Leadership is all about the hard stuff

Looked at from below senior leadership can seem easy. Unlike those toiling at the coal face, you have the power, you have the resources, you have support. There are days like that when everything falls into place and decision-making is easy. But those days are not that common. Mostly it’s a struggle to get things done. And oddly enough that is as it should be.

Why? Because the role of the senior leader is to make the really hard decisions, the ones where often you are choosing the lesser of two evils, where you are operating in the dark, in a future you can only guess at. I’ve been reminded of this in my conversations with leaders over the last few weeks where we have been discussing two issues where the future is unclear.

“It’s all very quiet at the moment”. The Q2conundrum

I’ve heard this from companies large and small, across most business sectors. Most people had a good Q1, some people had a very good Q1. Generally, everyone was on or above budget. Companies have gone into Q2 with healthy sales funnels and enthusiastic salespeople. Then as one CEO said, “things seemed to fall off a cliff.” It’s not that the funnel has disappeared; what it has done is go backwards. The projects are still there, (maybe) they are going to be done, but not just yet, maybe not until Q3. Q2 budgets are looking strained. “We can make Q2 but only by clamping down on any spend.” And then there is the summer, for Europe at least, the first two months of Q3 are always slow.

Is this the moment to start seriously reducing cost or is this just a temporary blip? What is causing what is happening in the market? How long can we wait before we take action? There are no good answers to these questions. There are no simple answers. You can (and I hope you do) do the research and that will give you some data points but the problem you face is that the biggest driver is missing.

When we talk about cause most people frame it as economic uncertainty. There are international issues with questions over China and the US economies, The Ukraine war goes on (though mostly now priced in) but the pressure on the local consumer is compounding uncertainty. And uncertainty is an emotion, not a hard fact. That is what is holding people back from committing, coupled with pressure on costs that are making margins look tight. If you can’t read the future, then better to hunker down and not spend. My guess is that we will see a lot more tightening come Q3. This is where CEOs earn their money. There are no easy choices.