Recently a colleague shared with me a ‘graph of doom’. It has been doing the rounds of the internet and shows clearly the impact of cost cutting on a major UK local authority. The projected reduction in funds is contrasted with a rise in demand of essential services and the point of crisis is predicted sometime in 2022/23. This point is when the local authority can no longer afford to deliver the services it is mandated to deliver. The simplicity and honesty provides a clarity which is hard to ignore and it is a little shocking.
The Barnet “Graph of Doom”
Of course, working through this tough financial crisis, we have all seen our share of similar graphs, though they are usually presented with an optimistic air. They obscure the truth and mitigate the impact. They tend to offer a way out, ‘If we do this or that we can avoid crisis’. It is understandable that no-one wants to be the bearer of bad news, no-one wants to be labelled as a pessimist. But whatever individual and group motivations may be, it is often surprisingly difficult to get to the truth of a situation. Business leaders need to work hard and use their experience to find the real truth.
Too optimistic and the important messages are lost and the call to action fails to ignite the organisation. Too pessimistic and the rush to act too quickly can damage businesses unnecessarily. But as we progress through our 5th year of economic downturn, options to mitigate the bad news are running out. It is possible that all of the ‘normal’ fixes have been exhausted but that doesn’t mean failure or game over, it means the game has changed and you need to play in a fundamentally new way…..you need to transform.
In the 1920’s (according to Professor Richard Foster from Yale University) the average lifespan of a US company was 67 years but today it has dropped to a mere 15 years. Estimates suggest that by 2020, 75% of the S&P 500 will consist of companies nobody has yet heard of. Established businesses can and do go under, new upstarts are disrupting markets in months not decades.
Things do change as do fortunes and rapid action is essential. If there are no other options, this is the time to understand your own graph of doom, make your plans and motivate your teams to implement with rigour, discipline and pace. It is time to exercise real leadership with real honesty.