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(originally published by Booz & Company)


Leading Out of the Downturn

The most important task for corporate leaders, says consultant and author Steve Zaffron, is to reorient the minds of their employees toward a positive vision of the future.

The last 18 months have been the most trying in decades for corporate leaders. The conditions that normally make running a company, a business unit, or a team rewarding — market expansion, revenue growth, rising pay, and incentives — have been absent for most, replaced by the unrelenting tasks of survival, retrenchment, and cost cutting.

What should leaders do in this depressed environment? Strategy+business recently put the question to Steve Zaffron, CEO of the Vanto Group, a global consulting firm. In The Three Laws of Performance: Rewriting the Future of Your Organization and Your Life (Jossey-Bass, 2009), Zaffron and coauthor Dave Logan, who teaches at the University of Southern California’s Marshall School of Business, offer a set of simple rules to show how leaders and their companies can prosper, even when the odds are stacked against them. The main task, they argue, is to recognize that people normally have an unconscious, gut-level idea of where they — and their company — are at, and where they’re likely to go. Zaffron and Logan call this “the default future” and show how it is deeply rooted in people’s assumptions, hopes, fears, and past experiences. The first task of leadership, they argue, is to identify the default future, discuss it, and analyze it, and then go about reimagining — and, in effect, rewriting — the future. The book examines a series of management cases at companies around the world where rewriting the future has led to real business transformation. And the lessons are just as applicable to individuals.

S+B: The future has been looking pretty bleak for people in a whole range of industries. How does your framework relate to those who are in a bad situation?
The three laws of performance work in good times as well as bad. Sometimes the good times can be just as challenging, in the sense that people ride the wave of optimism, think things are going to be great, and don’t see the black swan sitting there. But the bad times give us fear and anxiety about what’s going to happen. We get particularly challenged by the extra emotional content.

The type of leadership that’s needed — and it’s extra-critical for the CEO who has to steer the ship, is to get people in communication about the future that they see coming at them. This is what we call the “default future,” and it’s constituted by a lot of complexity that all comes together in a certain way. This default future consists of our expectations, our fears, our hopes, and our predictions, all of which are ultimately based on our prior experience. People make decisions based on things that happened in the past, and they project those decisions into their future. It could be decisions about themselves — who they are, what they can do, what they can’t do — or decisions about the company. And this default future actually generates the level of (or lack of) individual and corporate performance. So if I see fear coming at me, and anxiety, and everything’s bad and horrible and terrible, my actions are going to be correlated to the way that world occurs to me.

S+B: The three laws of performance in your book deal with understanding — and changing — the way people think about that default future. How does following your advice change the way a leader would react in the situation we’re discussing?
Instead of this fear — “I’m cutting my budget and what’s going to happen” and so forth — I could look at the same situation and see that this is a great opportunity to create a new business model, or to cut away things that haven’t worked but that keep going on, and to actually design something new. So two people can look at the same situation and see different realities: They see opportunities or the lack of them, possibilities or the lack of them.

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  1. Leander Kahney, Inside Steve’s Brain (Portfolio, 2008): How Steve Jobs pursued his dream of bringing technology to the masses, and rewrote both his own future and that of Apple to make it come true.
  2. Dave Logan, John King, and Halee Fischer-Wright, Tribal Leadership: Leveraging Natural Groups to Build a Thriving Organization (Collins Business, 2008): How “corporate tribes” — groups of 20 to 150 people within a company — come together on their own rather than through management decisions, and how leaders can use them to maximize productivity and profit.
  3. Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable (Random House, 2007): People place too much weight on the odds that past events will repeat, when, in fact, the really important events are rare and unpredictable.
  4. Steve Zaffron and Dave Logan, The Three Laws of Performance: Rewriting the Future of Your Organization and Your Life (Jossey-Bass, 2009): Zaffron and Logan develop their system for rewriting the future and how it operates, in several case studies of multinational corporations.
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