Managing in Times of Crisis

+++ As being posted on LinkedIn +++

 

Leading a cruise ship in calm sea and sunny weather is nice and easy. But hardly the time can you identify great leaders. In times of crisis, leaders need to show how well developed both sides of their skills are – management and leadership. Management is necessary because you will have to show good management practices which follow some simple rules. But management alone will not do the job; leadership will make all the difference. In the following, I collected some points to think about when managing a crisis in your business.

Identify a crisis, name it such and react

Sometimes it is hard to identify a crisis because things run so nice and smoothly, all is cozy. But as every captain has to see the weather forecasts, as a business leader you need to look ahead. Managing a crisis before it becomes life threatening is always better than waiting until you are in the middle of the hurricane. Keep your eyes and ears open. Is there something disrupting your business? Do the sales numbers not behave as they should? Do not overreact and interpret a bad week as the end of the world; but do not wait until the other guy already is eating your lunch.

A crisis means that the situation is not controllable by simple correction. Larger action is needed, so radical that it might disrupt your current business flow. Managing a crisis will also mean to invest in the future. You might jeopardize short term revenues.

When Steven Elop took over the helmet at Nokia, the company was not yet in deep trouble but it also ran out of time to prepare for the future. While trouble was not there yet, it was obvious that it will be. The perfect crisis. Elop wrote a memo (http://blogs.wsj.com/tech-europe/2011/02/09/full-text-nokia-ceo-stephen-elops-burning-platform-memo/) and compared Nokia to a burning platform with the choice to do nothing, stay on the platform and burn, or take the risk, jump and find a new future. He wrote this memo deliberately and was also pretty sure that it won’t be kept secret forever. But he did it to state the obvious and prepare Nokia, partners, and the world for what now had to happen.

Prepare you reaction – Do unpleasant changes quick and with a reason

The next phase is the most unpleasant one. Maybe we are talking about lay off, canceling beloved pet projects, reducing footprint, whatever. The first round of changes will effect business management. The business needs to be taken under control. Rigid cost management, clear KPIs, measurements, a review of processes. Goal of this exercise is to identify dead wood, waste. In short, things those are not part of your core competency. Knowing what you define of your core competency is of absolute help in this time.

This phase needs to be very short, so prepare it very good. And keep it deliberately short. When selling unnecessary things decide for the speed rather than for the absolute profit. Make the company go through this quickly. But keep an absolute eye on your employees; those who will have to leave and those who will stay. Have a good explanation and try to provide options. In my experience, treating somebody you have to lay off with absolute dignity and respect pays off. There are some areas where you need to guide the laid off person to the door. But in most cases giving the guys to go in dignity should be your primary goal. Picking up people at work and guiding them outside like a prisoner is a technique used by the police forces of some countries because it causes tremendous damage in the social status and self-esteem. You do not want to be like the GeStaPo.

For the people who stay it will be a very unpleasant time when you sit there and wait if you will be called in or not. So, for their sake, keep it short. Machiavelli was right when he stated that bad things need to happen sharp and quickly. Maybe he was right for the wrong reasons but still he was right.

All hands on deck

+ Declare and explain the obvious

As Elop did, it is now time to declare the obvious. The good old all hands meeting is a good idea now. Explain the why and how. Never talk negatively about those who had to go. In most cases, it was not at all their fault.

Don’t treat people like idiots. Some of them will know details because they prepared them for you. In this situation everybody expects changes. So, it is on you to deliver now.

+ Give a vision

Show a vision and a process how to get the company on the vision. Show that the changes were a preparation to get there. Companies can change tremendously when having the right vision. Again Nokia produced rubber tires before they started with mobile phones. But the vision needs to be good, understandable for everybody and obviously leading to the better.

+ Define a goal and show the progress

While the fact to have a clear vision is a necessary start, we can be satisfied with it. We need a plan how this translates into strategies and finally into actions. It is totally fine to not have all strategies and actions formulated by now, but then have a plan how to get there and when. Show that and how you measure and report the progress. You ask those people to go with you, so they deserve to be informed as much as possible. If you are member of the Shakespeare Company you might manage to get through keeping information behind your back. If you are not, better not try it. Human beings are very sensible for this and you lose their trust in the moment when you need it the most. There are things you cannot simply disclose to a broader audience… fine. Then say so and give a reason. As long as you do not have a crowd of yellow press journalists there, people will understand but trust you.

+ A crisis is time for good craftsmanship and change

Stating the obvious means also telling the truth about the immediate future. It is now time to get the business under control. This means a lot of boring stuff. Rigid cost management is one of this. Possible cuts of beloved activities or benefits. Everybody needs to understand and support. Now is the time to show the best craftsmanship in your proficiency. Make sure that people understand that it is not about controlling and judging them or their work. It is about having a clear picture on the situation to enable good decisions.

But it is also time for change. This cannot simply go on as before. So, look at the vision and scan your environment for things that do not fit into it, state it and get it sorted. For the leadership team this is the time to introduce radical change. People expect it and most of the time they are more than willing to suffer a short term for the better future. But this will not go on forever and if you miss the train, the situation gets even worse.

+ Ask everybody to help and give specific tasks

In times of crisis, normally nobody stays in bed. You need each and every one. But they need a clear position and a clear task. In an emergency training, this is called managing the scene. Do this! Have clear ideas, regular war room meetings. Share information and get information. Delegate as much as possible and keep yourself free as much as possible. Reason is that there will be a lot of unforeseen things popping up. If you are already loaded with work, you have to reprioritize all the time. Rather keep your team busy.

+ No politics please

In times of crisis, you will make new friends for life. You will discover that people are different to what you thought they are before. But you need to be open for that. Break little kingdoms by mixing up stuff and getting people to work together that normally would not work jointly. Make it obvious that it is no longer time for pet projects but for a clear check.

+ Keeping the notion of change

Keep your people informed how the situation looks like. How did we do according to the goals which we were given? Show specific actions and how they succeeded or failed. Over communicate.

But also, try not lose the idea of change. Make it a constant and keep on adopting. Small, continuous changes are better than a crisis.

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