I recently overheard a young professional bemoaning the “shockingly high” 4.5% rate he’d just locked in for his new mortgage. After assuring him that this rate is still very low historically, it struck me that he was probably not alone in his perception; an entire generation of emerging leaders has been operating in an environment of low rates, rising markets and overall economic prosperity. But that environment has changed.

For leaders seeking to navigate today’s business challenges, helping those unaccustomed to managing organizations through financial disruption will be critical, and will require a mindset shift. 

The war in Ukraine is just the latest in a series of disruptions – including the pandemic and various economic and geopolitical crises – that have affected the current economic landscape. The consequences of the war, ranging from sanctions to commodity and energy shortages, price increases, more supply chain interruptions, and changes in consumer sentiment, have further transformed our business climate.

The financial disruption we are experiencing and will undoubtedly be facing for some time will affect businesses and consumers in new ways. Just as consumers will need to manage rising rates and inflation, leaders will have to navigate through increased challenges and continued financial disruption, and that will take new ways of working and thinking. 

“In times of disruption, management alone will not suffice: executives need to provide leadership,” says a graphic with a recent EY report called “The CEO Imperative: Through relentless disruption, how can you stay the course?” This report asserts that recurring disruption requires increased resiliency, the ability to deal with rising costs and new or heightened threats, a focus on sustainability and culture, and flexible business models. Leading versus managing will entail problem solving on multiple levels in order to weather economic shocks. 

Similarly, a recent article in the Harvard Business Review called “The Future Is Uncertain. Here’s How to Ensure Your Team Can Adapt” also underscores the need for a new type of leadership. Authors Keith Ferrazzi and Kian Gohar cite research conducted for their new book, “Competing in the New World of Work,” which revealed that leaders who achieved the best results through the pandemic did more than react to their changing conditions. The best teams transformed their ways of working through what Ferrazzi and Gohar call “radical adaptability”; these leaders went beyond mere coping with the crisis and used the pandemic to reevaluate and reinvent their work processes and positioned themselves to manage unpredictable change in the future.

What does this mean to you as a leader or director? Thinking and acting differently as a leader can be difficult, but will be essential in order to prepare your teams, especially those for whom this magnitude of financial disruption is new. 

Here are some ways leaders can lead through financial disruption and position organizations for success:

Build resilience at all levels of the organization. While much of the current disruption may be new to your teams, the last two years have provided valuable experience in dealing with change. Draw on past adaptability and success to demonstrate your team’s strength and ability to respond quickly to disruption. Provide resources to support your team’s wellness and be a role model for healthy behaviors from the top down.

Examine and strengthen every area of your business: In times of challenge, every area of the organization must function well for the whole to perform. Audit your entire business with an eye toward rising costs, threats and risks; shore up the areas that need attention now to protect against future disruption. Invest in people and culture to ensure you have a strong and healthy workforce and workplace that are able to withstand challenges.

Prepare for more complex decision-making. Educate your teams on the confluence of considerations needed to make financial decisions in a volatile economic climate. Be ready to take into account not just market forces, but also geopolitical, social, ecological factors and values considerations; all these influence and affect performance. 

Provide historical context. For younger leaders or those who have not led through disruption, the plethora and rate of current challenges can seem overwhelming. Educate your teams on historical data and patterns including interest rates, market behaviors, economic disruption during wartime, and other factors that affect business. Provide examples of difficult economic periods in the past, and show how organizations weathered those storms, or even found opportunities to grow. 

Develop agile practices. Consider creating more fluid business models, operational structures and leadership constructs to ensure maximum flexibility. The more open and accustomed you and your team are to change, the easier it will be to lead through disruption and to position your organization for success.