Have you asked yourself how some young companies have become so successful in so little time? And why so many once big players like Nokia and Kodak seem to have vanished into nothing suddenly? What did they do wrong? And more importantly: what can you do to keep your business from failing like they did?
Pepyn Dinandt has spent 30 years being parachuted into organisations in trouble. His job was to assess and understand the situation facing the business and devising effective ways forward towards recovery and success.
In his new book, Business Leadership Under Fire, Dinandt draws on his own extensive business experience and, with the help of decorated army officer Colonel Richard Westley, marries this proven expertise with the leadership insights of military thinkers to develop an imaginative and practical nine-step plan for any leader who wishes not simply to survive but to inspire and thrive “under fire”.
In this interview, I speak to Pepyn Dinandt about his learnings from dealing with businesses in crisis, and how great leaders and entrepreneurs build resilient businesses that are able to survive, and thrive through turbulent times.
Q:What is the first thing you evaluate when you see a business in trouble?
[Pepyn Dinandt]: When you look at a business in trouble, the important thing is to understand where the trouble is coming from. Critically you need to know whether it’s a restructuring or transformation. A restructuring is where you adjust structures to a reduced volume or revenue level, but in this case the business model is not broken. In transformations, you still restructure, but you are dealing with a potentially broken business model. Transformations, as you can imagine, are much more demanding and complex as you are having to re-invent the business.
Q: How do you establish the right lines of leadership in a crisis?
[Pepyn Dinandt]: In general the incumbent leadership will know there is a problem with the business. Financials may be going in the wrong direction, market share may be lost. There needs to be the objectivity to say, ‘look, something’s happening here, and it’s something bad…’ – People need to know they’re on a ‘burning platform’ as that gives the new (or incumbent) leader the chance to change themselves and take ownership of the situation. Establishing there is a problem gives you a why – it makes it very clear that things cant’ continue as they are.
As a leader, you need to get out there early in a crisis and identify the things that need to be done right now. Your team need to see you as a safe, and experienced, pair of hands. Messaging is important, and the simpler the better. In crises, people need to hear one or two simple messages to act on – not a confusing list. Through your communication, you also need to project certainty – and the fact that you have a plan (even if it’s not fully formulated). Your team need to believe that they, and you, are going to get the job done, and that your mission will be achieved.
Q: What are the key things leaders need to be watching at all times, and staying alert to?
[Pepyn Dinandt]: We are humans – and humans have a tendency to fall into their comfort zone when things are going well. Unless your leadership is very much focussed on not letting that happen, it will.
You see the real-world consequences of over-comfort in the current Russia x Ukraine war. The Russians were very comfortable in their own overconfidence – they thought this would be fast and easy. They have a huge budget, lots of tanks, lots of planes and lots of soldiers. Ukrainians have experienced Russian attacks before, and have spent their time getting more professional, better trained, and better equipped. They had to leave their comfort zone because they needed to get prepared.
In the business world, we need to focus on the 4-Cs. Firstly, Customer. You need to take care of your customer – if you’re not close to them, someone else will get close, and propose a better solution, provide more value, and take them away. Even when you’re successful, you cannot get complacent, never take your customer for granted. Secondly, Competition. We are always competing, and you should never underestimate your competition. Take a look at elite forces such as the SAS. Even though they’re very good, their whole culture is about questioning, improving, observing the enemy, and questioning how to beat them. Thirdly, Comfort. It doesn’t matter how successful you are, how much market share you have, if you’re in your comfort zone you will leave yourself exposed. Fourth, Courage. You have to be prepared to take tough decisions – you may need to let people go, you may need to restructure, you may need to break-up a business. It is cowardice that stops leaders from doing this. Courage also links to decisiveness, which is one of the key attributes of great leaders. Every company has points in their journey where they need to make tough decisions – a new competitor may come along and disrupt your market for example- and you have to do something about it. You can’t kick the can down the road. Cowardice pushes the day of reckoning out, decisiveness brings it closer.
Q: What are some of the attributes of great leader?
[Pepyn Dinandt]: Great leaders know the details of their business. They know the outward perspective, the inward perspective, customers, competition, and the mechanisms of the company. They know the key products, processes, people, and they build a platform of knowledge that allows them to respond to new information and make decisions. Great leaders also detach themselves from heuristics and see past the comfort of, ‘we’ve always done it this way…’ they realise that change is needed. We see this in the military too – a fast-moving environment where you need good-knowledge of the enemy, good knowledge of your own capabilities, and need to look at every decision point fresh and decisively.
Q: How can we avoid making crucial mistakes?
[Pepyn Dinandt]: As Carl von Clausewitz said, ‘no plan survives first contact with the enemy.’ It’s not about having a plan, it’s about planning. You also need to remain close to the action. The military have a great term for this OODA, observe, orient, decide, act. When you are in a fluid situation, things change, and you have to adapt quickly. You cannot freeze into inaction.
Leaders need healthy egos. They need to be aware that they are not always right, be aware of their limitations, but also – importantly – they need to know their strengths. Leaders with neurotic deficiencies are often the reason why businesses fail or don’t’ stick to plan.
Q: What are the personality types of great entrepreneurs?
[Pepyn Dinandt]: You become an entrepreneur, not by intent, but by accident. It may be that you see a need in a market and decide to act on it. You see all kinds of people – those with huge egos, those with no ego, and those in between, who step-up to fulfil or serve an unserved need. Those for me are the true entrepreneurs- people that just start building, perhaps even without a plan, they just do it. Look at the most famous ones…. Jeff Bezos, Steve Jobs, they never went to shows or to training, they just got on with it.
There are however certain must-have attributes that successful entrepreneurs all share. They know their business very well, they have clear ideas and goals, they are courageous, authentic, fight for what they believe in, are great at building teams, and attracting people, and are great communicators. They can also delegate well.
These aren’t learned characteristics before they start, they develop over time. It’s also interesting that they’re not the ‘Mr. Nice Guy’ character – they have a vision, a set of beliefs, and will always say, ‘no, this is the way I see things…’ They will fight for the way they see the world.
Q: How does organisational structuring contribute to businesses you see in crisis?
[Pepyn Dinandt]: If you go into a business and see an organisational handbook… you’re in trouble. When people spend too much time drawing up organisational rules and charts, they’re spending less time with customers. It’s a natural tendency we see time and again – businesses get successful, and decide to optimise and organise – and hierarchical structures are the death of flexibility, they are the death of agility and remove the distributed leadership needed to make business work. When I have had to transform organisations, one step I always think about is breaking-up large structures into smaller, more nimble units, with leaders heading those units who are empowered to do what they need to do.
Q: What are your views on company culture?
[Pepyn Dinandt]: Organisations have a culture, a way of doing things. The older the business, the more ingrained the culture will be. It’s very hard to change culture, but more palatable to take the best elements of culture that exists and focus on those. The base that made the company successful… the way they did things when the company was doing its best work. You have to think about what the good things are at the company – and then overlay a performance culture that allows the company to play to its strengths, be aware of its weaknesses, and have close relationships with customers and an understanding of competition.
Q: What do you wish businesses, and leaders, did better?
[Pepyn Dinandt]: Leaders need to really get into the detail of the business, they need to know their business, customer, environment, and competition. You can’t go into business and be successful if you don’t know your business, competition, and customer.
You also have to keep your business in what Jeff Bezos calls day one state. You have to keep your business on its toes, you have to be high energy, and push your people and business to do better. You have to encourage people to improve, to question, and realise that if there’s a better way… someone else is going to do it and steal your lunch!
Know your business and always keep them on their toes. Never let them fall into complacency, into a day two business state. They’d rather always keep them young, energetic, on their toes and hungry.