Joel Peterson: How Entrepreneurs Should Lead in Times of Crisis

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The ability to lead through adversity is the true test of an effective leader, says “Entrepreneurial Leadership” author Joel Peterson. | iStock/DrAfter123

One Saturday afternoon in 2016, Diana Peterson left home for a 4-mile hike in Millcreek Canyon, just outside Salt Lake City, and disappeared. As darkness fell, her husband, Joel, began calling family members to see if anyone had heard from her. A short time later, Diana’s car was located at a trailhead and a search-and-rescue mission was launched.

As morning broke, cadaver dogs were called in and Joel Peterson drove home to find some of his wife’s clothing so the dogs could track her scent. Morbidly, he found himself composing her obituary. Happily, he didn’t need to finish it. As he arrived back at the canyon, Diana reappeared. She had a shattered wrist and was exhausted, but she was alive.

It’s an odd story to find in a book on leadership, but Peterson — a long-time Stanford Graduate School of Business adjunct professor and the chairman of JetBlue — eventually came to see the harrowing incident as a metaphor.

“Just as Diana knew all about flashlights, trail mix, water bottles, walkie-talkies, the importance of hydration, of staying on trails, and of not hiking on trails after dark or alone, in theory our students know about the perils of entrepreneurship and the requisite principles of effective leadership,” he writes in the introduction to his new book, Entrepreneurial Leadership: The Art of Launching New Ventures, Inspiring Others, and Running Stuff. “They are well-prepared in theory, but not in practice.”

The book is Peterson’s way of addressing this gap between leadership theory and practice. In it, he offers the same practical framework — the “set of principles, mind-sets, and self-talk” — that he has used to good effect in his life and career. Here, based on excerpts from a recent interview and the book itself, Peterson offers four key pieces of advice for leaders facing crises — such as the current COVID-19 pandemic and the economic chaos it has spawned.

Confront Reality

The ability to lead through adversity is the true test of an effective leader — and eventually, every leader will have to take that test, he says. The business failures that Peterson has studied all have one thing in common: leaders who failed to recognize and confront emerging threats quickly enough. “A lot of leaders deny reality for the longest time,” Peterson says. “But the faster you can get your head around the facts, even if they are negative, the better.”

Entrepreneurial leaders confront reality. They are honest in their assessments of the challenges facing their organizations. They embrace bad news, delve into the “dark corners” of problems, and ask hard questions. “They may bring in fresh eyes to help them understand problems,” writes Peterson. “They don’t sugarcoat the truth, and they are not afraid of delivering bad news. They understand that denying reality is toxic to a turnaround effort and will almost certainly lead to failure.”

Communicate Lavishly

Typically, leaders believe that they know what the people in their organizations are thinking, and that the people in turn know what the leaders are thinking. Unfortunately, they are usually mistaken: “While they may think employees communicate back transparently, the truth is that most people in most organizations don’t tell leaders what they think,” he writes. “Similarly, people in most organizations don’t understand leaders’ priorities, and they rarely think they’re getting enough information.”

This is a dangerous problem in times of crisis. “Adversity demands communicating lavishly,” says Peterson. “To me, that means over-communication, to make sure that there’s no unclear messages and that bad news, as well as good news, is shared. You need to communicate before, during, and after events.”

Moreover, communication must be two-way. “Leaders need to check in with people,” says Peterson. “The most important element of communication — and characteristic of great communicators — is the ability to listen. Particularly in adverse conditions, it’s very important to hear from the other people involved — to understand their feelings and their insights, and to bring them together.”

Pull the Trigger

Decision-making in crises is fraught with uncertainty and risk. But that’s the nature of most major leadership decisions, according to Peterson: “If you’re making a lot of easy calls, you’ve failed to delegate. Most of the decisions you make personally should be close calls.”

No matter how you choose to make decisions or what decisions you make, the key to successful decision-making is action. “You have to pull the trigger,” he says. “Collecting the information needed to make sound decisions costs a lot of time and money. So, at some point, you have to say, ‘I am going to have to make this decision and it may be wrong. And if it’s wrong, I’m not going to make excuses. I am going to apologize and do whatever I have to do to make it right.’”

Entrepreneurial leaders know that making no decision is a decision. And in times of crisis, it is often the worst decision a leader can make.

Use Your Board of Directors

To date, Peterson has served on the boards of 36 for-profit and nonprofit organizations. By his reckoning, fully one-third of those organizations didn’t get full value from their boards — sometimes because the boards are too ceremonial, simply rubber-stamping managerial decisions, and sometimes because they are too activist, meddling in operating decisions.

Instead, entrepreneurial leaders should think of their board as a team of wise people capable of making considered judgments, says Peterson. “Boards should be a group of people who collectively have the wisdom needed in all of the areas that are critical to the success of the business. They should have the experience to provide you with the insights needed to make big decisions — a sense of the tradeoffs involved and an inkling of how things will work out once a decision is made.”

Boards with these capabilities are invaluable in a crisis. “They coach, they nudge, they provide information, they provide context,” says Peterson. “But in the end, CEOs need to retain the authority to make decisions. I always used to sleep on the advice of my boards. Then I would make the call and ask for their support. That’s how a board can be most effective.”