Don’t Bury Your Head in the Sand: Profitable Crisis Management

As long as everything runs smoothly, we hardly pay more attention to concerns about future crises than to confused anxiety dreams – quickly suppressed, but the unpleasant aftertaste remains. Or we are not aware of them at all and they lie undiscovered in rigid supply chains, lack of digitalization and inefficient work environments. And yes, no one really anticipated a year like 2020. That’s why we advocate integrating risk management built directly into the business model: continuing to envision the anxiety dream, identifying actual vulnerabilities, and finding creative solutions before the crisis hits. You’ll feel the aftertaste evaporate. In the following, we will show you which mindset and steps are necessary for this.

A Mindset for Winners of a Crisis

Before you jump right in and possibly lose yourself in blind actionism, you should give a thought to the correct mindset, which helps tremendously towards getting your actions in a clear line. For this, we recommend the book by Natalie Turner: Yes, You Can Innovate, whose key points we are happy to share here.

In times of good business it is nice to be happy about it and to pat each other on the back but due to the global interconnectedness of the world, an abundance of processes correlate with each other so that the next crisis will surely occur at some point. Therefore, it is of utmost importance to optimize the initial conditions for an emergency situation in advance.

Any solutions to a crisis require creativity, flexibility and innovation. All of this can only be achieved in an environment where diversity is lived and individualism is given high priority. Rigidly conformist and simple-minded thinking is steered in new directions, where a free space for individual responsibility arises. Anyone who wants to thrive must make the decision now to exchange outdated conventions for courageous innovations. This is the path from orderly negligence to confident decision-making. And for this turnaround to succeed, something has to change in the minds of everyone involved. Natalie Turner calls it the Six ‘I’s which are all interlinked with the central purpose that has to be kept in mind:

  • Identifying: spotting both opportunities and aspects to be ameliorated creates a capacity for new ideas
  • Igniting: cultivating & nurturing new ideas which may serve customers’ needs or a new trend
  • Investigating: exploring the fresh ideas by experimenting and analyzing feedback
  • Investing: once approved, an idea needs funding not only with money but also with resources like time and energy
  • Implementing: executing the new plans and ideas in an innovative way
  • Improving: repeated reviews of the product or service and adapting where needed

This new mindset may involve a more or less radical shift within the mindset of many, but it’s worth making the effort. If you would like more inspiration on this, you might have a look at the entire book. It does not stop at the Six ‘I’s but includes hands-on, practical advice with tests and assessments.

If you take the opportunity out of the crisis – it becomes a threat. If you take the fear out of the crisis – it becomes an opportunity.

Anja Förster & Peter Kreuz in “Don’t Waste a Crisis” (orig: Vergeude Keine Krise)

1. Identify the Risks

Let’s be honest – are you aware of all the risks that could affect your company in the event of social, political, global, financial or technological upheaval? In other words, which of the risks that you recognize have you ever simulated from start to finish; taken a look at the various parameters, developed an analysis and a strategy of action? The pandemic has shown us very clearly how much more emphasis must be placed on crisis management in business models in order to remain capable even in the event of an emergency.

Such crisis prevention is based on a precise analysis of various scenarios. For this purpose, it is useful to apply all possible outcomes of these scenarios to your company and to find out which ones are of central importance for you. For this there are various departments in the company that take care of their own specific areas; Enterprise Risk Management, uses various parameters to evaluate both strategic and operational risks, Compliance Management investigates legal factors, while Sustainability Management determines sustainability risks and the internal control system examines the process flow for risks. As we can see, these areas are quite distinct, but they are all more or less interrelated because rarely does a problem affect just one aspect; often several interacting points of reference are involved.

2. Minimize the Risks

What effective crisis management requires is an integrated view of all the risk factors in the various areas. After all, the outcome of a risk can of course be assessed as marginally relevant when viewed in isolation, but it is only in the concrete, interrelated structure that a potentially serious effect arises which may become a threat. We tend to assess what is known as less imminent. However, you should be aware of this subconscious assessment when it comes to risk assessment. Just because we know the danger doesn’t mean it can have less serious consequences in reality.

This holistic and objective assessment is successful if the different departments cooperate – each is expert in its own area, but at the same time gains a deeper understanding of the processes and risk factors from other areas and can bring new perspectives to the table. Such loose collaborations are a great solution when it comes to short-term action, but in the long run, it needs to become a solid organization that serves as the basis for risk management and thus sustains crisis prevention.

Within this organization, the goal must be to calculate profitability based on real numbers, focusing on both the best-case and worst-case scenarios. In order to make better decisions, it is necessary to agree on risk factors, which, in conjunction with predefined key figures and qualitative aspects, allow for more well-founded scenarios. In addition, a decision tree can be created in advance on the basis of these scenarios, which increases the freedom of action in the respective situation, because it is much more difficult to act clearly and with a firm grasp of the facts when under pressure. These strategies make it much easier to recognize which decisions are likely to have which consequences.

3. Perform Regular Revisions

This last step is simultaneously the first step. It is by no means just a matter of meeting regulatory requirements, drawing up a plan for the crisis and then twiddling your thumbs. Instead, the focus must be on the safe continuation of the company’s business activities. To do this, we need to recognize that we are operating in an environment that will certainly not become less risky in the coming years as a result of strong global interdependence.

Once again, this means always keeping an eye on current changes in the world of technology, politics and business, regularly reviewing the different areas and possibly eliminating or exploiting new potential correlations, risks and problems in advance. We can clearly conclude that a holistic, forward-looking approach with a coherent purpose and the right mindset are the key elements.

Are You a Resilient Business Manager?

Efficiently communicating the right decision at the right time and always being in close contact with employees – today’s demands on managers are numerous and high. Leaders have to understand and manage a broad spectrum of tasks while maintaining an appropriate manner and setting a good example. The bulk of the responsibility rests on their shoulders, especially during turbulent times of crisis. But there are approaches that make it easier to master major difficulties as well as the little things in everyday life.

Five characteristics of good leadership

According to the Gallup Engagement Index, many employees are dissatisfied with the way their superiors manage their companies. It is therefore not surprising that experts have been calling for a change in leadership style for corporations, organizations and companies in recent years. What does a good leader bring to the table and how can a modern leadership style build resilience?

1. Engage in critical self-reflection

Start by questioning your own leadership behavior – if you make demands, you should be aware of how they may be perceived. This also requires a comparison of your self-perception with that of others and, if in doubt, adapting your behavior by learning new skills and ways of communicating. Openness to supervision in resolving conflicts is indispensable. Admitting your own mistakes is no longer a sign of weakness if you deal with them honestly and self-confidently and make your insights accessible to everyone.

2. Act with self-confidence

This point is essential: a confident manner paired with personable openness. However, be aware of the risk that great self-confidence can quickly be perceived as complacency, an inability to accept criticism and arrogance. Steering a middle course means to strengthen the team spirit and to express appreciation for your colleagues. Confidence is especially important for young managers. If the trust of older, more experienced employees is lacking, you should openly express your interest for their concerns. These conflicts should not be allowed to smolder in the undergrowth – clear up where doubts are not appropriate and where they may be, create a space for discussion and mutual learning. This way, you demonstrate your leadership qualities even to skeptics.

3. Communicate effectively

This is such an incredibly important and too often neglected aspect. For a long time now, it has not only been the manager’s expertise in the field that counts, but also who communicates what and how. It is worth creating structures that enable interactive, clear and team-oriented collaboration. Everyone should have the opportunity to bring ideas, doubts and feedback to the attention of their superiors without long detours. Keep the lines of communication as short and effective as possible and grant more trust than was usual in the conservative style of constant control.

4. Be the compass for business goals

As a manager, you are a role model. You set the course for navigating through both gentle and rough waters. It is important to create a positive outlook for the future and to radiate optimism because it is incredibly motivating when everyone has the feeling that they are jointly working toward a promising future. This is especially true in times of crisis and for challenges associated with technical innovations such as digitalization. Exemplify the company mission.

5. Flexibility

A keyword that is currently heard in many areas of modern management. It requires the ability to decide on a course of action that is appropriate to the situation – both professionally between risk and safety and personally between strength and compassion. At the same time, it is important not to lose sight of the goal. The demanded range of competences has increased considerably which makes further training and adaptation necessary, rather than a complete upheaval of pre-existing structures.

Food for thought

Management:

  • Analyze change measures & provide a constructive explanation thereof
  • Conduct risk analyses
  • Set clear expectations
  • Repeatedly identify goals & adjust the strategy
  • Understand & advance digitalization
  • Openness to new technologies

Employee Relations:

  • 360 degree feedback culture
  • Appreciate & praise good performance
  • Give chances to improve
  • Honesty, openness & commitment
  • Listen to wishes, discuss & take them into account
  • Visualize task distribution & progress, check off goals

Beginning with your own mindset. This is what significantly influences the resilience of managers. With both a crisis management plan and a satisfied team that communicates well, overcoming tough challenges is much easier.

 

7 Things You Should Absolutely Avoid Doing

  1. Conservative leadership style: passiveness instead of progressiveness. Authoritarian control instead of trust and dialogue. Exerting pressure instead of motivating. Constant criticism instead of appreciation of achievements.
  2. No self-reflection: According to the Gallup Engagement Index, the vast majority of all managers are convinced that they have a good management style, while many employees criticize the lack thereof. This disparity must be closed.
  3. Indecisiveness and poor communication about decision-making
  4. Assumption that one coaching seminar on communication and leadership will do the job. Continuous learning through interaction is important.
  5. Avoiding uncomfortable conversations will not achieve anything, they will rather become an even bigger problem. No one wants a scaredy-cat as a team leader who cringes at every difficulty.
  6. Ineffective coping with failure: suppressing a defeat in the long run or even denying it and pushing it off on others is a big mistake. This leads to a poor error culture throughout the team. If you demand that your employees be honest about their misjudgments, you have to set an example yourself. Say goodbye to the idea of having to appear infallible.
  7. Arrogance: The potential thought that one’s higher degree is worth significantly more than years of experience is a fallacy. Ideally, practical experience and theoretical expertise complement each other in your company, without one being appreciated more than the other.

You will only get to know a good helmsman in stormy seas.

Seneca

Who can help managers navigate a crisis?

In addition to the Seven Pillars of Resilience, which are well-known from psychological research and which we have already highlighted in the article about Resilient Business Design, we would now like to include the role of HR here. A modern leadership style is currently more in demand than ever, especially due to the digital transformation and the pandemic, so that companies can continue to live up to their claim to success in the long term. Therefore, it is advisable for team leaders to seek support from HR management. When changes occur, it can be consulted for innovative ideas and solutions. It also creates a framework for the continuous personal development of managers through training and supervision.

After all, despite their prominent position, managers are not left to their own devices. All those leadership skills mentioned earlier can be honed and improved with the help of human resources or other networks. They help to turn defeats into learning effects, to improve the basic positive attitude and not to dwell on past mistakes for long. In the process, you will be guided to ask the important questions of failure: What do I take away from this experience? Does the defeat also have positive consequences and how can I maintain my reputation in times of crisis? What skills will now help me to regain fresh strength?

Reframing is a good key point for this. It refers to the ability to look at things in a new light, from a different angle, and thereby reevaluate them completely. If you constantly focus on how bad a situation is, it will not change. But with a new way of looking at things, completely new visions emerge. This is best achieved with guidance from experts.
HR departments are also familiar with innovative measures outside of mindset work that break up the routine, such as integrating a fixed sports break into the office routine or loosening up the work environment with purchases such as a darts set or the like.
Such networks provide support for getting to grips with new leadership situations and overall provide guidance for self-management. That way, things will work out on the grand scheme, too.

Take a step towards the future today and become an excellent manager. Do not hesitate to contact us – we will be happy to support you on your path.

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