Leadership in a Crisis - Part I

Part II will appear tomorrow. If you would like to read more about business transformation, restructuring, turnaround and value creation from a middle market perspective, visit and subscribe to Base of the Pyramid.

“You get to know who you really are in a crisis.”

-??????? Oprah Winfrey

Overview

Leadership is never without challenges, but those challenges are often dependent upon multiple factors starting with the idiosyncratic circumstances of the organization being led, and radiating outward to include the broader industry, economy, etc. From this standpoint, successful leadership in a crisis is not at all unique in that addressing the situation (the crisis) places certain requirements on a leader.

However, leadership in a crisis is in other ways unique in the pressure that is brought to bear on the leader from all quarters. Boards require an explanation of what has happened, is happening, and the path back to some form of normalcy. Capital providers are generally angry about declining financial performance and demand updated forecasts and assurances that change is coming. Employees demand reassurance. And in the midst of these stakeholder demands, the crisis itself must be addressed. Time is of the essence, and generally money is running out.???????????????????????????????????????????? ?

An accomplished corporate executive and board member, reflecting on his own experience in crisis situations, made the following trenchant observation: “Crises come in two flavors:? existential ones and those that through bad handling you can make existential.” It is important to remember and internalize this message. In the midst of a crisis, there is no time for self-congratulatory fluff, nor for over-optimistic projections, and there is certainly no time for minimizing the problem. Rather, leadership in a crisis calls for accountability, collaboration, and transparency.

Accountability

Leaders in a crisis have a limited window of time to set the tone for how they will manage in a challenging situation, and many times it starts with accountability. The willingness, or not, of a leader to take accountability for a crisis, and in so doing show some humility, is in some ways a measure of the maturity of an organization and its leadership. Nuance and excuses will impress no one in these situations, but a frank and humble “we messed up, and this is how” often calms angry stakeholders simply through the bracing power of honest words, spoken plainly.

Accountability as a concept can be enlarged upon to encompass reciprocal accountability (an organization’s accountability to its stakeholders, and the accountability of those stakeholders to the organization), but that framing is likely to gain traction only after the majority of stakeholders have seen/heard and believe that the organization and its leadership accepts accountability for the crisis out of which it is seeking to navigate a path.

Collaboration

While individual efforts are certainly necessary for an organization to chart a course for emergence from a crisis, they are not sufficient. No amount of individual effort will suffice to put a crisis in the rearview mirror, because the exercise of emerging from a crisis is one of coordinating group efforts, often in unfamiliar combinations, to address the crisis. This is the “no hero ball” aspect of collaboration, surviving and thriving post-crisis requires coordination in equal or greater measure to raw effort.

Transparency

The temptation to favorably shade current challenges is a familiar one to many in leadership positions, and understandably so. Leaders should be optimistic about their organization and its ability to compete effectively in whatever market(s) it operates. However, in a crisis it is vitally important that communications from leadership be regarded as truthful, and the simplest way to achieve that goal is to lean hard into transparency. Leaders of course need to adjust their level of transparency based on their audience, but periods of crisis call for a heavy emphasis on transparency to foster trust. Transparency here starts with a willingness to acknowledge harsh truths and extends to a commitment to maintain open and frank communication with all key stakeholders for the duration of the crisis. Another temptation that must be overcome is the trap of thinking that this investment in a rigorous and taxing communication policy is somehow unwarranted or unnecessary (committing to transparent communication in a crisis is essentially committing to promptly sharing bad news, at least in the early stages); it is neither. ?

The austere, frank communication that is called for is akin to a bucket of cold water to the face of the audience (i.e. stakeholders). Communication must be direct and unflinching: this is where we are, this is what it means, this is what we are doing to address our challenges, this is why we believe these steps are sufficient for a return to success. Leaders in a crisis must fight the temptation to sand off the rough edges and instead focus on clarity and directness. Some stakeholders might be put off by this approach, but most will welcome the openness and clarity inherent in a commitment to transparency.

Part II will appear tomorrow. If you would like to read more about business transformation, restructuring, turnaround and value creation from a middle market perspective, visit and subscribe to Base of the Pyramid.