Publications Dealing with crisis – how can your organisation survive?

Dealing with crisis – how can your organisation survive?

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Our previous blog states that, with the right attitude, organisations can use the corona crisis as a catalyst for change. In this blog we build upon that premise by explaining how organisations should respond in times like these.

Desperate times call for desperate measures – the ancient Greek saying turns out to be ever so true today, during the corona crisis. Organisations must adjust to new rules and regulations, a customer drain or at the very least changes in customer behaviour, and a partially eliminated workforce due to illness. And although we are all dealing with the same corona crisis, the appropriate response mechanism[1] varies amongst organisations and industries and can shift over time as well.

When in chaos, act first and think later

In times of chaos, there is no order whatsoever as cause and effect relationships do not exist, nor do they matter, and basic survival instincts prevail. Clear examples that demonstrate this kind of behaviour were the September 11 WTC and 2011 Norway Utøya attacks where basically any action was preferable if it led to safety. There is no time to experiment, wonder or analyse the situation. Similar behaviour is very much visible during COVID-19. Everyone still has the vivid images of hospital-ICs, where many were overwhelmed by the immense influx of corona patients that quickly led to exceeding the maximum capacity, instigating a crisis. The same was noticeable when the virus hit national soil, when many governmental bodies demonstrated appropriate chaotic behaviour; that is to act first and get out of the chaos, and sense and response later. Dictator type leadership, top-down instructions issued, army support, curfews, regular street checks, all in place to desperately get a grip on the ever-spreading threat. Another example, the hospitality and travel industries. Both almost completely shut down and experienced a high degree of uncertainty; they had no clue what would happen next; when can we reopen again, how long can I survive financially and will our industry even be the same after corona?

Complex situations require experimenting to discover what works

Although we acknowledge the severity of the COVID-19 crisis on societal level, many organisations may not actually have experienced a Chaotic state. Instead, they were facing extreme Complex circumstances. They experienced fuzzy cause-and-effect relationships and most likely found that analysis and experience did not help in making the right decisions. The appropriate course of action in this context is to experiment with various options (‘probe’) and change your strategy if it is not successful. When companies underwent a complete and immediate shutdown of their business, many found themselves (and some still are) in this situation. Companies were unaware of what they should and could do to mitigate the negative effects, so the best way is to start experimenting to see what will work best for them as we have seen many organisations doing so successfully. Take for instance all the Michelin-star restaurants that were used to offering a complete customer experience and are now doing ‘plain’ take-away and delivery. Or remember the example in our first blog of the first Dutch ice cream drive-through, fitness centres that offer their classes online after an initial trial-period, cancelled festivals that reverted to an online event or via television. All in search of new ways to generate revenue, stay in touch with their customers and fans, and survive the sudden complexities handed to them.

Complicated situations allow for experience-based analysis

Some organisations were lucky enough to not find themselves (not for long) in Chaos as well as Complex situations and mostly ‘suffered’ from Complicated circumstances. Although cause and effect relationships remain much clearer and a sense of predictability exists, decision-making still requires (expert-) analysis to be successful. In current COVID-19 times, this is visible in bars and restaurants adjusting their floor plan and arrangement of tables to adhere to social distancing measures, or in institutes of higher education that now completely need to shift to online teaching. For many organisations, it will suffice to sense the new rules, analyse the possible options, and choose new effective practices accordingly. Organisations that, for example, experience an interrupted, international supply chain due to their offshored personnel being disconnected, will have to weigh their options and choose an alternative, probably onshore, solution to replace the unavailable services.

When simple circumstances rise, you can rely on best practices

Over time, disorder can fade. When uncertainties have vanished and new standards have been established in society, a sense of predictability might return. Such rather Simple conditions allow for standardized decision-making and relying on best practices when choosing your response. A fitting example of a shift towards Simple circumstances in the COVID-19 era is decision-making in supermarkets and public places; over time limiting the number of visitors and determining who can enter and who is denied access based on the national health checklists will probably have become the new standard. The extent to which ‘over time’ lasts for an organisation is however strongly affected by its industry as numerous industries will probably remain in a Complicated or even Complex situation for a long time. The airline industry, for example, is facing hard times with restricted airspace all over the world, while the entertainment industry is finding ways to survive on half-full houses due to social distance measures. And then lastly, it must not be forgotten that many organisations might not survive COVID-19 at all and will drown in a desperate attempt to survive or have even already gone under for good.

Circumstances change, and so does society

Obviously, the appropriate response mechanism and its ultimate effectiveness heavily depend on the context and disorder organisations find themselves in. Although it is becoming more evident each day that we will remain in this daunting situation for a while, examples are already showing us that many organisations have the potential to survive a time like this. ‘All’ you need is the right attitude and capabilities to match the situation you are in.

This crisis is reminding us of the fragility of our society and the impact that multiple organisations can suffer as a chain reaction to a single decision or event. For example, having discovered that working remotely is perfectly suitable in many industries, several organisations have decided to close their offices or instigate restricted access. Not only might this decrease in operational expenses show in a lowering of prices for their customers in the long term, it can impact society on a larger scale as well. Imagine the ripple effect when increasingly more people work from home: national commuting traffic would decrease, which on the long term effects for instance leasing companies and public transport providers who will see their revenues drop. On the bright side, less travel to work equals less of a burden on the environment, less traffic jams and subsequently less economic losses. You get the picture, right? The impact and unpredictability of this ripple effect makes for such a dynamic environment that decision-makers need to be even more alert than usual for shifting circumstances and could cause entire industries to remain in a Complex or Complicated situation indefinitely. We anticipate COVID-19 to have an undeniable and lasting effect on our society. What do you think, does this crisis mark the dawn of a new era?

By the way, a final note: are you interested in the underlying theory? Please take a look at this video of Snowden explaining his Cynefin model.

You might be wondering why some organisations, despite their adequate response to disorder, are more successful than others to quickly adapt in a time of crisis. In our next and final blog of this trilogy, we will elaborate on the aspects that not only help your organisation prepare for disorder but create long lasting strategic advantage as well.

[1] The Cynefin framework by Snowden (1999) provides direction to navigate times like these. Source: Snowden & Boone, 2007, A Leaders Framework for Decision-Making, Harvard Business Review.

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