Crisis management: Lessons in leadership

Crises in business are an inevitable part of the journey for any leader or business owner. And while they may be unavoidable, how a crisis is managed can come to completely redefine the direction of an organisation and set an effective leader apart; demonstrating their ability to not only navigate through turbulent times but also to emerge with a more robust, resilient and forward-thinking organisation.

Crisis management is therefore not just a process of guiding a company through an immediate challenge – it is the ability to remain calm under pressure in order to recognise the opportunities amidst the chaos. It requires a balanced approach of balancing quick decision-making, fostering clear communication and trust, and ensuring operational continuity for the future.

By doing so, leaders will find themselves transforming crises into catalysts for long-term success and resilience.

1. Decision-making

Crisis management starts with the immediate decisions that leaders must make under immense pressure. More often than not, these choices bring about significant short-term pain and discomfort, but they are absolutely crucial for securing the long-term viability and health of an organisation. During the 2008 financial crisis, Howard Schultz, the then CEO of Starbucks, made the difficult but necessary decision to close stores and lay off employees in order to keep the company afloat. The fall-out was immediate and dramatic, with the company’s share price falling 28% almost overnight and news media heralding this as the beginning of the end for the coffee chain.

Schultz remained firm and weathered the storm for another two years, all but guaranteeing the company’s survival. Shultz’s leadership during this time proved to be the turning point that secured the now thriving coffee empire’s future. His is a clear and powerful demonstration of the need for leaders to make hard but essential choices that strike a delicate balance between the immediate needs of a business in crisis with an enduring and successful vision of the future.

2. Strategic communication

But making the right choices are just one facet of the challenge of crisis management. Another, equally crucial aspect is effective communication. Poor communication from leaders and senior teams during moments of crisis can have a profound and everlasting impact. And Tony Hayward's communication strategy during the 2010 Deepwater Horizon oil spill serves as the perfect cautionary tale. His initial statements were perceived as lacking empathy and sensitivity, particularly during such an enormous environmental and human tragedy. This was then compounded by a communication strategy that came far too late and failed to be transparent and consistent, completely eroding public trust at a time when public support was vital.

This series of terrible communication decisions steered the oil giant towards a reputational catastrophe from which the company still hasn’t recovered. The Deepwater Horizon disaster is a vital lesson: effective crisis management is not just about making the right decisions but how those decisions are conveyed to consumers, the public and to stakeholders. Leaders must ensure that their communication is empathetic, transparent, and timely. A leader should look ahead and be prepared to turn potential pitfalls into opportunities for reinforcing trust and credibility.

3. Innovation

Forward-thinking strategies and adaptability can be far more than just crisis mitigation tools - they can pave the way for future growth and resilience. And while it may not seem like the most intuitive approach during times of immense upheaval, investing in innovation can be a powerful strategic move for leaders. By embracing change and fostering creativity, they can carve out a niche for their organisation in a rapidly evolving market landscape, ensuring not just survival but also future prosperity.

Take Satya Nadella's leadership at Microsoft during the COVID-19 pandemic for example. Under his direction, Microsoft anticipated the seismic shift in office working and rapidly adapted its services to support remote work and education. The significant initial investment into innovative tools and applications, which were largely untested at the time, proved to be visionary. Microsoft's swift pivot not only allowed it to meet the demands of a global shift to remote working but also positioned the company as a leader in digital transformation. The importance of foresight and agility in crisis management cannot be emphasised enough. Embracing innovation can transform even the most challenging situations into unique opportunities for growth and market leadership.

Effective crisis management is a multidimensional challenge that will test a leader's decision-making, communication skills, and their ability to innovate. The lessons, both good and bad, that can be drawn from industry titans like Schultz, Hayward, and Nadella provide invaluable insights for leaders attempting to navigate their organisations through crises. By remaining steadfast and balancing immediate challenges with a long-term vision, and prioritising ethical communication and innovative solutions, leaders can not only survive but thrive through chaotic times, steering their organisations towards enduring success.

At Acumen, we are dedicated to equipping leaders with practical tools to tackle real-life challenges. Our comprehensive range of training and development programs, including customised interventions and off-the-shelf courses, helps organisations foster a culture of respect and empower their employees. To learn more about our programs and how they can benefit your organisation, please contact Simon at simon@askacumen.com.