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.

The Business Lesson behind HDv 100/100: Preparing a Decision

+++ As being posted on LinkedIn +++

 

I had the opportunity to attend training at the Academy of Leadership of the German army. During the time there I learned an universal and pragmatic tool to cope with decisions in critical situations. I gave this tool to all of my team members ever since with the advice to see behind the military façade of it and use its core in business. You do not have to follow it slavishly but it is a good navigator**.

The military uses management by objectives. Which seems strange first – we all tend to think of a pure command and control scenario – is an absolute must. Soldiers are working in groups of specialists. Modern warfare asks every soldier to be a leader and to be led in constant change. In a way, a situation also quite common for today’s business scenario. So, having a look on the toolsets the military developed is interesting for sure.

One method is a format how to prepare and finally ask for a decision to be done from your management. At the first sight, the military way of doing it seems long and complex. I couldn’t believe it at first and asked my trainer when this is done. The answer was simple: Always, even under direct fire. Because these three minutes extra have proven to save lives later. In business, these three minutes reduce waste and save time.

So, whenever I want my management to decide or I am asked to decide, I stick to the following format. It all starts with an Analysis of the Order. It is something you do for yourself to start with but keep it in records. Whenever you give a status report or ask for a decision, you start by presenting your analysis as an introduction.

Analysis of the Order:

(1) Repeat the order given in the exact format it was given to you. This introduces all parties into the situation. Your manager might do a lot of things at once and she might not have present what the question was here.

(2) Intent of the superior in your own words. Reformulate this in your own words. Make it short and precise. It forces you to think about it and surfaces if you simply did not understand the request. If so, ask for clarification better in the beginning then after working for ours on the wrong things. Given your interpretation to the manager gives her the opportunity to see if you understood her intent. And finally, always fulfil the intent and not the direct order. Situations might change and you need to adapt.

(3) My main performance. You will probably be part of a larger team and you play a part here. Giving this information to the manager shows again if you understood what is asked.

(4) Restrictions. There are limitations (e.g. lack of resources, time constraints) and you need to make people aware of this as well as be aware to manage accordingly.

(5) Logical consequences / Check questions. You could call this KPIs or success control. Formulate questions and measurement to gauge the progress and final success of your actions.

If you know have to ask for a decision, stick to the following format:

(1) Analysis(see above)

(2) Status

(3) What has to be decided now?

(4) When needs the decision to be done latest?

(5) What options for a decision do we have (with the major arguments pro and con for each)?

(6) What option would I choose as the expert?

The key here is to optimally prepare the decision maker by giving the right amount of information. It is also a mean to steer the decision because it is easy for the decision maker to follow your advice. The preparation takes time and effort but pays back. And if you have an unprepared meeting, don’t be surprised about the outcome.

Let’s make a simple example:

Analysis:

Order given: Handling 3 party tracking on our customer nurturing process is a lengthy and complex process that leads to partner complaints. Your team should take over the process ownership.

Intention: Enabling a friction free onboarding of new partners as well as reducing measurement errors during tracking

Main performance: (1) Analysis of current situation, (2) requirement gathering and analysis from partner side, (3) process design and technical implementation, (4) operation and continuous improvement of process

Restrictions: (1) Process spans multiple teams, (2) current process needs to kept working until replacement is in place, (3) project has no budget assigned by now

Logical consequences: (1) Reduction in partner onboarding time, (2) reduction of measurement errors

Decision:

Status: We analysed partner needs and the situation we are in. To detail out possible implementations, we look for a basic decision.

What is to be decided? To provide an agile infrastructure, we need to revise the backend and do some major changes. This might be a major investment and defines the future flow of the project.

When needs the decision to be done? It blocks further work on the project, so a fast decision taking is necessary. At latest Friday this week, otherwise project gets delayed.

What options do we have? (1) Home grown process engine (Pro: The most flexible/Con: Most complex, expensive, longest development time), (2) Using BPM engine (OSS or licensed) (Pro: Faster implementation, supported, error proved, Con: Less flexible, expensive), (3) Using cloud based BPM (Pro: Faster implementation, supported, error proved, pay what you need, Con: On heavy load might be more costly than on premise, relying on cloud provider)

What option would I choose? Cloud based BPM.

It is a simple example and certainly in real live you would add more information. But please note one thing: Reformulating the intention behind the request gives a lot of more insight. For me this is the key to success.

 

** It is based on the HDv or Heeresdienstvorschrift. This is a collection of standards covering all aspects of military life. It is comparable to the NATO’s STANAG. The content of HDv 100/100 is similar to STANAG 2014 and it describes a standard format to give a military order.You can find similar standard formats for firefighters or ambulances.