Lessons From the Doom Loop

The conference room had that eerie quiet that follows a tense conversation. Our executive team sat at the table, a mixture of Japanese, Americans, and Europeans attempting to come to grips with the dramatic numbers in front of us. Over the preceding year, the company's revenues had dropped by nearly 30%. Three of its four profit centers were hemorrhaging money, and the fourth was struggling to break even. Our stock was taking a pounding.

It struck me then that we were in the Doom Loop--the downward spiral described by Good to Great author Jim Collins that is characterized by a parade of leaders, shifting strategies, and consistently poorer results. Having held a variety of leadership roles during my 10 years at the company, a provider of professional services, I knew that there were big problems well before this current crisis. This was not the moment of truth. Whether or not we had noticed, this was just the latest in such moments.

You may currently be in a company that is stuck in the Doom Loop, unable to flee to one that's thriving (since the job market is anything but robust). Or, like me, you may feel a sense of responsibility or even opportunity in staying. I wish my team had learned from others who had experienced a Doom Loop. Unfortunately, one of the symptoms is that you're so overwhelmed by crisis you feel there's no time to learn your way out. We learned--the hard way--that that's not really true.

>> Focus ruthlessly on reality

I noticed a disturbing trend in the Doom Loop. We were constantly overoptimistic or overpessimistic. In the beginning, we didn't want to believe the trends. We looked for all kinds of "reasons" for our poor performance: the dotcom bubble bursting, the collapse of several major markets, September 11. We hedged and hoped, and the results always came in below projections.

Only much later did I realize what happened. People in crisis are trying to protect themselves. Sales managers, for instance, want to project a positive picture because they don't want to be the next casualties. They engage in wishful thinking (at best) and concealment (at worst). As executives, we made projections based on these unrealistic forecasts. The result won't surprise you: We missed forecast after forecast.

Then a subtle change occurred that was worse than the missed forecasts. We lost confidence in our ability to plan and control the business. We stopped believing that we could get the numbers to work. A dispassionate look at the numbers for the past three to five years would have revealed the trends to us.

>> Beware the two great enemies of effective leadership: anger and fear

In the Doom Loop, what's most required is a coolheaded leader and a senior team that can stick together. The facts are almost always ugly. How we deal with those facts has a lot to do with whether they stay ugly. No two emotions are more corrosive to sound decisions and solid working relationships with colleagues, customers, suppliers, and stakeholders than anger and fear. In our conference room that day, you could sense the fear--in our language, our demeanor, and our obvious lack of sleep. Several meeting participants saw their lives' work and fortunes evaporating before their eyes. But panic was getting in the way of good judgment. It was almost as if fear had severed the connections between ears and brains so that some of us were deaf to reason.

Many of us were also becoming more and more dominated by anger. The occasional ugly confrontation in a meeting revealed only 10% of the disagreement in the group. Some began opposing ideas not because they were bad but because its advocate was someone they disliked. We spent as much time second-guessing and fighting one another as we did attacking our problems.

Only careful thought and reflection can combat these inevitable feelings. You have to ask yourself: What am I afraid of right now? How likely is that to occur? What can I do to prevent or minimize it? How are others feeling? Once you step back and ask these questions, it's wise to have a sounding board to bounce ideas off of. With the help of my personal coach, I created a group of people, largely from outside our company, whom I could call for objective counsel. They often confirmed my instincts. But there were also instances when a single word of encouragement or a different opinion clarified my thinking.

Soon after I became a vice president, I ran through all my challenges with one of these advisers. After hearing me out, he said something that shocked me: "Ted, I've never known you to be a fearful person, but you sound really frightened by this job. I see it as an incredible opportunity!" I hadn't even thought I was scared, but he heard it 500 miles away over a phone line.