Latest / Fit Happens: Why CEOs and Leaders Succeed or Fail / What Wildfires Can Teach Executives About Leadership
Transcript
- Jason Baumgarten 00:00 August 1949, Man Gulch, Montana. Fifteen smokejumpers land near a wildfire and join a fire guard already on the ground. Sixteen men. They expect a fire that they can contain. Then the fire cuts off their route towards the river. Jason Baumgarten 00:21 They turn uphill, the fire gaining on them. Their foreman, Wagner Dodge, tells them to drop their equipment. Then he does something extraordinary. He lights another fire. Imagine seeing that while you're running uphill for your life. Jason Baumgarten 00:39 The man who's responsible for getting you away, your leader, is starting a new fire. But Dodge is doing something in creating an escape fire, burning away the grass so the approaching blaze will have less fuel. He calls the men toward the burned ground, but nobody joins him. He lies down right there in the smoldering grass and survives. Two others find a way through the rocks near the ridge, and 13 men ultimately die. Jason Baumgarten 01:13 45 years later at South Canyon in Colorado, 14 more firefighters die trying to escape a wildfire. Karl Weick links the disasters in his essay "Drop Your Tools." Across two fires, 27 lives lost. And for those of us who study leadership, a recurring why was the equipment that was built to help fight fire so hard to abandon when the men were trying to escape it? There are multiple leadership questions inside that story. How did Dodge recognize that the plan had to change so completely? Jason Baumgarten 01:51 Why couldn't he get anyone to follow him? And why, 45 years later, were firefighters confronting that question again? I'm Jason Baumgarten, and this is Fit Happens. Jason Baumgarten 02:16 Today, I want to examine a phrase that sounds reassuring in a lot of leadership discussions, that a leader is crisis tested, or a crisis leader, or a leader for wartime. You can understand why many investors and board members want it. When the stakes are high, this kind of battle tested experience can matter. You want somebody who's felt the pressure, made difficult decisions, and carried unbelievable responsibility when, frankly, there often wasn't a great option. Jason Baumgarten 02:50 But there's an important question missing by all of that: tested by what? A cash crisis? A product failure? A collapse in employee trust? A change in the business model? Macroeconomic conditions? A global epidemic? Those situations can all produce incredibly sleepless nights. Jason Baumgarten 03:17 But it doesn't make them the same leadership assignment. So before you evaluate the person and call them a crisis leader, or better under pressure, really describe the problem. How soon could the damage arrive? How severe could it be? Do we know the answer, or is the problem pretty ambiguous? Jason Baumgarten 03:38 Sean Hanna and his colleagues developed a conceptual framework for extreme context in 2009 that helps us organize some of those differences. But then they added a practical question. Do you actually understand the crisis? Or are you still trying to figure out what exactly it is? Two crises can share a word and nothing else. Jason Baumgarten 04:01 We all felt that in the beginning of the COVID 19 pandemic, where we weren't actually sure what we were facing, and it took time to emerge. In 2008, Boris Groisberg and his colleagues examined something very unusual. They looked at star equity analysts who changed firms, and on average, their performance declined immediately. And that decline persisted for multiple years. And it was pronounced when they moved to less capable firms or moved without a big team. Jason Baumgarten 04:34 Those who moved with a big team or to stronger firms showed little or no significant decline. Now, analysts are not CEOs, but if a star analyst's performance depends on the team and the firm, you should ask what a crisis leader's success depends on before assuming it will travel intact, or even more so, be more helpful. Now, this connects to an earlier episode we did about the gap between capability and credentials. A visible achievement gives us something concrete to evaluate, but the temptation is to let it answer more questions than it really can. Jason Baumgarten 05:10 At a time when crisis experience is being asked for more and more, the evidence of what it is is worth examining, especially when someone has handled a similar threat with similar resources and can explain what they've learned. But the question is whether that experience actually prepares them for the assignment you have. So what happens when the situation changes? Let's start with that situation. There's a difference between a problem becoming more severe and a problem becoming something totally different. Jason Baumgarten 05:42 Suppose a major supplier misses a delivery. You know the exposure. You have alternatives. You can pay more, you can shift production. You can tell customers there will be a delay. Jason Baumgarten 05:52 You can pay for air freight over ground freight. None of those choices is pleasant, and some of them may be financially difficult. But you understand the problem you're solving, you understand its general magnitude, and you understand the likely consequences. It's a crisis, but one you can define. Now, suppose another supplier stops delivering, and another, and their explanations aren't making sense to you, and you can't tell whether you're facing a large but temporary interruption or some sort of permanent loss of capacity, or maybe something even worse. Jason Baumgarten 06:28 You still have to act, but now your job has shifted to discovering what the problem is. Now, those two situations at the surface may seem very similar, but they require very different skills and very different leadership models. The earlier Mann Gulch analysis, which was published in the early 90s, explored how shared understanding can collapse along with a structure that holds a group together. He called it a cosmology episode, when even your usual ways of explaining events just stop working. It's historical interpretation, but the question matters. Jason Baumgarten 07:08 What happens when people can no longer agree on what is happening? Michelle Barton and Kathleen Sutcliffe returned to wildland firefighting in 2009. They interviewed 28 people involved in the work. Noticing warning signs wasn't enough to change a course of action. Voicing concerns and actively seeking other perspectives appeared to help people reconsider it. Jason Baumgarten 07:32 But hard to do when you're running for your life. Now, a boardroom is not a fire line. But ask yourself, what happens when someone sees a problem? Do they talk about it? Do they gather different points of view? Jason Baumgarten 07:45 Does anyone investigate? Or is it a curiosity that you move on from? That supplier warning we talked about may already be in someone's inbox, and your next useful move may be to call the person who sent it and learn more. Now some anomalies really are noise. They're not real crises. Jason Baumgarten 08:05 The danger is making the explanation impossible to challenge. If every fact can be made to fit the original story, it's hard to figure out what's wrong. So the first question I'd ask under pressure is simple. What are we seeing that our current explanation doesn't account for? Put that on a weekly operating review regularly. Jason Baumgarten 08:26 Give the teams, your teams, a chance to practice answering it when the cost of speaking up is lower, and it becomes a learning muscle. If sales are down, does your explanation really fit, or is it just making us feel better? Now let's talk about expertise. In 2009, two researchers published a paper about when intuitive expertise deserves our trust. They approached the subject from different traditions. Jason Baumgarten 08:54 One focused on errors in judgment, the other on how experienced people make effective decisions in demanding settings. The commonality was that reliable intuition depends on an environment with learnable regularities and enough opportunity to learn those regularities through experience and feedback. But they warned that subjective confidence isn't a dependable measure of accuracy. That's a useful distinction for anyone who's ever said, I've seen this before. Maybe you have. Jason Baumgarten 09:22 But the question is what parts you actually recognize as being similar. A seasoned retailer may have excellent instincts about inventory or store operations, but that doesn't automatically make their intuition about a new geopolitical disruption to the supply chain equally reliable, even if the symptom they're seeing may look similar. A promotion can give you feedback in days. An acquisition may take years, and it's hard sometimes to separate the learning from the noise. You might have run hundreds of promotions and made only a handful of acquisitions, and those are different opportunities to learn. Dodge's escape fire depended on understanding of how fire behaves. Jason Baumgarten 10:07 He used his knowledge differently when the original course of action became untenable or too high risk. But knowing what to change is only part of the difficulty. In his famous "Drop Your Tools" essay, Weick offered several possible explanations. One was identity. A tool can represent what makes you useful. Jason Baumgarten 10:28 Set it down and you've given it up. The firefighters were clutching to the tools as part of their identity. Think of an operator who cuts costs, the founder who ships product, the deal maker who closes deals. If you stop asking them to do the thing that makes them successful, because it's a different situation, a crisis, you're asking for something more than a tactical judgment. Jason Baumgarten 10:50 You're asking them to trust that they still have something to contribute without clutching their tool, their go to activity. And you're doing it in a moment when the pressure's on. Imagine a leader whose greatest strength is speed. Now the cause of the problem is unclear. Jason Baumgarten 11:07 Investigating feels like a failure of nerve, a failure of action, an undermining of that greatest strength of speed. Take the consensus builder, excellent at bringing people along. But maybe this time waiting for board agreement could close the fundamental windows. We have to act, to do something about the crisis. Neither of these leaders needs a new personality reset. Jason Baumgarten 11:30 But both need to recognize when their strength requires a totally different reality, and they need to rely on somebody else's. So ask yourself, am I choosing this response because the situation actually calls for it, or because it's a response that I feel comfortable with, or that makes me feel most competent? The organization can also reinforce exactly the response the leader needs to question. In 1981, Barry Staw and his colleagues described a tendency for threat to narrow information processing, concentrate control, and encourage familiar responses. It's called threat rigidity, and recent reviews suggest that it remains a problem. If a practiced response fits the problem. Jason Baumgarten 12:16 Coordination and clear authority can be enormously valuable. You don't want everyone inventing their own evacuation procedure if you know exactly what you're dealing with. But when the facts no longer fit the plan, tightening control can actually make that harder to discover. In 2010, Ranjay Gulati and his colleagues reported analysis of hundreds of public companies across recessions. Only 9% met their standard for flourishing afterward, improving on their earlier performance and beating industry rivals on sales and profit growth. Jason Baumgarten 12:50 The most promising strategy combined operational cost savings with investment in future growth. Perhaps not surprising, aggressive cutting alone and aggressive investment alone had lower odds of success. This is just the evidence from the recessions. It doesn't mean it works in every crisis. But picture that first emergency meeting. Jason Baumgarten 13:13 The invitation list gets smaller. Updates are shortened. Someone decides the CEO shouldn't be distracted by conflicting reports or too much data. And a person closest to the problem now has to pass information through other people before it reaches the CEO. And we've already covered on another episode how much truth reaches the CEO. Jason Baumgarten 13:36 Now everyone believes they're helping. And the result can be a leader receiving a very clean picture of a very messy reality. The interviews done in this research point to voicing concerns and seeking other perspectives as a way to reconsider a course of action. Often you have to separate who's deciding from who can contribute information. The finding is theirs, the meeting design is mine. Jason Baumgarten 14:02 You can have one accountable decision maker and multiple direct channels for facts, unwelcome or otherwise. You can set a short deadline and still ask someone to challenge what your working explanation is, to see if the facts fit the crime, so to speak. High reliability organizations add another principle. They let relevant expertise guide operational decisions when the situation changes, each, even when that expertise sits below you on an org chart. Jason Baumgarten 14:30 All too often we hear the refrain that the important people weighed in, that management rewrote the employee handbook, that somebody who's an expert didn't really get to opine on it, because the people who were in charge did. But the reality is we often want the expert, even if that expert might be people on the front lines or people who challenge the elements of that particular decision. So here's what that could sound like. We're taking this action now because this is a great immediate risk. These are the two things, though, that we don't understand. Jason Baumgarten 15:11 This person owns getting those answers. We'll review it in six hours, or sooner if either condition changes, and rehearse the change in conditions before it happens. In a leadership working session, give the team a problem and let them develop a response. Then introduce a fact that undermines their core assumptions. What happens next? Jason Baumgarten 15:32 Did they revise the plan, or spend the rest of the session explaining why the new fact shouldn't count? I know what most of us would do. Practice changing direction together, including the explanation people need when the instruction we gave yesterday doesn't fit today's knowledge. There is a responsibility for the board here too. If directors ask for candor and then punish every expression of uncertainty, they're teaching their management team and their CEO to conceal it. Jason Baumgarten 16:01 This often happens when boards focus on process over content. A board can demand action without demanding that someone pretend to know more than they do. Now, that brings us to the audience. In 1985, James Meindl and his colleagues examined what they called the romance of leadership across work. Jason Baumgarten 16:20 They explored how readily we use leadership to explain organizational outcomes, especially exceptional ones. Later replications have challenged parts of the account, including whether crisis itself strengthens the effect. So this is not evidence without contest. But it turns out that in crises, charismatic leaders emerge as being higher rated than leaders emerging outside of crisis. The important word here is rated. Jason Baumgarten 16:51 That doesn't make crisis leaders frauds, but it gives you a reason to examine the story alongside the results. You can distort this before you interrogate anyone. If you decide the last crisis was won by one person's judgment, you might write a specification for that person and overlook the systems, or the team, or the particular dynamics or assets that made that outcome possible. Suppose a company survives a severe downturn. Its CEO acted decisively. Jason Baumgarten 17:21 Good. Now ask what those decisions contributed. How much protection came from cash accumulated before the downturn? What did the team recommend? How much cash was actually needed? Jason Baumgarten 17:32 Was there enough before the cash call happened? Which risk did the leader actually reduce, and which did they just happen to escape? The same discipline applies when the outcome was bad. What alternatives were available? What could reasonably have been known at the time? Jason Baumgarten 17:49 What happened after the leader discovered they were wrong? That applies to this episode, too. We've selected the fires for their tragedies and highlighted the winners. Neither tells the whole story by itself. Let me make this concrete with a hypothetical example. Jason Baumgarten 18:05 A CFO helps steer a company through an urgent liquidity crisis. She establishes a small decision team, tightens approval of spending, and makes a ton of difficult trade offs quickly. The business stabilizes. She's a hero. Later, at another company, employees raise concerns that senior management has been ignoring serious problems. Jason Baumgarten 18:27 She reaches for her tried and true approach that has served her well. She tightens the circle, ratchets down control, and ensures that fewer people are involved. The small circle was the tool that worked for her in the crisis. Being the person who could make the hard call was part of what worked. It becomes her identity. Jason Baumgarten 18:48 She reaches for it again. Now, some of that structure may still be useful. Someone must be accountable. Facts need to be checked. People need fair treatment. Jason Baumgarten 18:56 But if the central problem is that employees don't really trust the people making decisions, concentrating the response with an even smaller group of leaders can deepen the distrust itself. The situation called for a different response. Credible ways to hear concerns, appropriate independence, clear communication about how the company will establish the facts and act on them. She can preserve the discipline that helped her before. Jason Baumgarten 19:22 But changing who the stakeholders are, who participates, what information travels, and now people can see that the process deserves their trust. Now imagine interviewing her after these two episodes. I would be actually less interested in whether she could defend the first instinct than whether she could explain how she recognized its limits. What did she initially misunderstand? Jason Baumgarten 19:44 How did she see it? What did she change? That's where the learning becomes real and visible. The first crisis gave her some experience, but the second actually helps you understand what she did with it. Applying the same playbook a second time in a different context is not actually a good recipe. Jason Baumgarten 20:04 So keep asking candidates about crises they've had. Don't just stop with some polished account and somebody looking like they're wearing the cape and holding the trophy. Ask them to tell you about a time when their experience led them to the wrong answer. What suggested they were wrong, and how did they change course? Listen for that mistaken assumption, that learning shift, the person who challenged it, the data that made them question it, something the leader had to give up, and a change in behavior that they had to take afterwards. Jason Baumgarten 20:36 Be very wary of the leader whose only mistake was failing to appreciate how right they were. And ask them what they had around them, which people, which resources, which relationships, how much time, and try to understand if the context tracks. Now someone who can name that support around them is really communicating what they needed to be successful. And that's useful information for both of you. Jason Baumgarten 21:01 Give them your actual context. Ask them to apply the response, what they would repeat, what they would change, what they would need to know. Eventually, all leaders have to make a call. You're looking for a clear recommendation connected to explicit assumptions and a responsibility, and a learning aptitude for updating both. Then you want to verify the account with the people who were actually there, who are in the room, and really verify what the leader knew, how the challenge was received, what did it feel like in the room? Jason Baumgarten 21:31 How was the decision arrived at then? The hardest part is, did that leader build resiliency into the organization, or were they the hero that had to personally resolve every issue? There's another way to read the Mann Gulch tragedy. Dodge's solution worked for him, but it didn't become a shared response. Jason Baumgarten 21:52 We should be cautious about judging terrified people from a comfortable distance. Communication, trust, terrain, and the speed of events all matter. But the question for us remains. Can people understand and act on your change of direction? It isn't enough to be the first person to see that something must change. Jason Baumgarten 22:10 Leadership has an obligation to help others make that transition too. So I'll give you a 24 hour challenge. So in the next day, I want you to try this and think of it like your very own drop test. Take one consequential decision that you're currently committed to. Write down the assumption that needs to be true to make that decision accurate. Jason Baumgarten 22:37 Then write the evidence that would make you change the action, who you would have look for it, and when you would need to receive it. Include something that can still be reversed. Some choices can't be undone, but you may still be able to limit your exposure. So have a go at it. See what you learn. Jason Baumgarten 22:57 You might learn that everything's accurate and tracking, or you might find out something new. Or frankly, you may just teach the team to look at things a little bit differently. If you can't name what would change your mind, pause there. Perhaps it's a value that you don't want to compromise. Jason Baumgarten 23:17 Perhaps the evidence is hard to obtain. Perhaps you've just simply become attached to your decision. Ask a colleague if you have to, what do you think I'm least willing to reconsider about this, and let them finish. Jason Baumgarten 23:32 Then ask yourself, if this decision turns out to be wrong, what would I have to stop believing about myself? Perhaps you're the person who's always spotting the deal, or the one who never hesitates. And if the answer touches something central, you've probably named a tool that you find hard to put down. Finally, look at a recent decision record. A couple of decisions you've made recently. Jason Baumgarten 23:57 Can you track down the assumptions, the alternatives, and the concerns considered before the outcome was known? If not, try to get better the next time. Now I want to return to Dodge, but without turning a tragedy into some tidy podcast story about a hero that knew better. He found a way to survive, he couldn't bring others into it, and both belong in the story. For leaders, dropping your tools means being able to release a method you've trusted when the situation no longer supports it. Jason Baumgarten 24:27 And it means building enough understanding around you that others can move swiftly with you. Your experience still matters. So does your responsibility. The commitment you have to the people depending on you is important. What may need to change is the way you fulfill that responsibility. Jason Baumgarten 24:46 So we'll return to that question. What makes it so hard to let go of something that once helped you? When someone says they're crisis tested, ask them what they've learned to put down. And then ask yourself the same question. I'm Jason Baumgarten, thanks for listening to another episode of Fit Happens.