Shifting Mindset in Distressed Business Situations
Navigating the Winds of Change: Shifting the CEO and Senior Management Mindset in Distressed Situations
In a previous post, Navigating turbulent waters, , I explored how a CEO coach or interim leader can support management teams through turbulent times by offering structured guidance and fostering a mindset shift. My own experience as a CEO in challenging situations uniquely positions me to empathise with the CEO and management team when I am brought in during times of crisis. I understand the weight of responsibility they carry, having been there myself. While I am no pushover, I pride myself on creating a collaborative, supportive relationship, fostering a team environment that allows the leadership group to work together effectively. My role is to help them move from ‘business as usual’ (BAU) to a mindset equipped to navigate distress, maintaining authority with respect and guiding them through a transition toward a shared, strategic vision for recovery and growth.
This collaborative approach is especially critical when the business has breached its covenants, and management teams, understandably, may feel defensive or uncertain about next steps. By prioritising empathy and open communication, we can begin to make the shifts necessary to transform entrenched ways of thinking into proactive, resilient strategies.
Why Changing Mindsets is Crucial in Distressed Situations
When covenant breaches occur, the immediate reaction from senior management is often defensive. This is understandable – the leadership team has likely invested years into developing and executing strategies they believed were sound. But when those strategies falter, it’s imperative to see this as an opportunity to reset, re-evaluate, and create a new path forward.
Shifting mindset patterns in a management team can sometimes feel like navigating sastrugi—(That’s Sastrugi in the image for thei post BTW) those sharp, wind-carved ridges of snow and ice that reshape themselves with every storm. Just as sastrugi require a careful approach to avoid tripping or losing momentum, entrenched ways of thinking within a team need gradual reshaping. By understanding these ridges as natural but mutable formations, we can begin to work collaboratively to smooth out obstacles, helping leadership teams transition from a defensive posture to one of opportunity.
My goal as an Interim CEO is to help the team understand that, while this may be an uncomfortable transition, it is also an opportunity to think beyond the old model and explore solutions that can fundamentally reshape the business. This is where the mindset shift becomes critical: to see this not as a breakdown, but as a chance to rebuild with a sharper, more resilient approach.
Bridging the Gap Between BAU and a Distressed Mindset
When a business is in distress, there is a need for a clear break from BAU. However, rather than dictating change, my approach is to bring the senior team on a journey of honest self-assessment and collaboration. This journey is crucial to achieving a mindset of adaptability and proactivity in challenging times.
- Setting the Foundation of Trust and Mutual Respect
- A defensive response, as I saw in the example below, often stems from fear or frustration – both understandable in a high-stakes situation. My role is to balance authority with empathy, allowing the team to feel valued and supported while clearly communicating the need for a change in mindset. Once they understand that their experience is respected, they become more willing to engage in a new direction.
- Creating Space for Constructive Feedback
- In high-pressure settings, feedback can be tough to hear. But by creating an environment where honest feedback is received as part of a collaborative effort, not an attack, CEOs and management teams become more open to ideas that drive change. Recently, after a mildly tetchy board meeting where one of the funders shared honest but fair feedback, I noticed the CEO reacting defensively. Given the pressures he was under, the comments understandably struck a nerve. Recognising this as a crucial moment, I pulled him aside afterward and had a candid chat about seeing feedback not as an attack but as an opportunity for re-evaluation. An hour later, he called me with an insight I was thrilled to hear: “I want to thank you for the chat, and I want you to know that I’ve taken your advice onboard. I now realise that it’s an opportunity for us to re-imagine the business.”
- Honesty Without Aggression
- In these situations, transparency is vital, but it doesn’t require confrontation. My approach is to provide unembellished feedback with clarity and respect. By presenting the reality of the business’s financial and operational situation without placing blame, the team can objectively assess the challenges and begin to see ways forward. Leaders begin to re-frame the situation from crisis management to opportunity creation.
- Fostering a Culture of Innovation and Flexibility
- The greatest transformation occurs when CEOs and senior management teams move from a defensive stance to a proactive one. Rather than clinging to previous successes, they begin to ask, “What’s possible now?” – a question that brings previously unconsidered ideas to light. By shifting the emphasis from “preserving what we have” to “creating what we need,” they start building resilience and agility into the business.
- Driving Alignment Through a Shared Vision
- Ultimately, the goal is mutual consent to a new strategy, where everyone understands the vision and is committed to it. With the CEO mentioned earlier, the shift from defensiveness to collaboration opened the door to a re-imagined business model, one that embraced rather than resisted change. This creates a foundation of alignment, allowing the team to drive forward with a renewed sense of purpose.
The Role of the Interim CEO in Shaping a New Mindset
When I’m brought into these situations, it’s not simply to impose authority but to foster a culture that values adaptability, resilience, and mutual respect. Leaders often resist change not out of stubbornness but from a deep commitment to what they’ve built. By helping them re-frame difficult situations as opportunities rather than crises, I help them harness their expertise and passion to redefine the future of the business.
Final Thoughts
The CEO’s mindset is the cornerstone of organisational resilience, especially in distressed situations. Through candid discussions, like the one I had with the CEO after that challenging board meeting, leaders can transition from a mindset of defence to one of opportunity. By fostering an environment where feedback is valued, honesty is prioritised, and collaboration is central, the senior team can align on a re-imagined vision, build strength from challenge, and steer the business toward a dynamic, resilient, and ultimately successful future.
About the Author
Trevor is the Managing Partner of NorthCo, a fellow of the Institute of the Motor Industry and a member of the Institute of Interim Management. Trevor is a respected C-Suite leader, Chairman and professional Interim Leader. For over a decade, he has provided interim leadership solutions to private equity, venture capital, and asset-backed firms. Whether it’s to stabilise a business during a turbulent trading period, fill a temporary skills gap or support a management team to navigate challenging situations, Trevor’s wealth of experience and proven track record in delivering value creation and retention plans demonstrate his ability to lead and support operational management teams effectively. To find out more about his approach, explore his LinkedIn profile and read what others say about Trevor.
