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Risk researchers have always had a more realistic view of the vulnerability of business models than corporate executives. On the other hand, corporate executives are the ones with a clearer focus on future opportunities. Sometimes, however, these opportunities are more concerned with short-term feasibility and impact than the longer-term goal of sustainable competitive advantage. In this sense, a crisis could also be regarded as a clear signal that a business needs fundamental restructuring. The crisis represents an opportunity to initiate major (usually much-needed) transformation right now (finally!). Digitisation is just one example of how much more is possible – and indeed, desirable – in many industries and sectors than what has been achieved to date.
As it happens, it is perfectly possible to successfully combine standard operations with strategic (re)positioning if management and workforce both reflect on the potential opportunities. After all, ideas are not something that can be produced “on demand”, let alone restricted to a single goal. In short, it is well worth leveraging critical momentum.
To lay the groundwork for these considerations, it is essential to clearly define a crisis mode. “Business as usual” is not an option; people should be encouraged to be creative and all ideas should be welcome, at least to start with. Some companies, however, are always in crisis mode, because any deviation from the strategic plan results in operational chaos. Other companies never experience crisis mode at all, because they have become accustomed to low profits and stagnant growth. Neither of these two extremes is good, which is why every company should have worked out its own clear, appropriate definition of the term “crisis”, rather than trying to figure it out once a crisis has hit. Companies that have already thought about it can trigger crisis mode as soon as a genuine crisis situation occurs.
To effectively embed change, you need the positive commitment of all those involved; in change management, this is also known as the “unfreeze” stage. While a business is still running “satisfactorily”, any willingness to undertake major change is often limited or can only be elicited with considerable effort. This is where crisis situations help – people’s willingness to change is boosted by the realisation that change is needed and makes sense.
A crisis also helps to boost creativity, because the act of helping to remedy an untenable real-world situation unleashes additional creative potential. To do so, companies merely need to put innovation processes in place that are somewhat more sophisticated than traditional systems for “suggesting improvements”. Who, for example, are the people in the company most willing to embrace change – at all levels of the hierarchy? How can they be involved in the strategy formulation process during the crisis? How can a wide variety of skills be used to find ways of overcoming the crisis while simultaneously improving the company’s competitive position? At a minimum, these are the questions to answer. Interestingly, these questions also highlight fundamental strategic principles that remain valid even in a crisis.
Traditionally, crisis management focuses on rapid success, and only rarely on longer-term prospects. Why should a company’s most talented employees remain loyal to a company that can only see as far as the end of a crisis? Even if the company succeeds in emerging from the crisis, such a short-term view makes the ongoing erosion of the company’s business even more likely.
Bottom line: The only way to permanently overcome a crisis is by implementing a strategic process – and this process should take the specifics of each crisis situation into account.
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