How Businesses Manage in Extreme Crisis

The global coronavirus pandemic has exposed businesses to severe stress on an entirely new scale, yet many continue to manage amid exceptionally challenging and uncertain circumstances.

To increase organisational resilience and preparedness in future crises, it is advisable to unpick what helps businesses survive in adverse conditions. What behaviours, strategies and mindsets do those that make it through to the other side have in common?

During the pandemic, events have progressed quickly. Data about the virus and the decisions of leaders was in continuous flux and subject to ongoing updates. Amid all this uncertainty, businesses have had to engage in continuous processes of adaptation.

In such an environment, businesses must pay attention to their planning. They will likely need to adopt much more frequent planning, so they can respond to information in as close to real-time as possible, potentially for the entirety of the crisis. This is one characteristic of the agile business model, which is designed to balance the need for implementing change while securing business continuity. SurveyMonkey’s Adapting in Times of Crisis 2020 report found that agility was one of the two hallmarks of businesses best placed for survival during the pandemic.

Further, businesses can consider developing more than one plan – the first made according to a more conservative hypothesis and the second with a favourable one. Teams then closely monitor developments in the market and must be prepared to switch between the two plans, thus allowing organisations to profit from aggressive action when the environment permits this.

Additionally, one perennial problem threatening companies in times of crisis is a human one: optimism bias. It means that people are naturally inclined to under-estimate the negatives in a situation and assume a more positive outcome. In crises, this could give rise to several issues which hurt the crisis response, like reducing the accuracy of risk analyses. However, businesses can adopt measures designed to counteract optimism bias, like seeking the input of an outsider for objectivity, and encouraging improved organisational awareness so people can hold one another in check.

Good crisis leadership is another component of effective crisis management. Leaders are at the helm of decision-making processes, and they will need to bring employees along with them – inspiring their confidence in situations inherently full of doubt. For this reason, it is important that leaders are transparent with employees about the realities of the situation in which the company finds itself. Leaders who downplay events or deliver half-truths risk not only destroying employee trust and their own credibility, but they also compromise the ability of teams to come up with potentially effective solutions to problems.

Finally, strong creativity is an important – maybe even crucial – asset during crisis. In such times, the ability to think creatively to find new business growth opportunities, like entering a new market or developing a new product, may just be vital in saving a company from collapse.

References:

  1. The Most Effective Crisis Leadership Advice? Just Lead, June 2020, Forbes.
  2. What you can learn from businesses that do agile right, July 2020, Financial Management Magazine.
  3. Optimism Bias in Time of Crisis, Doug Reay, LinkedIn.
  4. Leadership in times of crisis, July 2020, American Psychological Association.
  5. Crisis Management in Project Management and Agile Delivery, April 2020, Medium.