Leadership in a Down Market

There is little debate that current commercial real estate market conditions are rough…so rough in fact, that many formerly well thought of brands have not survived the downturn. Regrettably, there will be more casualties before we see the proverbial light at the end of the tunnel. While I’m sympathetic to those who have suffered emotionally and financially as a result of the times we’re in, the harsh reality is that their suffering has less to do with the state of the economy, and much more to do with how they chose to operate their businesses. In the text that follows I’ll shed an uncomfortable, but accurate light on what has become an altogether too common excuse…the economy.

I don’t at all mean to sound callus, but businesses prosper and fail in any economic cycle. It just so happens that when things get really tough, businesses that have weak leadership at the executive level are weeded out much more rapidly. It doesn’t really matter what’s going on with the economy, businesses with sound leadership will find a way to navigate whatever the market throws their way. The economy doesn’t force an enterprise to become bloated, over-leveraged, over allocated or under diversified. The economy doesn’t force companies to cease managing the balance between risk and opportunity, supply and demand, or to stop being innovative.

The simple truth is that companies with sound leadership don’t get caught-up in the irrational exuberance and run-away emotions fueled by overheated markets. Smart leadership understands that markets are cyclical, and they plan and operate accordingly. Smart companies don’t stop innovating just because times are good, they don’t stray from sound fiscal prudence just because capital markets become frothy, and they don’t deviate from their values and vision. The economy isn’t an excuse for success or failure, rather it just is what it is…

Maggiacomo’s Moral: turbulent markets require steady leadership, quick and decisive action, and the ability to do the things that others either don’t or won’t do in order to reamain sustainable.