Advance preparation can unlock opportunity
Using crisis as a force for change
While unanticipated crises, industry disruption, or brand threats can spell danger to many companies, those prepared to respond proactively can actually benefit from risk—using it to spark improved performance and uncover opportunity for positive change.
Change is a constant for business, but in recent months organizations have been exposed to exceptionally rapid geopolitical, regulatory, and business shifts. As an upshot, uncertainty and strategic risk are on the rise. While unanticipated crises, industry disruption, or brand threats can spell danger to many companies, those prepared to respond proactively can actually benefit from risk—using it to spark improved performance and uncover opportunity for positive change.
The truth, however, is that most organizations are not really prepared for a crisis, even if they think they are. Although stories of safety issues, cyber breaches, geopolitical threats, terrorism, and embezzlement dominate the headlines, few senior executives genuinely know how to respond in a way that protects both their organizations and their personal reputations from harm.
A three-pronged response
To avoid the costs, regulatory sanctions, and brand damage associated with a lengthy recovery from a crisis, it’s important for organizations to develop a proactive response strategy. There are three steps to this.
First, you need to perform a vulnerability assessment to identify the types of risks to which your organization is vulnerable. This requires reviewing a broad range of scenarios, including risks associated with market changes, shifting local and global regulations, lawsuits, customer concerns, cybersecurity, natural disasters, and more.
Second, you need a process in place to respond to those vulnerabilities. This should include not only the steps you will take in the wake of a crisis, but also the people who will be responsible for your response.
Experience shows that even the most capable leaders can freeze in a crisis. Failing to act on vital information, saying the wrong thing to the media, or making an ill-timed decision can make a bad situation worse. To avoid this outcome, you need to identify—in advance—executive team members capable of leading under extreme stress. These people should then be provided with crisis training to ensure they have the ability to make strong decisions under demanding conditions. You also should have third-party partners identified in advance who can help rapidly conduct an environmental analysis and mount an instant crisis response. In a digital world, response times are measured in minutes rather than hours or days, which is why advance planning is so critical.
Third, you need to test how well prepared you really are. This includes rehearsal using simulations, drills, and war gaming techniques. By practicing real-time decision-making in a risk-free, yet rigorous, environment, team members can develop the muscle memory required to automatically respond in a real crisis situation.
Using crisis as a force for change
Of course, the real test comes when you’re faced with an actual crisis. On the one hand, organizations caught unprepared must now determine if they have the capacity to use the crisis as a transformative event. Rather than maintaining the status quo, they can use the crisis as an opportunity to shift their organizational beliefs, culture, mindset, values, and processes.
On the other hand, organizations that have plans in place may discover gaps to close when faced with a real-world crisis. This gives them the chance to shore up their defenses and potentially learn from the missteps of their peers and competitors.
Organizations capable of detecting opportunity within risk can even find ways to turn the crisis to their advantage by taking offensive action. Perhaps they can pick up market share from a competitor, win over disgruntled customers, or even consolidate their strength through a merger or acquisition. Before you can use risk to power performance, however, you need to rethink how you manage, create strategy, and lead.
To learn more about preparing for a crisis, download “10 questions to embrace risk and lead with confidence”.