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COVID-19: Managing crises when two worlds collide
Executive Education / 27 March, 2020
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Leiter Competence Center Professional & Executive Education
Thomas Kohrs leitet das Competence Center Banking und Vermögensberatung der Frankfurt School und ist ausgebildeter Diplom-Bankbetriebswirt. Der Schwerpunkt seiner Ausbildung liegt im Bereich Wertpapier und Vertrieb. Er verfügt seit mehr als 15 Jahren über praktische Trainererfahrung als Berater, Trainer und Dozent an der Frankfurt School.

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I’m a businessman – and also a reserve officer in the Bundeswehr, the German Federal Armed Forces. They’re two very different worlds. After the Lehman bankruptcy in 2008 and the subsequent financial crisis, I’m able to imagine almost any kind of business world scenario. And in the aftermath of the Charlie Hebdo attack in 2015, I’m also able to imagine all kinds of disasters, accidents or assassinations in the outside world. This is where my job as an armed forces liaison officer fits in, because in disaster control scenarios, I’m responsible for maintaining clear channels of communication between government agencies, blue-light units (police, fire brigade, Germany’s Federal Agency for Technical Relief, Red Cross etc.) and the Bundeswehr. In recent years, we’ve held exercises involving floods, forest fires and total power failures. And yes, we’ve regularly discussed pandemics, albeit only as an outside possibility. But the kind of pandemic we’re experiencing currently? So fast-moving and wide-ranging? Resulting in almost total economic shutdown? Very few of us anticipated anything like this. Making it all the more important to focus on a crisis management strategy.

Massive impact on the economy

In 2018, Germany’s GDP was around EUR 3.5 trillion. On average, that equates to EUR 9.5 billion per day. Currently, much of that is no longer happening, so effectively equates to zero. If people can neither consume nor produce, economic performance rapidly declines to a minimum. Yes, many companies are still earning money and paying employees their salaries – at least for the time being. But it’s clear that GDP is likely to plummet in the near future. This is the economic price we’re already having to pay, albeit to varying degrees: self-employed individuals immediately and directly, civil servants to a much lesser extent. It won’t be clear whether the almost total lockdown of business and social life has worked until the end of April at the earliest.

Crisis management par excellence

But if we want to manage this crisis, we really have no alternatives. Initially, Italy and Spain adopted these medical and economic measures with some hesitation – and now we’re having to accept them here in Germany. An economic standstill across almost all industries, accompanied by dreadful pictures of overcrowded hospitals and columns of military vehicles transporting coffins. Causing my two worlds to collide in the saddest way, across a virus-mediated interface.

In such situations, crisis management means clear leadership and the ability to take decisions quickly under time pressure. In the normal way of things, our democratic institutions strive to take all relevant stakeholders into account by engaging in lengthy debates and socio-political discourse, and by being willing to compromise when weighing up the various options. But to do this, you need time – time you don’t have in a crisis.

In the world of the Bundeswehr (generally regarded as authoritarian and relatively undemocratic), when an order is issued, it is obeyed as long as it fulfils a necessary, official purpose and doesn’t break any laws. In actual fact, this is not so undemocratic, because all orders or commands must satisfy these two criteria. But currently, as a citizen in the social world, I’m obliged to acknowledge that some of today’s directives are far more draconian than Bundeswehr orders. They violate basic human rights and restrict individual rights – and we must be careful to ensure that they do not remain in place permanently.

Crisis management: when decisions cannot pretend to be 100% correct

Crisis management presupposes certain things. First, you need a clear analysis of the internal and external factors affecting the situation – as detailed as possible, to act as a basis for identifying the available options for immediate action. Second, after weighing up the pros and cons of each option, you must make a choice, take the decision and act upon it. The choice of option that results from this decision-making process may not be the best one. It may well turn out that in retrospect, after taking all outcomes and consequences into account, another option might have been more appropriate. But during the actual crisis, the time required to assess decisions retrospectively and put them into some kind of historical perspective simply isn’t available. Which is why crisis management also requires cool, analytical, exemplary thinking. In the best cases, crisis managers find the modes of action best suited to leading a team, an organisation, a nation. But first and foremost, crisis managers must be capable of managing themselves. Ultimately this, plus a good pinch of luck, is what enables them to succeed.