By Katherine Xin

As COVID-19 continues to bring about dramatic changes in people’s lives and the way companies in all sectors do business, how can we adapt to our changing environment and embrace challenges? In addition to an intelligent quotient (IQ) and emotional quotient (EQ), an adversity quotient is also necessary for getting through challenges and becoming a true leader.

Difficulties and challenges for businesses amidst pandemic

We’re now living in a VUCA (volatility, uncertainty, complexity, and ambiguity) world. In this chaotic VUCA era, people feel anxious and confused without knowing where the future leads. But, as a leader, as nervous and confused as you may be, you have to think about how to manage through crisis and start over again.

Challenges facing businesses amidst the pandemic

First, plummeting revenues with many companies suffering from cash flow crises.

Second, products have become less able to stand out in a crowd. This is especially true for service products, as the pandemic has prevented customers from experiencing offerings first-hand. As a result, no matter how good a service is, it has become difficult to demonstrate its quality.

Third, large numbers of paid employees have led to mounting labour costs.

Fourth, broken supply chains and stagnant off-line sales. For example, the supply chain disruption experienced during the recent Shanghai lockdown forced residents to switch to “group buying” to stay fed.

Fifth, inexperienced employees have struggled to adjust. As the business environment changes, companies have to adjust their strategies accordingly. However, getting employees to adjust in the short term is not an easy task, which requires the adaption of both experience and ability.

775 start-ups went bankrupt

Official data suggests that, hit by the pandemic, 775 sizeable Chinese start-ups failed in 2021, many of which had raised more than 100 million RMB in funding, including DaDa English, Globalegrow E-commerce, and Kuai Pei Lian.

The most prominent reason for their failure was broken cash flows caused by high costs, inadequate financing ability, and poor profitability. Start-ups often develop new business models that require substantial early-stage investments. When the external environment changed before they could make ends meet, many of them were easily starved of cash, with bankruptcy only just a matter of time.

“Successful Failure” and “Failed Success”

The concepts of success and failure are not absolute. They are inter-convertible, generating a failure/success paradox.

Successful Failure

Some serial entrepreneurs enjoy the process of starting new businesses, tackling difficulties, and making impossible things possible. Although they may fail at an initiative, they learn lessons and turn their failures into valuable experiences, which help lay a solid foundation for future attempts. They may fail in the present, but they learn, grow, and make progress. This defines a different kind of success.

Failed Success

There is a saying that, in Silicon Valley, the busiest profession belongs to psychotherapists. There are many very successful young entrepreneurs in Silicon Valley who have made a fortune in a very short period. However, after they earned the first bucket of money and became completely financially free, they get lost and were unable to find meaning in life. This is a failed success.

A successful failure is when you enjoy the process to the fullest despite failing; while a failed success is when you are lost in life even though you have achieved business success.

What is the authentic self?

In my opinion, staying true to oneself is a proven solution to the above failure/success paradox. Authentic leaders help us pick ourselves up and face adversity head on in times of failure, and remind us to remain rational and modest in times of success.

But, what does it mean to be authentic?

First, walking the talk. People who remain true to themselves are consistent in words and deeds.

Second, speaking opinions that align with your values and beliefs.

Third, staying true to who you are and listening to the inner voice guiding you forward.

Fourth, adapting to the changing environment and being flexible.

The 4Cs of the authentic self

The true self is rooted in what is known as the ‘4Cs’: Clear, Consistent, Caring and Choiceful.

Clear perception: Having a clear idea of what my strengths and weakness are, and what I really want.

Consistent behaviour: Being consistent in behaviour, whenever and wherever.

Caring mindset (two parts): Care to dare means caring for people, and empowering them to make decisions and take actions. Dare to care means developing empathy to care about others. This is particularly important for entrepreneurs who are in need of security and courage to take on the challenge of coming up with innovative business models.

Being choiceful: For entrepreneurs or investors, the decisions they made are fraught with uncertainties and challenges. A tough decision it may be, and there is no guarantee it will be 100% the “right” one.

Overall, authentic leaders need to have clear self-awareness, consistent behaviour, a caring mindset to help others, and the ability to make the right choices even in difficult times.

Wisdom and a knack for true self

Leadership can be divided into the following four categories based on authenticity and communication skills:

Effective leadership. Effective leaders are authentic and trustworthy and have a real knack for communication.

Self-centred leadership. An authentic leader who lacks communication skills is likely to be trapped in a downward spiral of self-centred leadership.

Hypocritical leadership. A communication master with little authenticity is often hypocritical.

Self-defeating leadership. A leader who is neither authentic nor good at communication is self-defeating. Such kind of leadership is unsustainable in the long run.

An authentic leader is a “chameleon”

A “chameleon” means someone who can adapt to different environments while remaining true to themselves (forming a unity of opposites).

Advantages vs weaknesses

Authentic leaders have a clear idea of what their advantages and weaknesses are. However, these two terms are relative concepts. For example, many people believe that a leader should be particularly expressive and outperform others in every manner. In fact, this is not necessarily true. Sometimes, leaders who reveal their true feelings at the right time are more appealing.

Personality vs adaptability

While everyone has a personality that is unique, it is important to balance individuality with adaptability to one’s surroundings. If one acts like a lone wolf all the time, he/she will have limited influence on the people around them. But, if one can’t stand out from the crowd, their influence will also be diminished.

Emotional intimacy vs distance in the workplace

Leaders often fall into a dilemma about to what extent should they care for employees while keeping the right distance professionally. This is a process that needs to be cultivated, not only in the workplace, but also in all situations in life.

Success = IQ + EQ + AQ

In my opinion, an authentic leader needs three Qs:

Intelligent Quotient (IQ)

An authentic leader needs an intelligent quotient, which is largely an inherited gift rather than an advantage we acquire by ourselves.

Emotional Quotient (EQ)

Emotional quotient, the ability to perceive, use, understand, manage, and handle emotions, is a skill that can be learnt. It has four basic components:

First, self-awareness, the most important part in developing leadership. After all, very few people have an accurate grasp of their own emotions.

Second, self-regulation, or self-management.

Third, social awareness, being aware of the world around you before adapting to it.

Fourth, relationship management, the ability to connect with others and build positive relationships within your industry and society as a whole.

Adversity Quotient (AQ)

Adversity quotient is a numerical indicator that measures one’s ability to deal with and bounce back from adversity. The higher the score, the more resilient and flexible a person when it comes to tackling challenges. People with a higher AQ tend to be more optimistic and are capable of seeking innovative ways to tackle difficulties.

While success is the combination of the abovementioned three Qs, it is the adversity quotient that helps us prevail and serves as the bedrock of leadership excellence.

Development of AQ: Self-management

Self-management is indispensable if one wants to improve their AQ. It requires people to manage themselves in at least four ways:

First, time management. List your daily tasks and make priorities. Good time management skills can improve one’s productivity by 40%-50%. I once did a survey and found that every executive spent three hours per day on urgent but unimportant things. They could have been much more productive if the time had been spent on more meaningful things.

Second, health management. Good sleep and regular exercise are vital.

Third, self-awareness, which is related with authentic leadership we’ve talked about earlier.

Fourth, staying focused. David Allen, a master in time management, talks about the ability to stay focused in his book Getting Things Done. He believes that the horizon of staying focus is not only about solving existing problems, but also about making people more creative. One way to keep focused is mediating, which requires us to focus on our breath and clear our mind. We should not use our mind as a storage receptacle, but as a processor, and we should regularly free it up to ensure it runs faster and more productively.

Apart from the above aspects, self-management also requires us to be confident, optimistic, persevering, honest and altruistic.

A true self is a resilient self

Self-management is a life-long endeavour.

As an old Chinese saying goes, a gentleman aims at harmony, not at uniformity. If one can adapt to the external environment and realise spiritual harmony, they reach the state of the true self.

The first thing people should do is know what they want and then rearrange their resources, abilities, and dreams. This way, they can focus more on what they want to do. Adjust your mindset and try to pursue simplicity in your life so that you can discover the meaning of your “true self”.

Adversity is the new normal, resilience is the magic formula for the true self, and leadership is a marathon with no end in sight.

Katherine Xin is a Professor of Management, Bayer Chair in Leadership, Associate Dean (Europe), and Director of the Hospitality EMBA Programme at CEIBS. For more on her teaching and research interests, please visit her faculty profile here.