What Factors Contribute to a Crisis?

Crisis investigators, typically assigned by a regulatory agency to determine contributing factors and root causes of a recent crisis, always include a summary of findings in their final reports. Root causes, for those unfamiliar with the term, are specific underlying causes that can be reasonably identified, are within management’s control to remedy, and can help generate recommendations to prevent recurrences. What is a consistent lesson in these summaries? That crises are almost always the result of multiple contributing factors, which interact over some period of time (sometimes very quickly and sometimes very slowly), and eventually produce a chain reaction that results in a catastrophic outcome.

Why is this an important insight for high stakes leaders to understand? Because it tells us that in most cases, there are many warning signs before – often well before – there is a full-scale crisis. We’ve established that we can benefit greatly by engaging our stakeholders as our early warning systems to address potential crises before they actually become critical. This is a key aspect of resilience. But when these efforts aren’t successful, particularly when our stakeholders have been pointing out seemingly minor threats that have now escalated into a full-blown crisis, what was once an asset turns very quickly into a liability.

Consistent with the description shared earlier of the VUCA world in which we live and operate, ALL organizations are also facing growing levels of complexity. As complexity increases, early warning signals and subtle (maybe even not-so-subtle) vulnerabilities become more difficult to spot. Complexity makes solution-finding exceptionally difficult, as root causes are harder to identify, the scale and scope of both problems and solutions are more challenging to define, and solution implementation may feel almost impossibly arduous. Increasing complexity has enabled some incredible innovation and business outcomes, but a byproduct has been its often-debilitating impact on crisis leadership effectiveness.

Take the COVID-19 situation, for example. Even as we watched the development of the situation in Wuhan, China, the complexities of our tightly-coupled world made it difficult even for healthcare experts to predict the potential of this now historic pandemic. Regardless of your political perspective, we (here in the United States) appear to have grossly underestimated an appropriate response, not because we didn’t see it coming – WE ALL WATCHED IT – but because we couldn’t navigate the complexities of the various systems – political, social, economic, health and welfare, to name a few – that govern our lives.

As an interesting example of system complexities coming together to produce a crisis, consider the events that led to the infamous moment at the 89th Academy Awards celebration on February 26, 2017, when La La Land was announced as the year’s best motion picture, but Moonlight was the actual Oscar-winning film.

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Consider all of the things that had to go wrong for the two hosts, Warren Beatty and Faye Dunaway, to announce the wrong movie? You don’t have to be a student of the motion picture business to identify several factors that may have contributed to this crisis – some of which will be summarized below. What you should be a student of, however, is how complex systems or processes with many moving parts can create threats to an organization. Many of these threats start very small and are seemingly insignificant, but when a collection of small, insignificant issues come together in just the right way, the results can be explosive.

What are some potential root causes of the best picture crisis at the 89th Oscars? Here are a few elements of the process that suggest potential problems, should things not go entirely according to plan. As you read each item in the following list, consider how observers (stakeholders who can help us identify threats and increase our capacity for resilience) might have been able to recommend process modifications to reduce the potential for a catastrophe.

1) The secretive nature of the process. PricewaterhouseCoopers (PwC) was responsible for managing vote tabulation and the determination of Oscar winners. In fact, only two people at PwC knew the actual winners before they were announced on live television.

2) Dependence on the celebrity award presenters. As Warren Beatty and Faye Dunaway would announce whatever they read from the card in the envelope they were given, these announcers would have no way of knowing if they were announcing the correct winner.

3) Dependence on the presenters being able to read what is printed on the card. This particular year, a new combination of paper and ink colors were reportedly very difficult to read. What if the presenters couldn’t read the card, or could only partially read it?

4) Dependence on show producers to get the correct envelope to the announcers. In order for the announcers to reveal the actual winner, they would need to receive the correct envelope (it was later determined that Mr. Beatty was actually handed the envelope for the previous category winner, which was Emma Stone for her performance in La La Land.)

5) Dependence on the effective use of redundancy. Show producers had elected to create two sets of awardee envelopes, with a set being available to presenters on each side of the backstage area. While this was done to provide redundancy and flexibility for producers, it was actually this redundancy that contributed significantly to the crisis.

6) Overconfidence. According to PwC interviews prior to the event, there was no possibility that such an error could take place. The accounting firm had managed this process for years without an error, so it seemed almost unthinkable that an incorrect announcement could happen.

7) Lack of a Crisis Management Plan. Finally, as the events played out on stage on that evening in the Dolby Theatre in Hollywood, CA, it was clear that neither PwC nor show producers had a way to deal with such a crisis, when it did occur.

This list of potential ‘single-points of failure’ is provided as a way to illustrate that even in a system as simple as the one described here – the announcement of a Best Picture Oscar, having been done 88 times previously without error – there are opportunities for thing to go wrong in a significant way. This is why it is so important for high stakes leaders to understand that an important feature of the crisis environment is that threats can arise from many sources. As we operate within the VUCA business world, we must be vigilant in our awareness of potential threats and, to the best of our ability, engage our stakeholders to help us manage them.