Module 4 Introduction. Stakeholder Value Propositions Inform Their Reactions to Crisis

So far in this course, we’ve explored the characteristics of our VUCA world, and have come to the conclusion that in some way, shape or form, we will eventually find ourselves in a crisis situation. It’s not really an if anymore, it’s a when. Because our odds of having to provide leadership during a crisis are pretty much one in one, it makes sense for each of us to build some crisis leadership capability. We’ve also established that one of the most important aspects of crisis leadership is the ability to effectively engage our stakeholders. Our organization will have many different stakeholders, each of whom will draw a value from the relationship with our firm.

It is these value propositions that are threatened during a crisis. So the most effective way to engage stakeholders is with these value propositions in mind. We’ve also explored the topic of resilience, primarily from an organizational perspective, and determined that the most resilient organizations leverage their intimate knowledge of stakeholder interests and the relationships that had been established with them. It’s through these relationships that businesses can identify potential sources of crisis and address them before they become critical.

Also, as a product of these relationships, our stakeholders can become valuable assets during and after a crisis, helping organizations recover as quickly as possible, and move forward with improved processes, the benefit of experience, and stronger bonds with our stakeholders and ever before, we’ve truly already covered a lot of ground so far. In this module, we’ll explore more deeply how we should be engaging our stakeholders during a crisis. We know that our stakeholders might have been able to help us prevent this crisis, but for whatever reason, that didn’t happen.

So here we are in the midst of a crisis of some variety, we’ll leave the question of crisis type opened for now, and we know that we must engage our stakeholders as one of our many crisis leadership responsibilities. What’s the best way to engage them? What information do we think they want to hear? How should we package the information that we want to share? What goal should we have as we plan and evaluate the effectiveness of our engagement efforts? These are all great questions, questions that we will address in this module. A very interesting aspect of stakeholder engagement that we won’t have time to cover in this course is the science behind how humans process information in a crisis.

Some fascinating research has been done in this area. We know, for example, how we process crisis physiologically. We know that when we experience or observe a crisis, our perceptions stimulate brain function that can invoke a fight or flight response. Psychologically, we know from research that negative events activate our brains more than positive ones. We have a negative bias, such that we automatically give more attention to a negative event, a negative information than positive information or events. As high-stakes leaders, it’s useful to know some of the forces that are working against us in a crisis. Human physiology and psychology are two reasons that your stakeholders and others will be watching intently as the events of a crisis unfold.

But as interesting as these topics are, our focus here will be on how stakeholder value propositions are threatened by a crisis. Have you ever thought about how you process a situation where your value proposition is being threatened? It turns out that researchers have spent time studying this very question. In the article that follows, you’ll learn a very simple but powerful model that will help you better understand how stakeholders reacts to crisis situations. This model will not only be useful for understanding stakeholder reactions during a crisis, but perhaps just as importantly, it can help us predict how stakeholders are likely to react to a given scenario.

If we could predict how stakeholders are likely to react to a particular situation, particularly if that situation had some degree of likelihood, then spending time working through a few of these scenarios would help us in a number of ways. One, we could begin to build generic response plans for certain types of situations. Two, we could identify gaps in our crisis response capabilities, and three, we could begin to prioritize the types of crises that would be most important to be prepared for. In the context of organizational resilience, these are all precisely the sort of questions that will help us create mechanisms to anticipate crisis and cope more effectively with them when they appear.

Enjoy the reading on how and why it would be useful to have a model for predicting stakeholder reactions during a crisis. Following the reading, I’ll be back to talk you through each stage of the model, and share some ways that you can put what you’ve learned into practice right away.