When in crisis, do as what Jack says!

2020 is not very kind to us, and to me it's even harder, being one of many Jack Welch's students. We lost a true master in the business world during the crisis. Many people remembered him as the legendary manager in the century, with other reputation such as Neutron Jack. There are pros and cons in his tenure in GE. Honestly, GE is one of the hardest companies to run due to such a diverse portfolio, so many sections are heavily regulated, and also involve in advanced technology and finance sections.

However, Jack was definitely the A+ student in crisis management (I assume he would mark himself like that). Why? He was born in 1935 in Massachusetts, USA, five years after the great recession, then experienced World War II in his young age. His parents were immigrants from Ireland, lived in a “rough” area near the graveyard. In a nutshell, he didn’t have a good start. But, he was positive, confident, competitive, down to the earth and worked extremely hard; those helped him to claim success.

What I have learned about crisis management from Jack is always treat crisis different from regular business, which means deal with crisis meanwhile run the business as usual. It's very hard! That's why he was a rare leader who has strong leadership and management skills, and he balanced both traits so well, made it look effortless!

There are five elements about dealing with the crisis he mentioned in the book he co-authored with Suzy Welch, Winning. I will expand them a bit; hopefully that will be adaptable for the current pandemic related business crisis.

1. Assume the problem is worse than it appears.

This sounds like simple advice when the crisis occurs. I found some individuals prefer to choose to avoid acknowledging the existence of the problems. The brain automatically switches to defence mode once we come in front of the crisis; shock, denial and emotional, the reality somehow disagrees with our assumptions originally.

Advice: Do fall in love with the Failure Mode and Effects Analysis (FMEA). Think this way, when a surgeon decides to make a vital operation, she/he won't open up a human body in the operation room and realise that the problem is very different from what she/he thought would be. There must be a lot of investigations and simulations running before the operation, and everything happens fast. Similar in business crisis, we need to understand what will save us during the crisis, we also need to know more about what will kill the business in great details within a short period. As an individual, you don’t need to be a Six Sigma master to run the FMEA, but keep that in mind, prepare for the very worst!

?2. Assume there are no secrets in the world and that everyone will eventually find out everything.

The state government of China was trying to hide the information of novelty virus back in December 2019 in Hubei Province. Luckin Coffee denied the allegation from Muddy Water of fraud. And these are examples from just this quarter. We all knew the results by now, it's like playing with fire, but we don't know how big the fire will be, and how many damages will cause. Once everyone finds out, the crisis will get brewed to a different level, considering how quick it will spread via the internet.

Advice: Be proactive, address and expose the problem at the first place, which against intuition when you experience it first-hand, that's the time to establish a problem-solving communication channel is crucial. When I involved in organisation structural change, we had an appraisal and incentive crisis happened during that night after announced the news. I organised the general meeting as the first thing the next morning, and every single person includes the cleaning staff participated in the meeting in a hall to face the crisis together. We had several whiteboards out and wrote down all the voices we collected, suggested that only problem-solving solutions are welcoming. I thought that was the most "cruel" thing I have ever done to people, but the result was productive. We successfully transform the structure, which helped us to align the communication channel with the strategy more efficient. I couldn't imagine if we let that stew longer, we would lose some great talents.

Don’t brew it, get it out fast!

3. Assume you and your organisation’s handling of the crisis will be portrayed in the worst possible light.

Again, use Luckin coffee as an example, as the company was carrying on an internal investigation of its COO fabricating the sales transactions. I tried the coffee back in 2018, the vouchers they gave out to the consumers were very generous, almost too generous. By then, the stock price went down by 81%. Moreover, they lost the trust of the customers and investors. The CEO released an official apology a few days ago, too late! The media has dominated the story much earlier than the leaders did. What a painful lesson!

Advice: PR is crucial once media get involved, especially when you are weak, sometimes we see street fights language in media. Have a solid public communication strategy will buy in some valuable time to prepare for the next stage. Be prepare the history will get dig out again, become a “side dish” when a new crisis emerges. In the smaller organisation, gossip and rumour would become that “media”, and truth might be hidden anywhere, that’s why get it out fast is vital.

4. Assume there will be changes in process and people. Almost no crisis ends without blood on the floor.

Painful but true! Crises often break existing process, and we will have a new order of supply chain, more remote working opportunities and virtual business organisations. To achieve that level, the crisis will break some bones, generate emotions along with many noises.

Advice: I know this might be something you heard baby boomers said: "get on with it!" which sounds cold and brutal, but very effective. Both my grandparents had experienced World War II when they were young, and they had the attitude of face the fact and fear, crisis management was in their blood. We need to be honest that when the next pandemic occurs, how well are we prepared for a crisis? To minimise the damage, have crisis management installed in the culture, bring that idea in the budgeting process, risk assessment, operations and counselling support.

5. Assume your organisation will survive, ultimately stronger for what happened.

This is what we call thrive through the crisis, and that made Jack Welch. He candidly talked countless times about he blew up a factory when he was 28. He also constantly remind managers that don't make the same mistakes he made in Mergers and Acquisitions.

I met quite a lot of successful entrepreneurs, and they all mentioned that don't be afraid to make mistakes, and learn from them, then improve that helps them to succeed.

Advice: Increase tolerance for making mistakes, encourage everyone to try new things during the crisis, as to what Jack said "every brain in the game", build confidence, celebrate every tiny achievement!

I read many case studies are crisis-related and dealt with several crises throughout my career; those five elements are valuable. I strongly recommend to apply them to the crisis management process.

We will run a series of blogs relate to crisis management, and with relevant case studies, that would help more people to find common situations.

Must read book:

Winning

Source: FunKeyB