13 Reasons Why Crisis Management Could Bring The Best Lessons To You

A Confession and The Idea in Brief

Personally, I believe doing right in the face of overwhelming odds even if it means standing alone most of the time is a true test of character. So, I want to be honest with my readers by confessing that I have never dealt with a crisis of the magnitude faced by famous CEO’s and I do not know first hand what it feels like. However, I have observed many crises unfold — some at very close quarters and others by reading about the crises in the media (including social media).

Having said that, what I do know is that this article will definitely leave you with insights — some new and some reinforced on lessons to be learnt from a crisis.

The Definition of a Crisis

“Crisis is the greatest textbook of leadership” — Ratan Tata, Ex-Chairman, Tata Group, India

Crisis management is the process by which an organization deals with a disruptive and unexpected event that threatens to harm the organization, its stakeholders, or the general public. The study of crisis management originated with the large-scale industrial and environmental disasters in the 1980s. It is considered to be the most important process in public relations

Three elements are common to a crisis: (a) a threat to the organization, (b) the element of surprise, and a short decision time. Dr. Steven. J. Venette (associate professor at University of Southern Mississippi) argues that “crisis is a process of transformation where the old system can no longer be maintained.” Therefore, the fourth defining quality is the need for change. If change is not needed, the event could more accurately be described as a failure or incident

One of the foremost recognized studies conducted on the impact of a catastrophe on the stock value of an organization was completed by Dr Rory Knight and Dr Deborah Pretty (1996, Templeton College, University of Oxford — commissioned by the Sedgewick Group).

The study concluded that “Effective management of the consequences of catastrophes would appear to be a more significant factor than whether catastrophe insurance hedges the economic impact of the catastrophe”

(source: wiki)

A Personal Anecdote

About 6 years ago, I was sitting in an auditorium packed with shareholders attending the Annual General Meeting (AGM) of a very reputed multinational. There were labor relations issues being discussed and irate union members were hurling expletives at the CEO. In one of the finest displays of corporate communication, the CEO without changing his tone, losing his cool and without using bad language was able to avert what certainly would be a crisis and a global Public Relations (PR) disaster for the company. As a shareholder, my faith in the leadership grew stronger.

The Reasons

The crisis management mantra of Lanny Davis, former counselor to Bill Clinton is to “Tell it Early, Tell it All, Tell it Yourself” (source:wiki)

There are some common lessons to be learnt from past corporate crises. While I do not wish misfortune on anybody, I do believe adversity sometimes teaches you more than prosperity would. Here are 13 reasons why:

  1. It is the a great reminder to keep society, clients and stakeholders first and to the right thing for them;
  2. It is a leaders best lesson in continuous and coordinated communication and by extension the best lesson in employee motivation, shareholder sentiment and market reactions;

3. It is one of the most intense states of focus that a leader can achieve;

4. It is a leader’s best text book on social media, mass media marketing and public affairs;

5. It is a leader’s best lesson in understanding the scope and unintended consequences of his/her words and actions;

6. It teaches a leader that when you are a CEO of a global corporation, what you say and do is not only addressed to your immediate audience but, through media outlets, to the world in general;

7. It is the best possible time to re-iterate the mission and the values of the corporation to instill a sense of unity and meaning within the employees;

8. It is the best opportunity to recognize and assemble a cross functional team that delivers rapid results;

9.It is a great time for a leader to solidify his standing particularly among his detractors;

10. A crisis could be the best argument for a long overdue change;

11. It could be a practical lesson in Agile and Lean forms of management;

12. A crisis is the greatest lesson in perception trumping the truth. No matter the facts, always be aware of the optics of the situation; and,

13. A crisis could offer the best introspection and character building opportunity

To Sum Up

As a leader, honestly answer these questions:

  1. As a leader, barring gross negligence and questions of ethics and integrity, how often do you openly own the mistakes of your team without naming the person responsible?
  2. How often do you give credit openly to a team member who deserves it?
  3. How often do you stay true to your word?
  4. How often do you measure each word and the impact it can knowingly and unknowingly create on the people you influence including your family and friends?
  5. On a sinking ship, would you jump first or last?

I understand that the answers to the above could be situational but in general, these questions will help you understand character. Loyalty and respect are not just the outcome of right words spoken but also of sacrifices made, hard actions taken and leading by example.

Human behavior, is and always will be, unpredictable. You can never predict when disservice to a small minority (constituting less than 1% of your intended audience) can start a crisis that rides on social media to engulf the entire organization. What you can influence is how you respond to the crisis. Note that I have used the word “influence” rather than “control” because control can be an illusion. As a leader, you can always display your human side but more importantly, stakeholders need to know you are on top of things.

Your Executive Decision Right Now

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Abhishek Kothari

Abhishek Kothari

Futurist@The Intersection of Finance, Tech & Humanity. Stories of a Global Language: “Money”. Contributor @ Startup Grind, HackerNoon, HBR. Twitter@akothari_mba