Crisis Happens! It’s Not “if” but “when”

The nature of today’s business environment is truly remarkable. The speed of business driven largely by the ubiquity of technology aided access to goods and services, has forced companies to accelerate business processes and product availability beyond traditional limits and an effort to secure first access to prospective customers. Meanwhile, whether a result of changing customer expectations, the evolving practice of co-creation between businesses and their customers, or some combination of these, there seems to be a shift away from offerings that are 100 percent ready for market to something closer to good enough to test customer response, get feedback, and iterate toward the next right answer. This isn’t necessarily true for all businesses, but it is for many.

There appears to be an error of fail fast, fail small, fail cheap, learn, and move on, built into the fabric of today’s businesses. If yours is not one of these, perhaps it should be. If it is, how are you providing leadership to help navigate these potentially rocky shoals? This evolution in today’s business environment has increased our need for resilience, our ability to resolve issues as they occur and emerge from these disruptions having learned from the experience. Unfortunately, this is much easier to say than to manage. Business disruptions are much more common than ever, but that doesn’t mean we’re getting better at managing them.

Why does today’s business environment require resilience, and what are some steps that you can take as a high-stakes leader to improve your capacity for resilience? Or as the COVID-19 pandemic has proven to all of us, there’s great value to be found in further developing this capacity. As a testament to the changing business landscape, it’s interesting to note that through the latter part of the 20th century, business schools around the world taught the latest techniques for disaster avoidance and how to build relationships with members of key stakeholder groups to maximize the probability of identifying early warning signs that pointed to a potential crisis, and then responding accordingly to extinguish the glowing ember of parallel before it erupted into a full blown firestorm.

Through these decades, there even seem to be an undercurrent of judgment that would be cast upon any leader who probably because of insufficient oversight or simply a failure to effectively manage, allowed a crisis to develop on his or her watch. Days gone by, perhaps these messages of focus and accountability helped solve a particular collection of leadership performance issues. But I’m reminded of my colleague Gerry Meyers, a former faculty member here at the University of Michigan, who created the first crisis leadership course at the Ross School of Business. He shared a prophetic philosophy at the beginning of every class for over 35 years. “Maybe it’s time to stop trying to plan our way out of problems and consider an alternative-managing them.”

Crises are going to appear before us, there is no way around it. So when one does appear, how will we manage through it? Well, into the 21st century we see the nature of today’s business environment changing. There are still some quality lessons to be learned from 50 plus years of management research and how great relationships can help leaders spot a potential issue before it becomes a raging crisis. In fact, we’ll explore just this practice when we learn more about applying the principles of stakeholder theory to early phase crisis identification later in this course. But today’s leaders aren’t facing the business environment of the past.

We see indications of the new business environment all the time on magazine and book covers “Fail Fast, Then Succeed,” and “How to Really Learn From Failure, “ and “The 10 Commandments For Business Failure.” Our new reality rewards risk taking, getting new products into the market before a competitor, and launching minimum viable products with a co-creation strategy, where we ask users and customers to define which features or improvements they really care about. Ultimately, we’re seeing what seems to be a commitment not to perfection, but rather being satisfied with getting things right at least as often as we’re getting them wrong. In our time together, we won’t be exploring the merits of this new business reality.

We will however, embrace the notion that this reality means we, our teams, our organizations, are going to make mistakes and will be forced to deal with the consequences. Hopefully, they will be minor. In these cases, we’ll fail small, learn fast, and advance our businesses through the benefits of these lessons. Realistically though, some won’t be small, and the consequences won’t be minor, and the stakes will be high. In these situations, we’ll be faced with the harsh, unenviable task of having to lead our team through the disruption with a focus on preserving whatever confidence our stakeholders have in us and rebuilding whatever faith we lose along the way.

The way we think about the likelihood of major disruptions in our business has truly evolved quite a bit through the first two decades of the 21st century. As high-stakes leaders, we must develop the capability to continuously examine the forces at play that illustrate for us that crisis is not a question of readiness if we encounter a major problem, but rather when we encounter one. All of us as business leaders, will be asked at some point in our careers sooner rather than later I would argue, to help lead a team through some crisis, some set of circumstances that threaten the future viability of our business.

To be truly effective leaders, we should be spending some amount of time and energy considering what to do and what our teams and stakeholders need from us, when such a scenario presents itself.