Decision-Makers: The "Who", "When", and "How" of Important Decision-Making in Crisis Resolution

2010 was the year of the biggest corporate crisis in the 21st century, so far: the BP oil spill in the Gulf of Mexico. Its magnitude overshadows many events which occurred around the same time, and we can easily glance over a significant crisis which struck just one year prior: the Toyota vehicles recall. 

In August 2009, a stuck accelerator on a loaned Toyota Lexus resulted in a tragic accident killing 4 people in California. The cause of the crash was quickly pinpointed as an incompatible floor mat entrapping the foot pedal, and in November 2009 Toyota announced a recall of 3.8 million vehicles, adamantly stating that the sole issue was the floor mat and nothing else.

But this was far from being over.

The US National Highway Traffic Safety Administration (NHTSA) called Toyota's statement "inaccurate and misleading" and insisted on the underlying problem - the accelerator pedal - being investigated. The LA Times published multiple highly critical articles against Toyota, including a number of customer accounts of unintended acceleration in Toyota vehicles. Throughout 2009, Toyota also received 3 reports of unintended acceleration in vehicles without floor mats.

In December 2009, after accelerating out of control, a Toyota Avalon crashed into a lake in Texas, killing all four passengers. The floor mats were found in the trunk of the car.

Another 2.3 million vehicles were recalled by Toyota in January 2010 and sales of a number of its best-selling vehicles were suspended, amounting to an estimated $54 million a day loss in revenue. The share value of the company fell by 15% immediately.

A deeper look into this case reveals impaired decision making on Toyota's part, bordering on hesitation. Evaluation, impact assessment and appraisal of options are key phases of crisis management. However, in extreme or potential threat to life, it may be preferable to expedite this process for ‘prudent over-reaction’ to effectively minimise and mitigate further risk and escalation of the crisis. 

In 2009, Toyota was concerned about its reputation in one of its biggest markets and about financial instability after having struggled through the recession. Being able to look back on this crisis a decade later, it seems a fair assessment to suggest that Toyota's initial hesitant response was flawed. In the end, it recalled 2.8 more vehicles, after all, paid over $30 million in lawsuit settlements, and endured ferocious media scrutiny and a Congressional investigation aided by NASA engineers into possible electronic issues. The reputational impact it suffered was immeasurable.

Decision making in crisis management is difficult - very often working within the parameters of heightened stress and incomplete information. It can mean the difference between stabilising a situation or descent into further chaos, between becoming a leading example or a cautionary tale. In order to secure the best possible way to make decisions during a crisis in your organisation, you need to have crystal clarity on the following three questions: "Who?" "When?" "How?"

Typically, there is one decision-making authority in a crisis management structure (i.e. the plan in place before the crisis). In reality, however, the decision-making process is delayed, confused and interrupted by missing information, conflicting priorities of corporate functions and limited understanding of the context and risk escalation. One wonders, what discussions took place with Toyota's PR Lead and Customer Safety Lead? Who had the most influence over the company's response? Who informed the final decision? Whatever the answers, it is clear that Toyota miscalculated what approach to adopt in their crisis response. And the decision-making approach we adopt in a crisis needs to be responsive to the pace and potential risk of the event.

1. Urgent Decisions (The Authoritative Approach)

WHO: The Crisis Manager | The Primary Decision-Maker

WHEN: In situations where losses increase by the minute, where service or production is completely or severely interrupted, where cybersecurity has been breached, and especially where there has been physical endangerment, fatality, or the risk thereof.

HOW: The Crisis Manager needs to adopt an immediate approach to fix what is broken or mitigate any risks as soon as possible. A "zero-tolerance" mindset needs to be applied to anything which could prolong the "fix" or the reduction of risk. To take a very simple technology example, let's imagine a server hosting very important and sensitive data, has been accessed externally. It is quickly revealed during the initial troubleshooting that an Antivirus patch was installed on it last week. People start chiming in: "It cannot be the patch, it was already tested on our redundant server", "Let's investigate first if it has any known bugs," and so on. The Authoritative Approach in this situation would be to back out the patch first, see if this has fixed the problem, and then investigate it further. The benefits of this approach in this situation are the immediate mitigation of risk and the ability to tell stakeholders that specific action has been taken. The downside - of uninstalling the patch - is minimal in the context of the situation's urgency.

Does your company crisis plan allow for this level of autonomy?

2. Complex Decisions (The "Council of Advisors" Approach)

WHO: The Primary Decision-Maker, with input from Secondary Decision-Makers.

The major corporate functions in every organisation should have re[resentatives and delegates trained in the crisis process. In contrast to a scenario where a group of people gets pulled by instinct into the crisis resolution process, a well-managed crisis has at its foundation a clear structure of the crisis team; what is their role and what are they responsible for.

WHEN: In situations where the impact is one big "hit" which has already happened, an emerging threat where the current impact is minimal but has the potential to escalate significantly, or where there is a conflict between corporate functions (e.g. PR insisting on an immediate statement, and the legal department advising against making a statement), or where the negative consequences of "getting it wrong" far outweigh the consequences of a delayed response.

HOW: The role of the primary decision-maker or crisis manager here is to arbitrate in consideration of all available information and relevant arguments. It could even be to act as a mediator in the case of a conflict between two secondary decision-makers, with the goal of constructing the wisest course of action. While the speed of response is important, in this scenario the focus is framing a holistic company response in a non-urgent situation. 

How has this approach been tested and how well is it understood in your company - would it be respected by the senior personalities involved? 

3. Niche Decisions (The Delegation Approach)

WHO: The Secondary Decision-Makers

WHEN: In situations where a strategy has been set by the primary decision-maker and secondary decision-makers are responsible for the control of their business areas. Server reboots, Software changes, restoring data from backup tapes: all of these actions are the responsibility of the IT Lead. Press releases, Social Media response, communication with the media: all of this is covered by the PR Lead. Secondary decision-makers have a responsibility to update the primary decision-maker or Council of Advisors of mitigation activities so that the crisis team has a complete operating picture and can manage conflicts of interest. 

HOW: The crisis manager's role in this scenario is to identify the generic course of action, and to ensure the secondary decision-makers are all on board and physically available to accept ownership. Beyond this, if everything goes smoothly under the management of the entrusted parties, it is a process of maintaining updates on progress.

How effective would your crisis management structure be at overseeing delegated decisions, in particular for protracted events?

While each crisis is unique and unexpected, it is helpful to have a generic understanding of the nuances in decision-making under pressure. When should you take the reigns completely and when should you seek expertise? In the confusing web of crisis management, the methodology above will serve as a useful signpost.