Applying new lenses to crisis management

Every crisis has its own unique character, rooted in specific organizational, regulatory, legal, and business realities. Yet all crises have similar patterns and common effects: surprise, fear, insufficient information, internal strife, intense media scrutiny, and feelings of helplessness.

All of these effects are amplified today due to the complexity of products and organizations, rising stakeholder expectations, growing mistrust of institutions and organizations, and the speed of business and communications.

Your response will define not only how investors respond, but also how communities respond. In many respects, it also defines how long it will take for you to get back to business as normal -- or business altogether.

So, what can you do during a crisis to help manage the short- and long-term effects? At MIT, we studied crises across subjects and applied lenses and frameworks to learn how to make better decisions in times of uncertainty. Here are a few takeaways that are critical for businesses trying to manage a crisis:

Organize a crisis response team

The ideal crisis organization includes a small, cross-functional team encompassing all major aspects of the business, such as operations and planning, public and government affairs, finance and legal, etc. The best teams are relatively small, with limited approval processes, a full-time senior leader, and high levels of funding and decision approval.

Identify threats

In my experience, it helps to think of crises in terms of “primary threats,” which are comprised of the interrelated legal, technical, operational, and financial challenges that form the core of the crises. “Secondary threats” include reactions by key stakeholders to primary threats. This allows you to form early judgements about possible paths the crisis may travel and help identify the major decisions that must be made quickly.

Stabilize stakeholders

In the first phase of a crisis, it is rare for technical, legal, or operational issues to be resolved. The most pressing concern will be to assess reactions by key stakeholders and reduce anger and extreme reactions. This helps buy time for the legal and operational teams to complete their work. What usually works is to identify total exposure and milestones by stakeholders, then designing specific interventions to reduce exposure.

Resolve technical and operational challenges

Many crises have a technical and operational challenge at their core. However, the magnitude, scope and facts are rarely clear when a crisis erupts. If possible, try to avoid overpromising on timelines and instead allow the technical and operational team to slow down in order to speed up.

Repair root causes

Root causes of major corporate crises are seldom technical issues. Often, they involve people issues (culture, decision rights, and capabilities), processes (risk governance, performance management, and standards setting), and systems and tools (maintenance procedures). Repairing the root cause of any crisis is usually a multiyear exercise, sometimes requiring large changes to the fabric of an organization. Hiring fresh and objective talent is one tried and tested approach. Other initiatives include the redesign of core risk processes, increased powers for the risk-management function, changes to the company’s ongoing organizational structures, and work to foster a new culture and mindset around risk mitigation.

Jordan Baucum, EMBA '17, is a corporate reputation and crisis communications consultant based in San Francisco, CA and a Fellow at Duke University's Ormond Center.