Best Practices

Best Practices


General Electric has been in the news of late due its steep stock decline. There have been numerous interviews with the new CEO, John Flannery, about the company crisis and how he and his team are responding to it. He indicated in one of the interviews that he was not going to waste this crisis. If that turns out to be true, then kudos to him for recognizing the criticality of this point in time.

The quote, Never let a good crisis go to waste, has been attributed to Winston Churchill in reference to post-World War II conditions that allowed for formation of the United Nations. This phrase has utility as we reflect on 2017, a year of many and varied crises, from tensions in North Korea to several major hurricanes in the United States and the Caribbean, to mass shootings and political turmoil.

When a crisis does occur, of course attention and resources flow directly to dealing with the immediate management of the situation in order to reduce the impacts, whether they are casualties, financial damages, business disruptions or reputational in nature. This is as it should be. However, as the crisis develops and after the acute phase is over, there is much value to be gained from the experience.

In my view, a crisis can allow the following to occur within an organization in a more significant way than can be delivered through normal activities:

A crisis can act as an organizational rallying cry and bring laser-like unity of purpose.

A crisis can allow or even facilitate examination of breakout new ideas and tearing down of outdated or unhelpful paradigms.

A crisis can lead to radical re-prioritization of resources.

What kind of crises are we likely to be dealing with in our industry? They often fall into these categories:

Natural disasters such as hurricanes, floods or other weather conditions that severely impact business operations, whether our own or those of suppliers and customers.

Political crises such as passage of new regulations or changes such as Brexit in Europe that may have serious impact on products, customers or operations.

Business crises such as those caused by failure of a strategy, product quality issues, changes in the competitive landscape, loss of a major customer or business, operational disaster, etc.

Societal shifts such as changing appetites for vehicle types or attitudes toward driving itself, changes in where people live and work, and the shift to online retail.

So, how should we grasp the learning opportunity presented by a crisis?

The first step is to properly frame the crisis and the needed change. This is often not as simple as it may sound! For example, in the case of a supply crisis caused by flooding from a hurricane, the crisis could be stated as, We need to improve our hurricane preparation planning in order to allow continuation of supply to customers in all weather conditions. This may be sufficient depending on your situation; however, perhaps you would benefit from a broader statement of the crisis such as, We need to critically examine our supply-chain risk profile with a goal of systematically reducing all high and medium risks over the next two years.

The trick here is not to make the framing so broad that it becomes an insurmountable task, nor so narrow that you miss the larger learning opportunity. In the case of the supply crisis caused by a hurricane, you want to be sure to frame the crisis so that it allows a broad examination of mitigation steps, which may start with activities like inventory building and backup personnel planning, but can extend to options such as increasing equipment spares, backup facilities, elevating or enclosing facilities, supply deals with competitors, backup formulations and other out-of-the-box ideas. Be sure to set up a leader and a team of people who are committed to the change.

Next, you and the change team should engage with colleagues across the organization to share the plan and explain succinctly why it matters to them. This is a great opportunity to invoke passion and harness energy and creativity in the organization to promote the change. You may want to set up a process by which people can contribute time or ideas to the core team. Sub-teams may be needed to explore various aspects of the change.

If you are the one hearing about a crisis in your organization, I suggest you grasp the opportunity to be part of the process. This is a chance to engage with different leaders within the company and enhance your own learning and reputation while participating in an important and likely interesting activity.

The change team should gather a broad set of options to address the stated goal. It is likely that option evaluation will take resources and time. The team may want to set up a scheme to score options (high, medium, low) in categories such as cost to implement, time to implement, degree of contribution to the goal, risk, customer impact or others that may be important to your company. This can allow you to narrow the options to a manageable list for deeper evaluation. The change team should present to leadership the recommended options with a timeline, resourcing plan and expected outcome.

At this point, lets return to the opportunities presented by the crisis in the first place. Test the teams recommendations to see if they have taken full advantage of the opportunities by widely engaging with the organization and delivering the rallying cry in an effective manner. You may want to have leaders engage with their organizations or have focus groups set up to explore whether the rallying cry has really gotten through. Employees should be able to describe the nature of the crisis in simple terms, why it is important, and how they are contributing to the change. Then ask: Has the team introduced new ideas and options into the evaluation process? What old paradigms have been discarded?

Finally, consider whether the recommended options and timeline are aggressive enough. Ask these questions:

What would it take to implement these options faster?

What should we drop to make room for a more successful or lower-risk implementation?

What would make this plan fail? How can we address these factors?

Will the recommended options address the crisis? What new risks are introduced?

As we start a new year, lets reflect on whether a recent or coming crisis can be turned into an opportunity to improve. I wish everyone a safe and prosperous 2018.

Sara Lefcourt of Lefcourt Consulting LLC specializes in helping companies to improve profits, reduce risk and step up their operations. Her experience includes many years in marketing, sales and procurement, first for Exxon and then at Infineum, where she was vice president, supply. Email her at or phone (908) 400-5210.

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