Earnings Season and Great Leaders
This has been a very unusual earnings season, possibly one of the most bizarre in the history of the stock market. Some companies have experienced unbelievable growth. Others have been hit with unforeseeable headwinds. This business environment has put many CEOs in the spotlight, and crisis events often make it easier to determine who the best leaders are.
After listening to many conference calls these past few weeks, I have two observations about what distinguishes the great leaders.
Great leaders solve problems. Ordinary leaders wait for them to go away.
When analyzing companies this summer, I have paid special attention to how management teams have responded to COVID-19. The best companies, and the ones that are setting themselves up to be successful in the coming years have had clear plans of attack. They have continued to strive after their goals, making adjustments, often improvements to the plan when necessary.
One CEO whose company encountered extreme difficulties over these past few months commented how they had been forced to improve efficiency. He said that the pandemic clarified where they could get leaner and stronger. It sparked long-term improvements to the business that would have gone unnoticed if not for the pandemic.
No CEO can make COVID-19 disappear, but they can take steps to solve the problems caused by it. CEOs who are waiting for this pandemic to pass before returning to their previous plans are going to find that the world has passed them by.
2. Great leaders are thankful for good questions. Ordinary leaders take offense at having to answer tough questions.
On conference calls this past quarter, many analysts had difficult questions for the management teams. It was eye-opening to see the various responses to these questions. The great CEOs answered the questions or provided what information they felt comfortable with. Other CEOs dismissed the questions as unimportant and sometimes seemed to get offended that they were even asked.
In a time full of uncertainty, leaders should not be surprised that people have tough questions. Everyone is trying to make a clouded future as clear as possible. Bringing quality answers to the call and talking through the strategy and reasoning provides reassurance to investors that their money is well-invested. Great leaders understand that they can be points of steady certainty in tumultuous times.
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