Fighter pilots do not wait for an in-flight emergency to think about how they are going to react to it. Before take-off, during their pre-flight brief, they go over all the contingencies they might encounter. Whether it is bad weather at the destination, a birdstrike, a mid-air collision, an engine fire, or even an ejection, everything is covered. Nothing is left up to chance. Their life depends on it.
Granted that our day-to-day operation in our businesses and brands is not as time-critical as having to decide if we eject or not from our plane but, why not operate as they do? Why not be ready to face any likely crisis or contingency in our daily operation?
Life is good until it suddenly isn’t.
Whether we work for a big company or a small one, whether we are CEO’s or employees, entrepreneurs or freelancers, someday, in our future, a crisis will show up to disturb our business and potentially our life. Its impact might mean losing customers and that
Out of nowhere, without previous warning, something will go wrong with our startup, our product, or our supplier. Perhaps one of our unsatisfied clients gives us a bad review on social media, maybe we suffer a cyberattack or suddenly, a virus changes the world overnight. Don’t you think it’s possible?
Price Waterhouse Coopers recently surveyed over 2000 companies in 43 different countries about corporate crises. Surprisingly, 69% of the participants admitted having experienced at least one crisis in the previous five years, with the average number of crises experienced being three.
No matter who we are or where we work, we are not safe from crises. There is no haven from crises, no matter if we’re big or small. It is not a matter of if, but when a crisis will hit us.
What is a crisis?
A crisis is an abnormal, unstable, and complex situation that arises in our daily operation that represents a major threat to our strategic objectives, our reputation, and even our continuity or existence. Crises are characterized by escalating rapidly, generating chaos and uncertainty, impacting normal operations, and normally causing victims.
It might seem unlikely for anything to happen to our project, our product, or our services. It might be difficult to imagine, but we just have to look around to see that we all wear masks now because something called COVID-19 came out of nowhere catching the whole world off-guard generating a global crisis.
73% of the crises suffered by companies in 2019 were “smoldering, foreseeable crises.” Fortunately, crises are mostly foreseeable and their impact can be mitigated. According to the Institute for Crisis Management, during 2019, 73% of the crises suffered by companies were “smouldering crises”, meaning they were caused by known potential issues or sources, versus 27% of unexpected crises. The case for being crisis-ready is clear.
“The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger — but recognize the opportunity.” John Fitzgerald Kennedy
But not all crises end up being so negative if the company affected is prepared to confront it. Again, according to PWC, out of the 1,400 companies who had admitted having faced a major crisis, 42% said they were “in a better place” post-crisis. Some even reported having grown revenue as a direct result of their management of the crisis.
Why reputation matters
According to Merriam Webster’s dictionary, reputation, in general, is “an overall quality or character as seen or judged by people in general.” Speaking about corporate reputation, it can be defined as “ the overall perception the internal and external stakeholders have of a brand or a business based on its past actions and probability of its future behavior”.
Why is having a good reputation important?
Easy question. There are many reasons, but to name a few:
- Competitive advantage and customer loyalty
- Better relationships with suppliers and partners
- The attraction of high-quality talent and employee retention
- Easier to enter new market opportunities
- Greater crisis resilience
- More favourable media coverage
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently”. — Warren Buffet
The good part is that our brand’s reputation is manageable. It is not a fixed value. We can work on it through common sense, good corporate management, and effective communication.
What can we do to prepare?
1. Identify our vulnerabilities
We can begin by auditing our daily operation to identify potential vulnerabilities and risks that could blow up to become a crisis. Perhaps it is a procedure that is riskier than desirable or an employee with below-average standards, or maybe it’s our information security measures.
Once identified, we need to think of actions to mitigate or eliminate the impact of those potential risks. If they cannot be eliminated or reduced, we will consider what actions we would take in case they explode into a full-blown crisis, such as apologizing, recalling our product, refunding our customers, etc.
2. Identify our stakeholders and how we communicate with them
A stakeholder, as the name implies, is someone who has any stake or interest in our operation, someone who is affected by what we do. They can be external stakeholders or internal stakeholders. Examples of external stakeholders are investors, clients, suppliers, government agencies, and regulators, the media, or our business’s neighbours. Internal stakeholders include employees, syndicates, the board of directors etc.
It is critical to know what our stakeholders like or don’t like, what they need, how well informed they are, who communicates with them, by which channels, and how often. And one more thing, we need to know what happens to them if we mess up.
Although obvious, it is generally a good idea to have a solid, win-win, relationship with our stakeholders in your day to day. In the middle of a crisis is not the best time to try to establish a relationship with our stakeholders.
3. Establish a Crisis Team and draft a Crisis Plan
The Crisis Team is our first line of defense. They are the firefighters who try to put out the fire before it gets out of control.
The team should be as multidisciplinary as possible within our means and capabilities. We can evaluate the skills available within our company and try to include members from the communications/marketing department, from legal, IT, and, at least one decision-maker.
Once the team is assembled the next step is to draft a simple, easy-to-read Crisis Plan. It should be a rough guide, as concise and understandable as possible, of how to respond to a crisis. It can include pre-planned messages, a stakeholder contact list, and pre-assign responsibilities and tasks for quicker response when chaos hits.
Just by going through these 3 steps, we will have set ourselves up for success, ready to take advantage of the possible opportunity our next crisis might bring us. If we want to put the cherry on top, we can exercise the Crisis Plan wargaming it against one of our likely crisis scenarios.
Being crisis-ready can protect our reputation, save us lots of money and keep clients on our side. Our business’s life might depend on it.
“It takes many good deeds to build a good reputation and only one bad one to lose it.” — Benjamin Franklin
Depending on the size of our business, perhaps we do not need to practice full “battle stations” and go through crisis simulations, but we will certainly benefit from having brainstormed our vulnerabilities and how we would react in a crisis. Being ready for when you’re in trouble or at least have thought about it is a lot better than trying to come up with ideas amidst the chaos.
Fighter pilots do not leave anything to chance when they go up in the air because their life depends on it. Shouldn’t we operate our businesses the same way?
Manolo Romero is a Spanish Naval Aviator passionate about leadership, communication, teaching and self-development. Husband and father of four, he is always working on becoming the best version of himself.
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