While a few companies in Silicon Valley and other industries are enjoying a boomtime (perhaps another bubble?), the situation for leaders in most U.S. companies is very tough times. They are caught in the jaws of increasing costs and still slack demand with little growth. These elements combine to create a very challenging business environment, in which leaders are still being asked to produce higher profitability on increased revenues.
I want to comment on what constitutes a "good leader" in these conditions. The demands on leaders in this situation are different from what is expected in more bouyant economic times. This can lead to a vicious cycle that surprises the leader who thought that he/she was "doing the right thing."
Here's how it happens:
The top quality that the corporate boss is generally looking for in a leader reporting to them - especially in challenging business conditions - is someone who can reliably deliver the results that she/he commits to. Someone who will "commit and deliver." This is always a very important quality, but, it is magnified in importance during tough times. Often there is very little concern on the part of the corporate boss for how the results are accomplished - or sympathy for the difficulties that the leader is experiencing - many of which can be coming from an uncontrollable external environment. This can have a strong impact on leader behavior. When a leader is primarily oriented to meeting the needs of the corporate boss under these conditions, many become very conservative in what they will commit to, because the downside penalty for missing a commitment is so steep. They will also consider a range of options to produce results that they otherwise might not - including dramatic downsizing and spending reductions which, while potentially harming the long-term prospects of the organization, and having adverse consequences for the affected individuals, will enable the expected results to be delivered for the next quarter.
Similarly, members of the leader's organization are generally looking for someone that they can trust and rely upon. Someone who will ensure, as his/her top priority, that the organization survives in tough times. They are leery of the leader who, while perhaps being inspirational - is perceived as putting the organization (and thus, its members) at risk. Again, these expectations may cause the leader to become quite conservative in what she/he takes on. The consequence can easily be that the short term spending is reduced, and initially new hires are stopped. Then, if results do not improve, cuts are needed and start to be made.
This sequence, which was initially driven by the leader's desire to preserve the organization, ironically, often starts to erode the trust of the organization members. Commitment and performance start to decline. It becomes harder and harder to produce the results - which, going back to the earlier comment about the corporate boss - results in less being committed. As less is committed, the corporate boss starts to have an issue - even when the lower result is delivered. That's because the expectation is increased revenue and profit.
The moral of this story for leaders is that they really need to think hard about which behaviors they are going to select in tough business times. The obvious, "conservative" route can turn out to be even more fraught with peril than staying with a more proactive business strategy focused on investment and growth.