How to lead through a crisis

Leaders must build a culture in which people are happy to speak up before crisis hits, says Stefan Stern.

May 16, 2019
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Dennis Muilenburg, CEO of Boeing, the world’s largest commercial aircraft maker, has done ‘a really good job.’ So said David Calhoun, lead independent director at Boeing, in the wake of two crashes in Indonesia and Ethiopia, involving Boeing’s new 737 Max plane. With the new aircraft grounded until a fix to its flight control system has been achieved, others might question this upbeat assessment.

In this age of instant global communication and transparency, any leadership team that did not work to anticipate potential crises and try to be ready to act when disaster strikes, would be falling down on the job. So how can leaders spot the early signs of a crisis, and how should they respond if and when it happens?

According to Lanny Davis, a former adviser to US President Bill Clinton, leaders should ‘tell it early, tell it all, tell it yourself.’ However, this view presupposes that you know what ‘it’ is and have the information you might need to explain what is happening. And although leaders should lead from the front, other sources of expertise – whether inside or outside the business – might be required to help calm the situation.

Crises may appear to erupt suddenly. In reality, they may have been brewing for some time. Indeed, the signs may have long been visible to those who know where and how to look. In their 2005 paper ‘Leadership as (Un)usual – how to display competence in times of crisis,’ Erika Hayes James and Lynn Perry Wooten, describe the different stages of crisis and six essential leadership competencies to cope with it.

   ‘Crises may appear to erupt suddenly. In reality, they may have been brewing for some time.’

 

The first task is ‘signal detection’ – knowing which signs of crisis to look for. This may take place at the same time as a second task ‘preparation and prevention’. It is followed by ‘containment and damage control,’ where Lanny Davis’s ‘tell it all, tell it yourself’ principle might apply. The cycle ends with ‘business recovery,’ and ‘learning.’

James and Wooten’s six leadership competencies are:

  • Building an environment of trust. Alerting colleagues who are able and encouraged to speak up, is probably the most effective early warning system. However, this will not happen in a low trust environment.
  • Reforming the organisation’s mindset. Complacency and arrogance fertilise the soil from which crises grow. For example, health and safety is every employee’s responsibility. The business’s ethical standards must also be clearly understood. Leaders must work on the organisation’s collective mindset.
  • Identifying obvious and obscure vulnerabilities of the organization. A classic SWOT analysis may be insufficient to help you spot and manage risks. Vulnerabilities may exist throughout an extended supply chain or in far-off time zones. A business continuity plan may help deal with them.
  • Making wise and rapid decisions. Steering a safe path through a crisis calls for ‘grace under pressure’. A cool head is essential, otherwise an already tricky situation will only worsen. A crisis management team may be needed to speed up decision-making.
  • Be courageous. Inaction is not an option. A crisis calls for decisive interventions. This requires courage –if leaders are founding lacking they should make way for others who have it.
  • Learning from crisis to effect change. Whether managed skillfully or not, a crisis becomes an invaluable learning opportunity. New processes may be developed to reduce the chances of anything similar re-occurring. Crisis can be a ‘burning platform’ – a spur to action, learning and improvement.

In a recent HBR blog in response to the Boeing crisis, Harvard Business School professor Amy Edmondsen observed that the risk of crisis may not have been properly understood at the top of the organisation.

‘What’s required,’ she wrote, ‘is more than operational fixes. It is nothing less than a full organisational culture change. But how telling it is that it takes a cataclysmic event (two, actually) for executives to take culture seriously.’ She concluded: ‘What’s needed is speaking up and tuning in.’

It is up to leaders to build a culture in which people are happy to speak up before crisis hits.

 

Stefan Stern

Visiting Professor, Cass Business School

Stefan Stern is visiting professor of management practice at Cass Business School, a business journalist and former FT management columnist. He is co-author of Myths of Management.