Leading Through Uncertainty

How Umpqua Bank Emerged from the Great Recession Better and Stronger than Ever

Raymond P. Davis

• Publisher: Jossey-Bass
• Year: 2013
• Print ISBN:
  9781118733028
• Edition: 1
• eBook ISBN:
  9781118782606
• Topic: Business
• Subtopic: Leadership
• Index: Business

From the CEO of Umpqua Bank, the essential leadership practices that allowed the West Coast's largest independent community bank to emerge from the economic crisis even stronger than before

In this follow-up to the successful Leading for Growth, Umpqua Bank CEO Ray Davis shares the tactics and strategies  that have allowed Umpqua to grow and succeed in the toughest economic environment. The results are clear: despite years of economic uncertainty, Umpqua has continued its upward trajectory—expanding from five locations in 1994 to more than 200 today. Davis's approach can help leaders recalibrate their approaches, no matter what the industry or market upheaval they face. 

In Leading Through Uncertainty, Davis shares a concise set of smart, actionable leadership practices that leaders can use to navigate their businesses and teams through difficult times. These include focusing on honesty and transparency, motivating and inspiring employees, building an outstanding corporate reputation, paying attention to details, and more. By showing leaders how to maintain a clear value proposition and strong leadership, Leading Through Uncertainty will help any company secure a lasting foothold in any economy.

Part 1

Leading Yourself

Control is not leadership; management is not leadership; leadership is leadership. If you seek to lead, invest at least 50 percent of your time in leading yourself—your own purpose, ethics, principles, motivation, conduct. Invest at least 20 percent leading those with authority over you and 15 percent leading your peers.

—Dee Hock, founder and CEO emeritus, Visa

Before you can lead others, you first need to learn how to lead yourself. Leading yourself will help you hone the skills you’ll need to lead others, while building the confidence that infuses good leaders and builds the confidence of those they lead. Part 1 considers a number of topics related to self-leadership, including getting your arms around today’s headlines, the importance of telling the truth, dealing with problems, understanding what you can and cannot control, and exercising your intuition.

Chapter 1

The New Normal

Destiny is not a matter of chance; it is a matter of choice. It is not a thing to be waited for, it is a thing to be achieved.

—William Jennings Bryan

The effects of the global financial crisis continue to affect our economy: growth and unemployment rates haven’t yet stabilized, and change is constant and faster than ever before. We’re in the new normal—a time when there is no normal. Now more than ever before, leaders must be looking over the horizon to the next revolution—before it overtakes their businesses and their customers along with it.

Since my book Leading for Growth was published in 2007, the world has been through an economic tsunami that has wrought incredible damage. Although Umpqua Bank, a regional community bank headquartered in Portland, Oregon, has done well in these uncertain times, other companies—and the citizens of many countries—haven’t been so lucky. The economic recovery that followed the 2007–2009 recession has been particularly weak due to many factors, including a stubbornly high unemployment rate, the impact of European fiscal disasters, and the ineffectiveness of Congress to address the major issues facing the United States, to name just a few. The impact of the recession, coupled with a slow and uncertain recovery, has left many families and businesses bruised and battered, resulting in an American public that for good reason is worried about the future.

We’re stuck in a kind of economic no-man’s-land where anything can and just might happen. Is a double-dip recession waiting for us a few months down the road? Maybe. It’s not out of the question. A boom driven by a sudden surge in consumer demand? Sure. It’s a possibility if consumer confidence begins to rise. Even the things that we have long taken for granted—fully stocked grocery stores, lights that work when you flip the switch, and water that flows from the tap when you turn it on—may soon be at risk according to experts who point out that the infrastructure of post–World War II America is wearing out.1

Of course, this new normal isn’t all negative. Out of this economic trial by fire, we’re seeing great creativity and innovation in technology and business, which is resulting in remarkable new products and services that are produced more efficiently than ever before. Entrepreneurs are starting up new businesses at a high rate. According to the Kauffman Foundation in Kansas City, Missouri, more than 500,000 new business owners were minted in the United States each month in 2013.2

Nevertheless, the uncertainty of the times we’re in—and can expect to be in for many years into the future—creates anxiety and fear, and this anxiety and fear drive the decisions that we make. Let’s face it: When we are scared, confused, and worried about our prospects, we all have a tendency to do nothing and hope the storm passes over us without too much damage, or we overreact impulsively—sometimes exacerbating the bad situation we are already experiencing.

We business leaders are no different from the people we lead. We often feel compelled to take action in difficult or uncertain times. Sometimes we do this to make a difference when we see a clear path to our goals, and sometimes we do this just to let people know that we’re awake at the wheel. Business leaders are human, and we often find ourselves in situations where our fellow associates are looking for and expecting us to remain calm and deliberate—and we overreact. In the heat of the battle, it’s natural for leaders to overreact to the conditions in which they find themselves instead of staying calm and acting only when necessary. The old saying “It’s better to do something than to do nothing” isn’t always the best advice to follow. In fact, in many cases, doing something for the sake of appearing busy—or what has been described as “firing for effect”—can get you and your company into even deeper trouble than if you had instead done nothing.

I have to wonder whether Netflix’s decision in 2011 to split its business into two—creating one company, Qwikster, that would handle its legacy DVD rental business and another company, retaining the original Netflix name, that would be responsible for the online video streaming business—was an overreaction to fast-changing and uncertain market conditions. The net result for Netflix’s loyal customers was twofold. First, the price they would pay for their Netflix subscriptions would double overnight, from a minimum of $7.99 a month to $15.98 a month. In addition, those same customers would also have to deal with two companies to get the same services they were getting from the original Netflix. This led to a virtual riot among Netflix customers that aggressively built momentum through newly popular social media channels, with 16 percent reporting soon after the decision went public that they would cancel their subscriptions.

The result? The price of shares of Netflix stock sunk 57 percent in just two months, and the plan was scuttled by company founder Reed Hastings before it went into effect. Said Hastings at the time, “There is a difference between moving quickly—which Netflix has done very well for years—and moving too fast, which is what we did in this case.”3

The dilemma we often find ourselves in during uncertain times is made more complicated by the simple fact that it’s almost impossible to remain the same. It has long been said that there are only two things we can count on in life: taxes and death. We need to add one more certainty to that short list: change. But unlike the other two, change can be exciting, positive, and rewarding.

It’s interesting to watch how people react to the simple expression “We are going to make changes,” or “If we are going to improve, we need to change,” or any of the many other ways of saying the same thing. I’m sure there are many psychologists and physiologists who would point out that we are genetically programmed at an early age to fear and worry about change. Indeed, according to experts in organization change, more than 70 percent of all organization change efforts fail, and failed change is the number 1 reason that business leaders get fired.4 Much of the blame for these failures can be traced to the resistance to change that seems to be genetically wired into many of us. I often wonder why this is so when change can be so inspiring. If you don’t believe change can be beautiful, just watch your children grow.

In business, change is a constant, and its velocity is getting faster and faster. According to Harvard Business School professor John Kotter, “Rate of change in the world today is going up. It’s going up fast, and it’s affecting organizations in a huge way. And what’s particularly important is that it’s not just going up. It’s increasingly going up not just in a linear slant, but almost exponentially.”5

Just when you think you have something figured out, new technologies or systems are created to change things. Again. The simple fact is you can’t stay the same. Although it’s challenging for organizations to embrace change, staying the same is even costlier and more difficult. Even better, of course, is to get out in front of coming changes in your business environment and to anticipate and respond to them before they arrive.

Suppose you’re driving on the freeway at fifty-five miles per hour. How difficult is it to keep that speed constant versus slowing down or speeding up? (For the troublemakers reading this, yes, that assumes you can’t use cruise control.) The point here is simple: you will change, and it’s up to you how you are going to make the transition. You can adapt to change because you “have to” or because and when you “want to.” The choice is up to you. Pick one.

Change comes in all sizes and levels of importance, can affect budgets, and usually shows up, or at least so it seems, at the most inopportune times. This we can count on. What’s important is how we respond and react to change.

We can embrace change knowing we have no other choice, or we can overreact or panic, causing havoc within our companies. If we choose to be proactive about change, we must actively “hunt” for it and try to prevent it from making surprise visits. This is productive, positive, and powerful. The decision to freeze up or overreact to difficult situations or changes that are forced on us is counterproductive, morale killing, and the start of death spirals in many companies. These two polar opposite reactions to challenges and crises in the business environment are counterdirectional, and different leaders often act in sometimes completely different ways in response to the same events. While some are ready to anticipate change and “lead the revolution” when it arrives, others see change coming, panic, and stick their heads in the sand.

Which kind of leader are you? Which kind of leader do you want to be? If you’re not the kind of leader you want to be, how will you change to meet this challenge, and when will you do it?

A WORLD IN FLUX

By definition, a revolution is a complete and radical change in something, and a panic is a sudden, overwhelming fear that produces hysterical behavior. A revolution is change put into practice, while panic is an irrational and emotional reaction to that change. Panic can quickly spread throughout an organization, causing widespread fear and concerns if it isn’t quickly addressed and defeated. As you can well imagine, panic is rarely (if ever) a good thing for any company. In virtually every case I’ve seen over the years, panic creates hysterical, unproductive behavior among a company’s people that leads to bad decisions and lousy results. And we are not in business to provide lousy results—to our customers, our associates, or our shareholders.

Revolutions occur all the time in the world around us. While the word revolution most often makes us think of countries engaged in political upheavals, revolutions also impact the world of business and the consumers of their products and services. I think it’s reasonable to believe that the radical changes we experience in all types of industries can rise to meet the definition of a revolution. Consider the introduction of the first cell phone, the first personal computer, the first heart transplant, the first satellite placed in orbit around the earth, and any number of other product advances that have radically changed our lives for the better. These events were profound when they occurred, but it’s what they created that is so critical.

Business revolutions of this magnitude are still happening today with no slowdown in sight. Reading glasses of various strengths are produced in China at a cost of less than fifty cents a pair. This advance has the potential to affect the lives of more than 100 million people around the globe who have trouble reading close up. European utility companies are exploring the replacement of coal with briquettes made from sustainable timber by-products, including sawdust and tree bark. Considering that 6 billion tons of coal are burned worldwide each year, rapidly depleting the world’s supplies of this key fossil fuel resource, a revolutionary advance of this magnitude could have a huge and lasting impact on our ability to power the future.6

Revolutions, however, do not have to be big to be important; they don’t require a radical transformation of the world as we know it to have a big impact. Sometimes it’s the small revolutions that can make big differences in how we live and conduct business.

The introduction of FedEx is a great example. This small start-up company founded by Frederick Smith in 1971 created a revolution in package delivery. Before FedEx took off, getting documents to a distant destination overnight was a difficult and cost-prohibitive proposition. FedEx (which once marketed itself as “a freight service company with 550-mile-per-hour delivery trucks”) completely changed the paradigm, making overnight delivery of envelopes and packages a routine, reliable, and relatively inexpensive event.7 While the company today is one of the world’s largest and most successful businesses (ranked number seventy in the Fortune 500, the company has annual revenues of more than $42 billion and operates a fleet of almost seven hundred aircraft and more than fifty thousand delivery vehicles and trailers), it started out with just a handful of airplanes Smith acquired when he purchased a used aircraft company in Little Rock, Arkansas, in 1971.8 A small revolution in the transportation industry gave birth to something much bigger.

Revolutions can be opportunities to be taken advantage of, or they can be disruptions that cripple our ability to carry on with our existing business paradigm. They can be positive and inspiring if we find them before they find us, or they can be devastating and destructive if they find us first.

I see revolutions and opportunities as synonymous. A revolution or opportunity discov...

Table of contents

• Cover
• Contents
• Title
• Copyright
• Dedication
• Foreword
• Introduction: The Great Uncertainty
• Part 1: Leading Yourself
• Part 2: Leading Your Organization
• Part 3: Leading the Way
• Conclusion: Lead On
• Acknowledgments
• About the Authors
• More from Wiley
• Index