Problems, difficulties, and setbacks are a normal, natural, and unavoidable part of life and business. When you set a new goal or launch toward a new destination, you will experience challenges and difficulties that you never expected or anticipated. But the true test of character is the inevitable and unavoidable crisis. Your ability to solve problems is important, but your ability to deal with crises largely determines your success or failure in life.

It is estimated that the average person today experiences a crisis every two to three months. This can be a business crises, financial crisis, family crisis, physical crisis, or personal crisis of some kind. This means that each person you know, including yourself, is either in a crisis today, has just gotten out of a crisis, or is just about to have a crisis.80

Crises, by their very definition, come unbidden. They are completely unexpected, from out of left field. And since you cannot predict or anticipate a crisis, the only thing you can do when one occurs is to respond to it effectively.

Leadership Abilities

In a multiyear study conducted at Stanford University, researchers examined the annual performance appraisals of hundreds of presidents and chief executive officers of Fortune 1000 companies, some of the most successful executives in every business or industry. The experts looked at what had been written about the executives from the time they started work, searching for the common characteristics of top people.

This study revealed that top executives had two dominant qualities in common. The first was the ability to function well as a member of a team. When they were starting out, they were good team players, making valuable contributions to the teams they were on. As they were promoted to more senior positions, they demonstrated an ability to bring together winning teams of talented people and organize them to accomplish important goals and results for their companies.81

The Most Important Leadership Quality

The second, and most important, quality that top leaders had in common was the ability to function well in a crisis. Top people in every field had demonstrated throughout their careers that they were able to deal effectively with the inevitable crisis when it came along.

The researchers discovered something else: teamwork could be taught in seminars and workshops. But the ability to function well in a crisis was not teachable. A leader did not learn to deal with crises in a workshop or seminar or by role-playing with other people in an imaginary problem situation.

The ability to deal with a crisis could be learned and demonstrated only in a real crisis, an unpredictable and unexpected reversal or setback that had the potential to cause major damage of some kind. During such a crisis, the true leader would emerge to save the situation and resolve the problem.

Life Is a Series of Tests

In life, problems are the tests you must pass to move onward and upward. The inevitable crises that you experience in your day-to-day life are the true tests of your competence and your maturity. They are the measure of your character. They are the best indicator of the levels of courage, intelligence, persistence, and foresight that you have developed up to this moment.82

As Epictetus said, “Circumstances do not make the man; they merely reveal him to himself.” And to others, for that matter.

When you are a leader faced with a crisis, everyone watches you to see how you react. Everyone measures and judges. People upgrade or downgrade you in their estimation. The crisis is the great “crunch time” of life.

How Leaders Perform in a Crisis

Over the years, I have worked with the presidents and chief executive officers of many large companies. I have coached, counseled, and consulted with millionaires, multimillionaires, and even billionaires. I have been able to watch them “up close and personal.”

One quality that they all seemed to demonstrate was their ability to remain calm and cool when faced with a major reversal or setback. When they were confronted with a problem or crisis, they seemed to be able to turn on a switch in their minds that enabled them to become calm and completely in control. They immediately took charge of their emotions and the situation.

The top people I have dealt with never became angry or upset. They did not become excited or irritated. In fact, they seemed to go to the opposite extreme. They slowed down and became more polite and courteous. They said “Please” and “Thank you.” They asked questions and gathered information before reacting or responding.83

Get the Facts

Harold Geneen, the past president of IT&T, a 150-company conglomerate, once said that the most important step in dealing with any business problem was to get the facts. He said, “Get the real facts. Not the assumed facts, the apparent facts, the obvious facts, or the hoped-for facts. Keep digging until you get the real facts. Facts don’t lie.”

Whenever Jack Welch, former CEO of General Electric, was presented with a problem, he would ask, “What’s the reality?” He insisted on knowing the truth about the situation, whatever it was.

These executives found that the more information (the greater number of facts) that they gathered about any problem or crisis, the more obvious would be the correct solution or course of action. This solution would seem to emerge as the result of delving deeper and deeper into the problem.

The Most Important Work

What is the most important work you do? The answer is “thinking.” Your ability to think clearly and make good decisions largely determines the course and quality of your life. People who think better come to better conclusions. They take better actions and get better results. People who do not take the time to properly think through situations often come to the wrong conclusions, make the wrong decisions, and take the wrong actions, leading to underachievement and failure over and over again.84

The most valuable skill you bring to your life and your work is your ability to think calmly and clearly. This requires that you deliberately practice a form of detachment when you are dealing with an unexpected reversal. You remain objective. You imagine that you are a consultant who has been brought in from the outside to analyze this problem or crisis and make recommendations. You hold it at arm’s length while you are examining the situation. You remain unemotional while you collect information. Only when you feel that you have learned everything you can about the problem do you make your recommendations and decisions.

Think Ahead

One of the most important thinking skills that you can develop is crisis anticipation. To practice this skill, regularly look down the road of life, into the future, and ask yourself, What are the worst possible things that could go wrong? What could derail my plans or block my ability to achieve my goals?

Make a list of every problem or crisis that could occur. Use the 3 percent rule: Even if a serious problem has only a 3 percent chance of occurring, write it down on your list. Think about what would happen if it occurred and how you would respond. Royal Dutch Shell, one of the biggest oil companies in the world, is famous for its scenario planning. Because it has oil and gas fields, pumping stations, pipelines, ships, refineries, and gas stations around the world, the company has developed more than six hundred scenarios to deal with various crises, should they occur.85

As a result, if there is a pipeline breakdown in Kazakhstan, a civil war in Nigeria, or an oil spill in Alaska, Royal Dutch Shell has a written plan of action to respond to the situation. The company is prepared to react quickly and efficiently, minimizing damages and costs, shifting oil and gas from one place to another to avoid disruption of supplies.

In the same way, you should project into the future and think about what could happen to disrupt your plans or block you from achieving your goals. You then return to the present and ask, If such a situation were to happen, what would I do immediately to deal with it?

The Key to Victory

Napoleon Bonaparte was famous for his ability to anticipate what might happen in the course of a battle. He would ride out in advance with his generals and inspect the potential battlefield. He would study the lay of the land carefully, noting where he could deploy his artillery, mass his infantry, and move his cavalry. Then, whenever possible, he would lure the enemy army onto the battlefield of his own choosing.86

Today, we remember Napoleon as the general who lost at the Battle of Waterloo. He also lost at the Battle of Leipzig in Germany in 1813, and he failed in his invasion of Russia in 1812. But what is often forgotten is that between 1793 and 1815, he led the French armies in hundreds of battles, all over Europe, and was victorious almost every time, often against superior forces.

His ability to practice crisis anticipation, to foresee the worst possible things that could happen in any battle, gave him a tremendous edge over the enemy general. No matter what happened when the firing began, he was ready. As the battle unfolded, he could immediately give orders to deal with an unexpected enemy action or take advantage of a withdrawal or breakthrough. He had thought through every possible scenario in advance.

The greater thought that you have given to the possible problems, challenges, and crises that you may face, in advance, the calmer and more confident you will be when they actually occur. And just as summer follows spring, your life will be an endless series of problems and crises, large and small.

Making Course Corrections

This brings us to one of the most important parts of the real secret of success. Earlier I said that an airplane is off course 99 percent of the time. Every flight from one place to another requires a continual series of course corrections to keep the plane flying toward its destination.87

In your life, you will have to make continual course corrections as well. Every hour of every day, you will have to make major and minor changes to deal with unexpected events and circumstances. Your ability to make these course corrections quickly and effectively will determine your success more than any other single factor.

Resist the Lure of the Comfort Zone

Because of the fear of failure, the majority of people resist change, even if the change is to their benefit. Because of the Law of Inertia—“A body in motion tends to remain in motion unless acted upon by an outside force”—people tend to keep doing the same things, day after day and year after year, for no other reason than they are comfortable doing them in a particular way.

Harold Geneen said, “The biggest problem in the executive suite is not alcoholism or workaholism; it is egoism.”

Most people hate to be wrong. Even if it is clear they are wrong, they hate to admit it. Because of their egos, they go through incredible mental and emotional gyrations to avoid admitting that they have made a mistake. If they are caught in a mistake, most people tend to ignore it, deny it, or blame it on someone else. They refuse to make course corrections.

Change Is the Only Constant

But in times of rapid change, according to the American Management Association, you are going to be wrong at least 70 percent of the time. Information will change.

Technology will advance. Your competition will do something unexpected. Events over which you have no control can render your best plans and intentions worthless.

On Friday, you may put together a complete plan of action, involving many days or weeks of planning. But then on Monday, something may happen in the marketplace— as big as 9/11 or as small as a price reduction by your competitor—that changes all your plans.

This is why flexibility is an essential quality that you must develop for dealing effectively with the storms, turbulence, headwinds, and lightning that you experience on your flight toward your destination. You must be willing to accept feedback and to self-correct. You must be more concerned with what’s right than who’s right.

Some people think that to admit mistakes and change direction is a sign of weakness or incompetence. But in times of rapid change, the willingness to admit that you are not perfect, that you have new information that requires that you change your course of action, is a mark of courage, character, and personal strength. Weak people always attempt to cover up their mistakes. Strong people admit them quickly and then immediately take a different course of action.

Keep your mind clear by practicing zero-based thinking at all times. Ask yourself, Based on this new information, if I were not now doing this, knowing what I now know, would I start it up again today?89

If the answer is no, immediately make whatever changes are necessary to keep on course toward your goal. Remember this rule: Be clear about your goal, but be flexible about the process of achieving it.

Take Control of Your Mind

Whenever you are hit with an unavoidable crisis, take control of your mind—and the situation—by asking yourself and others these key questions:

1. What are we trying to do?
2. How are we trying to do it?
3. Is there a better way?
4. What are our assumptions?
5. What if our assumptions were wrong?
6. What actions should we take immediately based on our answers to these questions?
7. What is the first action we should take?

Separate facts from problems. A fact is something that is fixed and immovable, like a past event that you cannot change or a current event over which you have no control, like the weather.

On the other hand, a problem is something that can be solved. You can do something about it. You can apply your mind to finding a solution of some kind.90

The rule is simple: Refuse to become upset or angry about something that you cannot change. Save your time and energy for those challenges you can influence in some way. Remind yourself that “what cannot be cured must be endured.”

How to Remain Flexible

You can make three statements on a regular basis to clear your mind and increase your ability to deal with any situation. When you develop the habit of making these statements in response to problems and difficulties, you will much more easily make the course corrections that are essential to reaching your destination.

1. When you make a decision, and new information or circumstances prove that it was the wrong decision, don’t be afraid to say, “I was wrong.”
   
   As soon as you admit that you were wrong, the situation is over. You don’t have to waste another minute or ounce of energy defending, justifying, or explaining yourself. Simply say, “I was wrong,” and start determining the course corrections you need to make based on your new information.
2. The second statement you can make is “I made a mistake.”
   
   Since fully 70 percent of your decisions will turn out to be wrong, your entire life will be dotted with a series of large and small mistakes. When you can calmly and confidently admit that you are not perfect, that based on the information you had you came to the wrong conclusion and you made a mistake, the situation is over. Everyone can now focus on the solution and what actions you can take to get back on course.91
3. The third statement you can make is “I changed my mind.”
   
   Throughout your life, you are going to make decisions based on how you think and feel at the moment. But after a few hours or a few days, you may see the situation differently. You may realize that based on your current information, your previous decision was not the best one for you. When you have the strength to simply admit that you have changed your mind, you can move on.

Free to Choose

My parents were very rigid in their thinking. Once they had taken a position, they would never budge. As a result, my life as a child was frustrating. Even if they were wrong, my parents would never admit it because their egos were involved.

When I raised my children, I decided to reverse this behavior. I told them from an early age, “You are always free to change your mind.” I didn’t want them to ever feel that if they had made a statement or taken a position, they were trapped into defending it for the indefinite future.92

My daughter Christina, who is now grown and married, has told me repeatedly that this advice, “You are always free to change your mind,” has been one of the most liberating ideas she ever learned. She teaches it to everyone. You can practice it for yourself.

The key to achieving everything that is possible for you is to make continual course corrections throughout your life. And you can always change your mind.