The business landscape is a constantly shifting obstacle course of risks. Navigating that obstacle course and coming out the other side is one of the biggest challenges for businesses hoping to stay resilient and thrive.

Many businesses have come to accept this new reality and understand the need to be proactive in the face of risks. They may have put in place processes, structures and formats that are designed to help businesses stay resilient. What they are unable to do however is predict the future and the unexpected will still occur.

Crises seem to be increasing in frequency and impact. We’ve seen the impact that a disruption in service, loss of data, leadership scandal or extreme weather can have on a business’s ability to function and serve its customers.

The proliferation and power of social media, as well as new regulations and laws (such as GDPR), also now means that hiding a crisis from the public and the media would be as unwise as it would be impossible. Once they’ve got hold of a story, the business and its leaders’ handling of the crisis will be under scrutiny.

For example, just a few months ago, the poor handling of the crisis that followed a highly unsuccessful IT project, which cost more than 200 million euros and caused one of Britain’s worst banking outages, led to TSB Bank’s CEO stepping down.

Strong leadership to ensure resilience during a crisis has never been more important. When they occur, crises will threaten an organisation at the highest level and the executive leadership team will be the ones in the spotlight as they try to navigate to a positive outcome.

How do we define a crisis?

Here are four typical conditions that usually define a crisis:

·         There is a threat to:

o   An organisation, its customers and stakeholders

o   the general public

o   or the environment

·         There is an element of surprise. Either the type of incident or the impact that it’s having is beyond expectations

·         Existing response mechanisms that have been put in place are failing to cope, meaning they need to be refocused or changed completely. That implies reviewing situational understanding and any decisions taken, or resources allocation and adjusting business priorities

·         Significant strategic business decisions have to be made quickly to protect brand and reputation

What are the fundamentals of crisis management?

When a crisis happens the severity for each situation differs, but they all impact the ability for a business to run “normal” operations. Speed is now key and it’s up to the executive leadership team to figure out a plan of action. To do that, there are five key questions that must be posed:

-          What happened?

-          Why are we here?

-          How are we going to get out of it?

-          What route are we going to take?

-          What things do we need to do to get there?

By their very nature, crises are mostly unexpected and their impact unknown. Take the recent drone activity around Gatwick as an example, which brought the airport to a halt for three days. Whilst limited drone disruption had taken place, a situation of this scale had never been experienced before and the authorities struggled to manage it.

What you can count on is that a crisis will be complex and unstable and what were detailed plans may suddenly be missing a few elements. And that is the crucial difference between a crisis and an incident. For an incident, a business will most likely have prepared for it and have an agreed plan.

When a crisis occurs, the scope of what was prepared for changes and plans have to be tweaked with only a limited amount of information available.

The race is then on and a rapid hunt for information takes place. The challenge is that on the first day of a crisis about 80% of the information you are using may be wrong – you just don’t know which 80%. It’s therefore important to ensure that you know which information you have is right and challenge, check, be hyper-critical, test assumptions, re-check, clarify and analyse.

Don’t accept the first thing you hear as gospel and don’t make assumptions without assessing your basis for making them. This all needs to be done under time pressure and the reality is you’re not going to know everything you want to know or find out everything you want to find out.

This is where strong, resilient executive leadership comes in – the ability to make decisions under pressure with incomplete information.

How does the leadership respond?

It’s vital that the leadership team quickly accept the uncertainty of the situation. They then need to just as quickly bring an air of calm, authority and determination.

Crisis situations engender strong psychological responses of fear, uncertainty and worry as well as panic, insecurity and anxiety. Demonstrating calm and authority, leadership teams need to help get people focused on the problem and finding a solution.

That means setting the right conditions to allow people to respond effectively. Give people confidence, build consensus and create the right team. This isn’t always the same group of people that will lead. Depending on the nature of the crisis, it’s important to include the right people for the job with the right set of skills.

Once the team has been created, it then needs information. Information management is crucial and leaders need to bring what information they can access into a format and a structure that provides a clear view of the situation. It will show what’s happened and what’s happening now so that they can figure out what to do and how they are going to do it.

Demand for information will always be greater than the availability of the information, particularly at the start of the crisis. Having a history and current picture of the crisis will help leaders identify priorities and ultimately reach a decision or series of decisions.

Most critically, effective information management allows the development of shared situational awareness – or everyone in the team being on the same page.

Trust your gut

In a crisis, there are two types of decision making that work hand-in-hand – analytical decision making and intuitive decision making. Analytical decision making implies having time, which means that intuitive decision making often (and naturally) plays more of a role in the early stages of a crisis.

Some don’t like the idea of using intuition, having a “seat of the pants” feel to it, but “gut feel” is nothing more than experience and making decisions based on what you’ve seen before. What leaders do need to watch out for are cognitive biases. Recency, proximity and confirmation bias (looking for information that will reinforce your preconceptions) can all influence decision making.

To be truly effective, resilient leadership has to be aware of where they are becoming victim to one of these biases. Best practice is to raise awareness of these biases when preparing the leadership team for a crisis so that they can identify them and know how to steer around.

Change course

Once a decision has been made, it’s important to follow the impact of that decision, communicating it out to the business and externally and then getting feedback on whether it’s worked. If it hasn’t, then a successful executive leadership team will have the confidence to change it. That isn’t easy and takes moral courage to take that step.

Leaders must feel empowered to be able to change their minds and the direction they are taking as the situation and new facts come to light. Ignoring the facts and maintaining the same course will result in failure.

Where can it go wrong in a crisis?

Communications is frequently where many crisis responses fall over. Effective communication is at the heart of successful crisis management. It requires a proactive approach and being on the front foot – effective communications cannot be achieved passively or defensively.

The trouble is there are plenty of barriers to effective communications: language, jargon, accent, dialect, tone, technology, stresses, security, privacy, confidentiality.

It’s very easy for mixed messaging to take place. Just sending an email is not effective communications and even verbal communications need to be checked. To help at the strategic level, leaders should bring in the communications experts to help with creating messages for the variety of audiences that need to hear what you are saying: governments, partners, regulators, media, clients, customers, supply chain etc.

Prepare as much as possible

Whilst it’s impossible to know what will happen when a crisis hits, there are things executive leadership teams can do to get them in the best place possible to respond successfully:

·         Bring in experts to deliver crisis management masterclasses

·         Adopt a coaching approach for exercises

·         Train with challenging and realistic scenarios that build on the key skills for crisis leadership

·         Vary exercise scenarios to address most significant (worst case, most likely, highest impact) organisational risks

·         Don’t start testing people who are not or have not been prepared for it

A crisis is a scary time for any business. But if managed right, it can also be an important learning opportunity. By showing resilience during a crisis, a business can not only maintain its reputation but also potentially improve it by showing its strength. The key is strong, effective leadership.

Chris Butler, Principal Consultant, Sungard Availability Services.