INSEAD, which is consistently ranked among the finest business schools in the world, has been looking at how the best CEOs handle a crisis.
They itemise these essential qualities:
- Acceptance and preparation
- Risk mitigation
- Cool headedness
- Attention to people
When crisis strikes, business-as-usual protocols will likely have to change. Set procedures, even standard roles and responsibilities, may be irrelevant if not counterproductive.
A crisis may well call for entirely new solutions and whatever these solutions are the CEO needs to find them fast. As Giuseppe di Lampedusa wrote in his book The Leopard: ‘If we want thing to remain the same, things will have to change’.
Acceptance and preparation
CEOs are getting used to the fact that during their tenure, they will have to fight a crisis. A crisis that may well be caused by external forces and events. Like the innocent bystander in a Western, a company, on occasions, is going to be in the wrong place at the wrong time.
Jeffrey Immelt, ex-General Electric CEO puts it this way: “Anybody that has been around in the last 10 or 20 years has seen what I would call ‘tera-risks’ – from outside the company. In other words, the global financial crisis, 9/11, Fukushima nuclear power plant, you know, oil spills, stuff like that.”
But of course, that’s not to say that the issue won’t arise in-house. One only has to think of the BP Deepwater Horizon oil spill of 2010 to appreciate the magnitude of what can happen when a series of small issues combine to create an explosion and fire on an oil rig that led to the worst oil spill on record. Add to that toxic fusion a tin-eared CEO and the mix is combustible.
So, scenarios need to be scoped, simulation exercises undertaken and staff trained to enable an effective organisational response.
A good CEO needs to develop sensitive antennae to detect potential risks and then put in place risk mitigation which according to INSEAD ‘combines mathematical tools, big data, diverse human expertise and leadership judgment grounded in experience, knowledge and intelligence’.
Renato Bertani, CEO of Barra Energia, Brazil, uses a gambling metaphor: “The key is trying to figure out how to set the odds in your favour. That’s the big difference from gambling. There, the odds are in favour of the casino. In our business, you want to understand sufficiently so that most of the time we win.”
A cool head and a speedy response are essential qualities needed to resolve a crisis. According to INSEAD, bosses must remain calm and: ‘Analyse the new reality, adjust their mental models, evaluate options, make a decision and only then act. Unlike in normal times, they must do all this quickly’.
One CEO thinks feline qualities also help: “To manage a crisis you need to be like a cat – super attentive to the environment, scanning it constantly for the new signs of danger or hope, and moving around with your legs half-bent, so you can jump away quickly.”
No one can handle a crisis on their own; it takes collaboration. At Crisis Solutions we teach that overcoming a crisis will almost certainly involve groups of people who don’t usually work together coming up with innovative solutions to fix the problem.
Harvard Business School Professor Amy Edmondson identifies what she calls Teaming. It is collaboration that cuts across formal organisational boundaries and can be seen as teamwork ‘on the fly’. Teaming is designed to draw on the creative energy of people from different parts of a company to help it overcome a crisis. Edmondson also claims that Teaming should enable organisations to become more resilient after an emergency has passed.
Attention to people
In a crisis people should be every CEOs priority; people who are affected by the crisis and those who will ultimately rescue the company from adversity. Bosses must be attentive to the ideas and feeling of their employees and indeed everyone who is caught up in the emergency. They need to supply sympathy and empathy combined with a willingness to take difficult decisions while providing the authority and direction sought by staff. Bosses must also exhibit optimism and confidence that a crisis can be overcome.