01/12/2011 17:18 GMT | Updated 31/01/2012 05:12 GMT

In Our Uncertain World Executives Must Resist the Natural Urge to Command and Control

Don't panic. That's the essential message business leaders need to take on board as the world's financial markets continue to go through unprecedented turmoil. Now is not the time to burden your staff with over-cautious risk controls. On the contrary, now is the time to seize a competitive advantage by innovating while others fear to do so.

It's natural to react to uncertainty by going defensive. Many business leaders have felt recently that they must do something, and that this action must involve battening down the hatches, acting more cautiously and concentrating harder on reducing costs. The flipside of this tactic, however, is that many businesses have become less adventurous, harming their chances of renewed growth.

Good things will happen again. The only question you should be asking yourself right now is: "Am I positioning my organisation in the best way to take advantage of future opportunities?"

However, don't expect that the end of the current economic crisis will mean a return to "business as usual". The interconnectedness of the global economy is now so great that disruption is the new "business as usual". A major event that occurs anywhere will have ripple effects everywhere, whether it is manmade, like a house price crash in America causing the credit crunch, or a force majeure, such as the tsunami that devastated North-Eastern Japan earlier this year.

Executives need to learn how to handle such turbulence coolly because it's going to part of the new landscape. A good place to draw inspiration is the military, where in a battlezone thousands of servicemen and women need to be coordinated in hugely dangerous environments where one thing is certain: you must rapidly adapt to the unexpected, and the unexpected is constantly occurring!

If organisations wish to carry on operating effectively in spite of constant change then many must change the way they respond. While the strategy is set at the top, it is executed at the frontline. When the landscape changes the response needs to be immediately at the front, not after new orders have cascaded their way down from head office.

Many believe that when an order is given by a military commander, it must be followed rigidly and with unquestioning obedience. But, in reality, officers of all ranks are expected to show initiative and to exercise personal judgement, within defined but liberal constraints, at all times and business leaders can learn a lot from this technique.

The military has many examples of great strategic victories being secured by frontline commanders being allowed to pursue their initiative. Just think Nelson's blind eye at Copenhagen or Patton breaking out of Normandy after D Day. Think also what that might mean for your business if you can mandate the front line in the same way.

To achieve this, staff need a clear sense of the overall strategy of the organisation, from which their decision-making must flow, with leaders trained in communicate this vision succinctly and compellingly to their people so they know what to do as circumstances change. Businesses can learn a lot from the military where there is a huge emphasis on the ability to have orders passed reliably from senior officers to the front lines without any loss of clarity. Indeed, it is this link between strategic intent and tactical execution that defines military effectiveness, and the principle stands for business too.

The practice of "leading by letting go" became a necessity in the military in the mid-19th Century, with the development of railway networks, telegraphy and long-range weapons. Suddenly, the battlefield was transformed into a "battlespace" of unlimited size, and it was no longer possible for one man to see, much less attempt to control, everything that took place within it.

Many major companies, and their advisors too, were made to look foolish by the Dotcom Crash of 2001 and the Credit Crisis. Yet, amazingly, there are still chief executives out there who want to be the equivalent of the "hero general", trying in vain to micro-manage every aspect of their organisations.

Like the modern battlespace, the modern business environment is not something that can be brought to heel by any single person - not even within a single industry. The military talks of the "strategic corporal". This is a tacit admission that initiative must now be delegated to the lowest leadership ranks in the armed forces by necessity. Corporate leaders would be well-advised to follow the example. After all, it is the armed forces who remain the foremost practitioners of a form of internal communication that has proven itself for centuries in the harshest of conditions: the reciprocal exchange of lethal force. If it works there it will probably work in your business too.