of their failure, and turned it around. Second will be Anne Mulcahy and how she prevented Xerox from fading into obscurity and eventual oblivion. Third is an examination of Franklin D. Roosevelt’s presidency and how he led the county through a financial catastrophe while World War II raged. And finally, saving the most profound for last, Abraham Lincoln will be featured because of his efforts to not only enforce the constitutional right that all men are created equal, but also held the Union together during its bloodiest conflict ever. But to start, a profile on Lee Iacocca, and his place in history as the savior of Chrysler Corp.

As stated by Lee Iacocca himself, “Leaders are made, not born. Leadership is forged in times of crisis. It is easy to sit there with your feet up on the desk and talk theory… It is another thing to lead when your world comes tumbling down.” Lee Iacocca is a first generation American. His parents emigrated from Italy and taught him the meaning of hard work. His Father in particular was a businessman who taught his son about the responsibilities of money and the need for a strong drive and a great vision in order to build a thriving business.1 After earning his Bachelors and Masters Degrees, he began a successful career at Ford Motor Company.

He started as a trainee and soon established himself as an innovative professional, and began his climb to the eventual president of Ford Motor Company. During his tenure, he and his staff launched the Ford Mustang, which, thanks to brilliant styling and marketing, introduced a new wave of sports cars, set a first-year sales record for any model, gave its name to a generation, and landed its creator's picture on the covers of Time and Newsweek.1 After Ford dismissed him for reasons unknown, Chrysler Corp hired Iacocca as president.

When Iacocca started at Chrysler in November 1978, the company announced a $160 million loss for the quarter, the worst in its history.  Chrysler was appallingly managed, lacked organizational discipline, and operated like a series of fiefdoms controlled by different executive groups.2 He turned the company around by downsizing expenses; securing a $1.5 billion in federal loan guarantees; by selling off profitable units such as the tank division; and by introducing timely products. Just five years after Ford dismissed Iacocca, he became president, and then chairman of Chrysler Corp. the company posted profits of $2.4 billion, higher than in the previous sixty years combined.

Through his career, Iacocca developed a leadership strategy that helped him stay grounded and maintain the lessons he had learned from his Father. He broke-down his leadership imperatives into “The Nine C’s of Leadership”3. The nine C’s are a common sense approach to leading people, when our world’s moral compass and common sense fails us. Curiosity – stepping out of one’s comfort zone to listen to others challenging ideas. Creativity – leaders need to be willing to try something new. A leader needs to be able to adapt to deal effectively with change. Communication – Effective leaders confront realities, even when it’s painful to do so. They must be able to communicate truth, strategy, and invite others to share ideas. Character – leaders must know right from wrong. Reputation and character should mirror each other. Courage – the ability to sit down and talk, possibly defend what is right even when it might be unpopular. Conviction – the passionate belief in their goals and be determined to achieve them. Charisma – the quality that inspires and encourages trust. Competency – a leader has to know his job, his company’s job, and what it takes to get it done. A good leader surrounds themselves with competent people that can be problem solvers. And Finally, Common Sense – Leaders need to be able to reason and use common sense. Sending a rocket ship to Mars is going to endow NASA with billions of dollars, but isn’t going to help our country’s financial crisis. Many of Iacocca’s C’s are unconsciously evident in the next leader presented, Anne Mulcahy.

At an early age, Anne Mulcahy’s parents encouraged her to maintain equality with her four brothers. Her upbringing taught her not only to handle criticism but also to listen to it as well—an ability that has helped her to make difficult decisions.4 She started as a sales representative for Xerox in 1976, and gradually rose through the ranks to be the CEO in 2001, and then Chairman in 2002. When the Xerox board chose Mulcahy to be president and CEO-in-Waiting, no one was more surprised than her. Not only was she the first female CEO and chairman, she was exactly what Xerox needed to remain fluid and relevant. She was straightforward, hardworking, and disciplined, and she was fiercely loyal to Xerox—the company, the brand, and the people. In her tenure as CEO/chairman, she ordered a restructuring that cut annual expenses by $1.7 billion, slashed 25,000 jobs, and sold $2.3 billion worth of noncore assets to reduce Xerox's long-term debt. Mulcahy also paid a $10 million fine and restated five years of Xerox's revenues to quiet an embarrassing accounting scandal; the Securities and Exchange Commission had accused the company of bending its numbers to meet Wall Street's expectations.4 In addition to her executive acumen, she had a down-to-earth approach that resonated with her subordinates. She was able to cultivate credibility and rouse workers to support her objectives. She registered 100,000 miles to visit Xerox locations. By answering as honestly as possible, the employees had an opportunity to buy-in to the company’s revitalization.

And finally, she was able to use her sales competency to restructure the company’s customer support. Her research found that Xerox had stopped listening and lost their focus n the market. She spearheaded efforts to capitalize on markets where Xerox had a competitive advantage and thus opportunities for profitable growth.5 By utilizing charismatic leadership, Mulcahy was able to streamline the company, embolden workers spirits, and set a foundation of new direction by allotting a new research and development budget.

Under Mulcahy’s leadership, Xerox moved from losing $273 million in 2000, to earning $91 million just three years later. By the year 2005, the company's profits had reached $859 million on sales of $15.7 billion. Before her retirement in 2009, Mulcahy earmarked $1 billion annually for research and development to reinvigorate the company. Despite analysts doubts that Xerox could change, Mulcahy’s leadership directly resulted in Xerox return from the brink, and the company’s continued success as a document management company. Transitioning from one executive to another, President Franklin D. Roosevelt inherited many similar financial calamities, although on a much larger scale than Anne Mulcahy successfully had to deal with in her tenure at Xerox.

When Franklin D. Roosevelt (FDR) was inaugurated, the country was suffering factory closures, farm foreclosures and bank closures, all while unemployment soared. FDR faced the greatest crisis in American history since the Civil War. 6 To be successful, he had to reinvigorate the country and restore confidence. Within his first 100 days in office, he introduced the first of his “New Deal” programs. FDR effectively reinvented the presidency. Throughout his tenure of four consecutive terms, he worked with special sessions of Congress to pass recovery legislation such as the creation of Federal Deposit Insurance Corporation to insure American’s bank deposits. As a result, Americans were no longer scared they would lose all their savings in a bank failure. He also introduced the Security and Exchange Commission, which regulates the trading on the stock market. Banks could no longer buy stocks with depositors' money. Companies that wanted to sell shares to the public to raise money had to disclose a host of financial information to potential investors. For the first time, investors could find out if a company was worth the stock price it was asking.7 Next, he implemented the Tennessee Valley Authority (TVA), which helped farmers and created jobs in one of America’s least modernized areas. By reactivating a dormant hydroelectric plant, he was able to provide cheap electric power and flood control for the entire Tennessee River valley8. He also worked to help farmers specifically by creating the Farm Security Administration (FSA), which was able to loan out $1 billion (about $17 trillion adjusted for inflation in 2012) in aid. Additionally, FDR established the Fair Labor Standards Act of 1938, which banned child labor and set a minimum wage to satisfy the progressive-era social reformers. Finally amongst the longest-standing programs was the creation of the Social Security Administration (SSA). The SSA was established to provide old-age pensions for workers, survivor’s benefits for victims of industrial accidents, unemployment insurance, and aid for dependent mothers and children, the blind and physically disabled. Although the original SSA did not cover farm and domestic workers, it did help millions of Americans feel more secure.8

While dealing with the financial disaster. FDR also had to lead the US through World War II (WWII). When German aggression spread throughout Europe, FDR initially tried to maintain American neutrality. He signed a “Lend-Lease” bill to enable American aid to European nations at war with Germany and Italy, but after Japan’s surprise attack on Pearl Harbor and Germany and Italy’s declarations of war, FDR was President of a nation officially at war.6 He created “grand alliance” against the Axis power through “The Declaration of the United Nations”, in which all nations fighting the Axis agreed not to make a separate peace and pledged themselves to a peacekeeping organization (now the United Nations) upon victory.6 Although FDR died before the end of WWII and wasn’t able to see the fruits of his labor, his leadership helped a nation carry-on through one of its darkest periods.

The leader that guided the US through its definitive darkest time was President Abraham Lincoln. Ten days before Lincoln was inaugurated, the Confederate States of America swore in Jefferson Davis was sworn in as President. On the day he took the oath of office, seven southern states had declared themselves seceded from the Union. The prior president, James Buchanan had given up hope and declared himself “The Last President of the United States.” To say that he inherited a sinking ship would be an overwhelming understatement. To compound an already untenable situation, the House of Representatives tabled a bill that would have allowed the president to call out state militias and the Senate passed a resolution that requested the War Department lower military funding, all between the time Lincoln was elected and taking the oath of office.

This paper cannot sum up Lincoln’s contributions to keep the Union together in a few paragraphs, but by studying his uncompromising principles, we can gleam what made him a leader for the ages. His leadership is a reflection of the man. His mythical storytelling reinforced his charismatic leadership approach, but he was a leader that was unafraid to spend time in the trenches (literally) with the troops. Lincoln received negligible formal education, and was instead, a self-taught man. While suffering many defeats and failures before becoming president, he never publically lost faith in himself, and allowed his natural leadership to prevail. He was a thoughtful man and prescribed to many of the same principles and the nine C’s of Lee Iacocca, before Iacocca was born.

He understood that “human action can be modified to some extent, but human nature cannot be changed.”9 Many of the Union generals were accomplished in their own right, but didn’t have the will to move as decisively as Lincoln would have liked. When criticism mounted against Gen Ulysses Grant and his drinking after the battle of Shiloh, Lincoln was quoted as saying, “I cannot spare this man. He fights.” He demanded competency from the generals he appointed.

Lincoln’s charisma and communication skills were unparalleled and remain a lasting testament to his leadership. He was known from his earliest beginning as a storeowner to his career as a politician. He repeatedly diffused tensions with his humorous stories and often offered wisdom in the form of his country parables. His character was beyond reproach, and in truth, his reputation for honesty and integrity, even though challenged over the years, has remained unblemished. In fact, as knowledge is gained about the real man, it is largely enhanced. Myth in this case has become reality.9 The humane character of Lincoln was best demonstrated by his policy of reconciliation with the South, as expressed in his second inaugural address, March 4, 1865, in which he spoke of "malice toward none" and "charity for all.10 Any leader worth his salt would benefit by incorporating Lincoln’s principles into their toolbox.



In conclusion, this paper has detailed how four chosen leaders have responded to crisis, most of them inherited. Lee Iacocca devised a strategy of nine C’s to mold leaders. Anne Mulcahy got her hands dirty by interviewing her employees and customers to better serve the needs of the company and the customers. Franklin D. Roosevelt saved the country by implementing many important programs to help American deal with the Great Depression, and saved the world, by being a strong Allied leader until his death during WWII. Abraham Lincoln used his wit, character and charisma to lead the country back into a unified America. It’s probably best stated by Reed Markham when he said, “Successful leaders see the opportunities in every difficulty rather than the difficulty in every opportunity”.

BIBLIOGRAPHY


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1 Encyclopedia of World Biography. Lee Iacocca Biography. http://www.notablebiographies.com/Ho-Jo/Iacocca-Lee.html (accessed Nov 27, 2012).


21Encyclopedia of World Biography n.d.

 Poole, David. How Lee Iacocca Resurrected Chrysler…And its Lessons For Us. 1 7, 2011. http://www.dragoncollege.edu.au/blog/2011/how-lee-iacocca-resurrected-chrysler-and-its-lessons-for-us/ (accessed Nov 27, 2012).

3 Integratis. The 9 C’s of Leadership by Lee Iacocca . Jun 13, 2013. http://integratis.com/leadership/the-9-cs-of-leadership-by-lee-iacocca/ (accessed Nov 24, 2012).

3


4 Neumann, Caryn E. Anne Mulcahy Biography. http://www.referenceforbusiness.com/biography/M-R/Mulcahy-Anne-M-1952.html (accessed Nov 27, 2012).

54 Neumann n.d.

 Knowledge@Wharton. The Cow in the Ditch: How Anne Mulcahy Rescued Xerox. Nov 16, 2005. http://knowledge.wharton.upenn.edu/article.cfm?articleid=1318&specialid=41 (accessed Nov 24, 2012).

6 FDR Presidential Library and Museum. Franklin D. Roosevelt Biography. http://www.fdrlibrary.marist.edu/education/resources/bio_fdr.html (accessed Nov 27, 2012).

7 Ganzel, Bill. Farming in the 1930's. 2005. http://www.livinghistoryfarm.org/farminginthe30s/money_15.html (accessed Nov 27, 2012).

86 FDR Presidential Library and Museum n.d.

 FDR American Heritage Center Museum. New Deal Achievements. 2007. http://www.fdrheritage.org/new_deal.htm (accessed Nov 27, 2012).

9 Philips, Donald. Lincoln on Leadership. New York: Hachette Book Group, 1992.

109 Philips 1992

 Civil War Home. Abraham Lincoln Biography. http://www.civilwarhome.com/lincolnbio.htm (accessed Nov 27, 2012).


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