What Could Go Wrong?
In March 2009, my colleagues and I anxiously waited for our managing director to begin the meeting. 10% of our office had been laid off this week, adding to the 10% laid off the previous month and the 15% laid off a few months before. Since the financial crisis had started, our office had shrunk by 45%.
Finally, the director arrived, confidently looked at us and gave a speech I will never forget.
On crises
Crises are inevitable, yet how prepared is your organisation to rapidly and effectively respond to a crisis?
For example:
The discovery of a major product flaw, affecting 10% of your customer base immediately after market launch?
The temporary shutdown of a major supplier due to a natural disaster?
A competitor spreading disinformation that results in a social media storm?
An ex-employee claiming your company is using the stolen intellectual property?
I have experienced first-hand how a mishandled crisis decimates revenue, customer trust and employee morale. You cannot predict when or how a crisis will strike, but you can be ready when it does.
The more dynamic your company and environment, the higher the crisis risk and the need to manage it.
Bad decisions
The more acute the crisis, the higher the stress and the lower our ability to think logically. As a result, we tend to make terrible decisions. Some high-profile case studies include:
Boeing: Boeing posts first annual loss since 1997, expects 737 Max costs to top $18 billion.
Volkswagen: VW’s diesel emission scandal.
Samsung: Samsung’s burning issue.
Virgin Galactic: Spacecraft crash.
Red flags
Certain cultural and structural factors increase the propensity to mishandle a crisis, such as centralised decision making and strong hierarchies, and a risk-averse culture where individuals avoid making mistakes at all costs to protect their careers.
My rating on the companies I’ve worked with. Where is your company in the spectrum?
Back to the speech
The managing director cleared his throat and said:
“In life, sometimes we are lions; other times gazelles. Yesterday, we were lions, enjoying life. Today, we are gazelles trying to stay alive. Everything will be fine. Remember this.”
And he left. And so I went back to my desk and began to search for a new job.
Now compare this to the speech I attended as an intern at Marshall Aerospace back in October 2001. The days following the attack on the Twin Towers saw the airline business collapse. Consequently, demand for our work on commercial aircraft disappeared overnight.
Realising all employees were on edge and unfocused, the head of the Avionics unit, a Scott named Hugh, called a meeting. Hugh was a man of few words with eloquent silences. He said:
“Many of you are scared of losing your jobs. You should be. Demand for our commercial services gone, and we don't know when it will be back.
The good news is that demand for military services has increased, and we can seize this lifeboat to survive.
You have two options: either commit fully to turn the tide or leave. We will offer generous packages to those who wish to go.
For those of us who stay, we must justify every day why we chose to remain. Tasks that took us a day to complete will not take half a day. We will adjust budgets. We will cut salaries. We will bury personal grudges. And we will give everything we have to get out of this 'shite'.”
With this, he stood quietly for a few, eternal seconds and then sat down at his desk to work. We all did the same with a renewed sense of optimism.
Contrast both events: one leader downplayed the severity of the situation; the other acknowledged it. One leader reassured us with empty words; the other told us we had to choose between leaving and total commitment. One leader said he would take care of us; the other presented a plan with the sacrifices we would need to make.
Prepare
Was my managing director incompetent? No, simply unprepared to make decisions and adequately communicate under extraordinary levels of uncertainty and pressure. I doubt I would have done better at the time.
To implement new and improve existing crisis management programmes, I have created this blueprint, to help you achieve the following outcomes:
Decide whether your company requires a crisis management blueprint.
Convince your executive team to implement a crisis management blueprint.
Identify, evaluate and prioritise risk.
Define what constitutes a crisis and plan how to respond.
Test the system.
Review, learn and improve.
Appendix: templates to accelerate setup.
