Crisis Management vs whack-a-mole?

I work with many business - small, large and Corporate. One thing that can challenge Leadership teams is the ability to manage crises effectively and efficiently.

To fully understand the value of investing in a robust crisis management approach requires a review of the threats as they are currently perceived; an appreciation that crises are often without warning; time to act is typically incredibly short (and often highlights a wider need for change) .

Failures in crises management can come in many forms. I have witnessed some personally;

1. Two examples where Crisis Management was blurred with Risk Management - with almost fatal consequences. Thankfully, the boards took swift action in time to instal expertise that calmly instigated plans and assumed control through to the recovery phase.
2. A CEO operated in a Caesar-like dictatorial manner where all decisions were centralised - with him. Prolonged delays in recovery destroyed significant business value that would have otherwise been preserved if we had empowered others to act.
3. A cavalier MD who in crisis mode simply looked for available arms and legs to deal with the issue. It was akin to rearranging the chairs on the deck of the Titanic. - at best a short term band-aid. His business ultimately failed as he never recognised the need to apply the right skills to a very serious task.

Let's not focus on these failures. They all shared a common thread of not facing up the the challenge - trying desperately to do things their own way without a sustainable solution. Inevitably, as one thing is fixed another problem emerged.

What is effective Crisis Management? Without teaching many grandmothers to suck eggs, starting off with the basics is always a pretty good start.

Distinguishing between Risk Management (Assessing the potential threats to business and identifying mitigating actions to avoid those threats) and Crisis Management (Dealing with the threats before, during and post crisis) is important.

In the context of this post, Crisis Management is confined to business - not any natural disaster or civil / political unrest. In Business, crisis management focuses upon limiting the adverse impact on financial, reputation or safety due to an event or related events. Recovery understandably relies upon a function of leadership knowing exactly what they will do when and if a crisis develops.

People who know me well will recognise my dogged attempts to consider what can go wrong and to plan for recovery. Some may think it a negative planning process - but I have seen it save businesses, deals and in some cases careers.

Resilient leadership will of course always have clear plans in place, well-defined roles and responsibilities, a play book. Resilient leadership appreciate that whilst they focus on the crisis, the business must continue to run.

So a team will be empowered - entrusted to run the business - to keep the lights on whilst others are directed on the immediate threats. Focus is everything and a systematic approach will be deployed if the business is to avoid the Whack-A-Mole analogy of firefighting but never really solving the underlying problem.

Focus starts with identifying the type of crisis currently being faced - is it a Sudden Crisis that has hit the firm sideways or a Festering Crisis that has been irritating people for some time yet has never been dealt with. Regardless, time is of the essence and its here that the plans kick into action.

Red Flag Detection - were there any signals of an impending crisis? - those things that may have been ignored, perhaps in a 'hope springs eternal' belief that everything will turn out ok. Well versed leadership with recognise that in crisis mode, people can have a tendency to not speak the truth, more naturally hiding their views of what could be the worst case scenario. Calmness is the key to allowing your people to really explain their fears of how bad things can be.

Predictive Modelling - Quickly establishing the potential impact / fallout of this crisis? It may require several scenarios to be worked through to establish a cohesive understanding of the severity of the crisis and to prioritise the remedial actions.

Damage Control - limiting the threats beyond the crisis as it impacts the business' finances and reputation is a priority for the leadership team - by facing up to and dealing with any negative market, staff, client or shareholder sentiments that may emerge. Appreciating that social media potentially plays a major role in accelerating the flow of bad news, conjecture and mistruths - swift action is imperative.

Remediation and Recovery - this relies heavily again upon the resilience of the leadership team themselves. Empowering others to run the business whilst the crisis absorbs the leadership focus demonstrates strength, allows for focus to shift towards resolution, improving staff, client and potentially market sentiment. Appreciating that social media - having fanned the flames in crisis also plays a vital role in recovery. Marketing and Communications functions will swiftly develop the backdrop for leadership to emerge triumphant as recovery is underway.

At a people level (whether leadership or workforce) coping and reacting to crises emphasises and often amplifies character flaws. Encouraging people to be able e to learn from mistakes is essential. Whilst this may often be part of a firms values - it is in crises that one finds out of it is part of the culture. Leadership will fail if it allows any form of blame culture, or advocates protecting ones back whilst others are thrown to the wolves.

Interestingly, and as a footnote - studies show that when Leadership stands up and accepts responsibility/accountability from the outset, recovery has been swifter and produced circa 5% improvement in share price compared with pre-crisis levels. It goes to show that swift action and strong planning ethos can both deal with a crisis effectively and actually improve value.