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What is a crisis and how do you manage it?

The word 'crisis' can be interpreted in many ways, here are the most popular definitions.

"When questions arise that cannot be answered." - Ryszard Kapuscinski

Definition of Crisis in the Oxford Dictionary

Definition of Crisis by Harvard School of Management

As seen above a Crisis is an urgent problem that is unexpected and brings up questions that are difficult to answer, in some cases a questions that can't be answered or given a logical answer can also be categorized as a Crisis. A Crisis can come in many different forms, the most common categories are

Economic - Family - Environmental - Natural disaster - Technological - Social - Health.

Currently due to Covid-19 we are experiencing a Crisis in almost all of the categories above. I believe you can find plenty of examples, so I won't lay them out here.

What does any crisis have in common?

A clear and present danger or threat, surprise or shock, a need for an immediate response requiring quick and tough decisions to be made.

Statistics show and the current Covid-19 pandemic also has proven that when a crisis happens most companies and even governments were caught off guard and still do not know how to deal with the crisis making the situation even worse, despite having experts and specialists to solve it.

In business, since the crisis is unexpected most companies don't train their staff or even upper and top management about Crisis Management, which as we've seen with COVID-19 has left many companies, crippled and dead in the dust. So you might be asking, if a crisis is unexpected and has no answer then how can you manage it and that's what I will go into a bit today.

Keep in mind the old saying "For every lock, there is a key" meaning for every problem this is always a solution and crisis management is about being able to respond quickly, take decisive action, make tough decisions, analyzing data, disperse and share information promptly and transparently to the main crisis management team, knowing how to stay calm and avoid widespread collective panic.

To understand this we must first look at some common misconceptions of crisis management:

Most people, staff, and netizens usually think leaders/managers have all the answers and are responsible to make all the decisions and solve the crisis, while this should be the case the reality is that a crisis will affect everyone and so everyone is accountable for helping to solve or provide perspective and possible solutions for the crisis, sadly most people sit around and expect someone else to deal with it. To make matters worse, the problem is most managers/leaders see decision making as a one-time thing. Decision making is, in fact, a process. Leaders/Managers who see decision making as a process are more likely to make more effective decisions. By involving others, they weigh different opinions and deepen the discussion. Perhaps most importantly, taking a “process” approach is more likely to lead to many people accepting the decision – and to more effective action. Following a step-by-step process and procedure offers the greatest chance of resolving many problems.

In business, especially in big corporations and companies that consider themselves market-leaders usually don't think a crisis would affect or happen to them, history has shown us many examples of these companies (Blockbusters, RIM (Blackberry), Nokia, Kodak, IBM and I could mention so many more. Perhaps its arrogance, unwillingness to change and adapt with the times or ignorance. The fact is that what all these companies had in common was that they had no crisis management plan in place and they think they can ride out any crisis but statistics show that approximately 80% of companies that are affected by a crisis close within 18 months no matter how large or profitable they are, 60% never recover and usually end up closing or get acquired.

There are of course some companies which are the exception for these companies a crisis can actually be a 'turning point' that makes the company stronger and better. How did they do this, you might be wondering? The answer is simple.

Baca juga 5 Tren Utama Leadership yang Mengubah Dunia Organisasi

They used Crisis Management: Crisis management attempts to either avoid a crisis or handle a crisis. How do we do this? They had a crisis management team or the top management knew the aspects of crisis management:

1. Risk Assessment (What could go wrong? What's the worst case scenario?)

2. Communication (Who do we talk to, be confident, have conviction and know who to share the information to and how?)

3. Strategy (What do we do in a worst-case scenario? What's the Plan B-Z?),

What do these mean?

- Risk Assessment - Always remember to consider the little things and make sure people are not ignoring/overlooking them no matter how mundane. As the saying goings " for want of a nail, a horse was lost, for want of a horse a king was lost, for want of a king a kingdom was lost" or " an ant may destroy a whole dam."

- Communication - Who are the experts? How do you share information with everyone and make sure they take it seriously? What are words you shouldn't use to avoid unnecessary panic!

- Strategy - Is every perspective being looked at, do you have a backup plan for your back up plan, most importantly you must have a growth mindset, never be satisfied and always think of how you can make things better! “Crises and deadlocks when they occur have at least this advantage, that they force us to think.”. 

Crisis Management plays 2 critical roles:

1. What can we do during a crisis?

- Define the most urgent aspects of a problem, don't make rash judgement, inspect don't expect.

- Keep calm, don't jump the gun and make intelligent decisions based on the counsel of others, respect your team don't shoot down any idea, even bad ideas can lead to good ones. 

- Be curious, ask opinions, gather facts and data, then with all the information you have consider the best way to deal with the crisis and have a strategy with multiple plans and solutions. This will help you stick to your decision with confidence.

- Above all remember that if you treat your people well they will take more ownership and may just surprise you in the time of crisis. Finding good talent is harder than finding new customers.

2. What can we do after a crisis?

- Reflect and understand what caused the Crisis: what went wrong and why?  

- Analyze the crisis management plans. Which ones worked and why? If they didn't, why not?

- Know how it happened think of how to prevent it or what can be done to improve and update the crisis management plan.

- Recognize any of your people who helped you during the Crisis and show appreciation for their support.

All leaders and those in management positions should know more in-depth about Crisis Management, systems and processes, communication, how to make informed decisions, and much more, that just might be the difference between you or your company going belly up.  

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