Ernest is a well-known name in Belgium, by the name of the founder of Solvay in 1863, one of our most respected Belgian industrial multinational companies. But our partnership has been named after another Ernest, Sir Ernest Shackleton. This Irish Antarctic explorer led three British expeditions to the Antarctic. Particularly the Trans-Antarctic (Endurance) Expedition (1914–16) that he led, is a compelling story of leadership when disaster strikes again and again. This story and his leadership is so resonant to our moment, that we borrowed his name.
Consider just a handful of recent events: the financial crisis of 2008, the euro crisis in 2011, the Covid crisis that has hit us in 2020, but also the environmental challenge that is a growing concern to all of us. Constant turbulence seems to be the new normal, and effective leadership is crucial in navigating it.
Shackleton exemplified this kind of leadership for almost two years on the ice. What can we learn from his actions and translate to our turbulent environment?
- Nowadays one crucial leadership quality is the ability to challenge conventional business approach to find a new one that’s more effective, given the new circumstances.” This applies not only to business models, but also to financing models. Many companies have traditionally been financed by banks. Bankloans are indeed a cheap and relatively flexible way to get funding. But banks are faced with unprecedented challenges, from low interest rates, new digital businesses emerging rapidly and other such as non-food retail under tense pressure, but also from increasing regulatory requirements. They are not always in a position to support their clients anymore. This leaves finance directors with a totally new situation of having to find alternative channels to get funding. These alternative funding providers are eg: loan funding platforms, invoice financing specialists, private debt groups, public finance institutions,… What we notice is that CEO’s and CFO’s lack information on these alternatives, don’t know their requirements nor how to approach these players.
- Another key quality of leaders is building unity and commitment with their team, but also with their company stakeholders. When there is alignment, leaders find that people are not just with them, but fully endorsing a shared vision reality. As Ernest Shackleton showed, alignment doesn’t come automatically it needs debate, communication and fostering. He made sure team members could come to him with concerns and had an “open-door policy” long before the term was coined. Without people and stakeholders, a company will never reach its goals. So, leaders keep investing in their financial stakeholders by presenting and explaining their company strategy, position, business plan strengths, but also challenged risks. It will prove a great investment to get people and financial support in return.
- Making the tough decisions. In exceptional circumstances leaders will need to make these tough calls, not pleasing all, but accepting increased risk to adapt to the new environment. Too many leaders chose the candy-coating, in an effort not to upset others or lose status in the eyes of their followers, the delay often does far more damage than whatever fallout they were trying to avoid. In fact, hard decisions often get more complicated when they’re deferred. In a 10-year study of more than 2700 leaders by leadership and strategy firm Navalent, 57% percent of newly appointed executives said that decisions were more complicated and difficult than they expected. Tough decisions may be to stop certain businesses, but also to invest in new activities or try new approaches to clients, despite the uncertainty. We found out that getting funding from banks and other financial stakeholders is often dependent on sharing in a transparent way your analysis of the situation and the why and consequences of the decisions. Company management often underestimate the impact of management behavior, appetite for risk and transparency next to financial figures in decision of banks and financial stakeholders.
‘Part of what the Shackleton story is about . . . is leading under moments of great uncertainty when the game is changing, and may change on a dime.’
– Nancy Koehn, HBS Professor of Business Administration
At Ernest Partners, we have not only borrowed Sir Ernest Shackleton’s first name, but his leadership is an inspiration for us in our work to support our clients.
Ernest Shackleton’s sense of responsibility and commitment came with a great suppleness of means. To get his men home safely, he led them across ice, sea and land with all the tools he could muster. This combination — credible commitment to a larger purpose and flexible, imaginative methods to achieve a goal — is increasingly important in our tumultuous times, it is important to us in supporting our clients. That’s why ‘We bridge people, companies and ideas’.