Essential Skills: Managing a Disaster

Margin leaders must sometimes deal with no-win situations.

Leaders in the margin are more likely to find themselves at the helm of a failed initiative than traditional managers. An initiative may have looked promising early on, but new information gathered along the way or initial results from activities may alter the assessment. While wise margin leaders can often avoid clearly hopeless causes, the high-risk environment guarantees that, occasionally, margin leaders must navigate through a flawed situation with as much grace as possible. Various strategies can be employed to deal with this situation, but the primary objective should be to move on to projects with higher chances of success as quickly as possible while maintaining the important relationships that hold margin efforts together.

Stick to it. In the face of a disaster, one tactic is to see it through whatever the cost - time, expense, effort, political capital, etc. This demonstrates that you have done everything in your power to make it work and may be the more politically acceptable means of dealing with a challenging situation. Organizations and partners tend to respect the individual who does everything he or she can to achieve a result against difficult odds. Any resulting failure can be attributed to external factors (e.g. "The market wasn't right."). However, this tactic can backfire if, after expending everything you have, it fails dramatically. Partners will question the leader's judgment and capabilities. This negative effect is compounded when the leader attempts new initiatives as partners will be significantly less willing to follow the leader into future initiatives having sunk their own resources into a failed activity.

Call it quits. Another approach is to tie off the effort. While all costs incurred up to that point are immediately lost with no hope of return on the investment, it avoids the continued expenditure of resources on a low/no-probability effort. This is easier to do early in the life of a project when expended resources are less than the projected expenditures to come. However, while some may respect the decision, other partners (particularly those who have already contributed significant resources) may strongly react and their involvement in future efforts may be curtailed. With this option, failure is more likely to be attributed to internal factors (e.g. "He just didn't have the ability to pull it off"). This tactic may also be seen as a leadership failure by those who always default to the "Stick to it" option. Calling it quits is easier to apply if the leader/initiative has other successes to point to, offers other opportunities in the future, and can explain the decision from within a larger context. In this situation, the outcome is more clearly the result of good decision-making skills than leadership failure.

Sidestep. In some instances, past efforts can be tied to future opportunities despite a current failure. Resources developed, contacts made, and lessons learned during the current, failed project will help the team pursue new opportunities in related fields. A margin leader can sometimes shift the team from one project to another that is related, recovering a portion of the resources invested to date in the failed project. The success of this tactic depends on how many of the committed resources can be transferred, the probability of success for the new project, and the cause of failure. Moving everyone from one failed project to another with equally-poor fundamentals merely postpones the disaster.

Applying any of the above tactics is easier when the leader has a proven track record of success to point to and an organizational culture that accepts risk and failure as a natural part of the business growth process. Lacking both, a margin leader has little choice but to apply the "Stick to it" approach.