These days there isnt a chief executive on the planet who isn't conscious of the extent to which terrorism can completely reshape, if not destroy a company — even an entire industry. The big question: what can a CEO do about it? Thats what a gathering of top executives met to discuss at a Fortune Magazine conference on leadership in New York this week, and their conclusions were not encouraging. When youre in a fixed — and very high cost — business, like airlines for instance, you can't afford not to know when or where or how big the next hit is going to be. All the management tools from every consultant with a hot book wont help you solve for X when theres no constant. Says economist Larry Goldstein, president of the Petroleum Industry Research Foundation: "We know where we are, but we dont know where were going."
Todays pervasive sense of uncertainty has changed the corporate landscape forever. Dealing with terrorist threats themselves is relatively straightforward, although it may require American companies to be more open and collaborative with each other than they are used to. Ambassador Paul Bremer, former chief of the State Departments office of counter-terrorism, says companies need to rethink the contingencies for a variety of disasters, from workplace violence to tainted products and industrial accidents. "If you handle an incident well, there should be minimal impact on how the company is perceived," says Bremer. "If you dont, then both the brand and the CEO are at risk."
Much more difficult is how to lead a company through these uncertain times. Being a CEO has always been tough, but as the parade of corporate top guns at the Fortune conference attested, its never been tougher. Take Gordon Bethune, CEO of Continental Airlines. By most accounts, Bethune was a corporate hero prior to Sept. 11. When he took over at Continental in 1994, he set a simple goal: be on time. From that flowed a host of seemingly conventional values that worked magic on the company. On Sept. 10, the airline was first in on-time performance, first among customer surveys and among the top 20 most desirable places to work in the Fortune 500. Five days later, Bethune had axed 12,000 employees, been pilloried for not giving up more of his own compensation sooner, and accused of overstating the airlines woes just to get a government bailout.
It doesnt matter whether Bethune is good or bad, right or wrong. The fact is, his order was jeopardized by circumstances beyond his control. Gary Hamel, the uber-strategist who moderated the Fortune conference the way a Baptist minister rails against booze and babes, warns that "we have approached the limits of manageability."
So how to lead in the era of uncertainty? New York mayor Rudy Giuliani told the Fortune group that "whats important about leadership is knowing that youre right." The problem is, respect for freedom and democracy dont do much for a companys bottom line. And even if there were no terrorist threat, todays world is too complicated and too global for know-it -all CEOs. Information moves too fast for anyone to juggle the demands of different cultures, currencies and markets — and keep shareholders happy: last year 22% of Fortune 500 chief executives were drummed out of office. Says Hamel: "No single person has the bandwidth to run a global company any more."
The answer to thriving in a terrorist world is one part Bethune, one part Hamel. The Bethune part is simple: stick to basic values (eg. the customer comes first, baggage handlers deserve the same respect as the chief financial officer, no profits are worth damage to the environment, etc.) and demonstrate them (forego a chunk, if not all, of your multi-million dollar compensation when you have to lay off thousands of employees).
The Hamelian advice is much tougher to carry out, because it means that if companies are to thrive with the twin challenges of globalization and terrorism, the CEO can no longer afford to be the man behind the curtain, pulling the levers of power all by himself.