Article Summary:
Many leaders face a crisis that threatens their organization yet find themselves and their team woefully unprepared to handle it well. In this article, five-time CEO Bob Vanourek outlines ten practices for leading a crisis so that you can emerge even stronger than before.
by Bob Vanourek
“The signature of the truly great versus the merely successful is not the absence of difficulty, but the ability to come back from setbacks, even cataclysmic catastrophes, stronger than before.” -Jim Collins
Some of you will encounter a crisis that will threaten your organization’s very survival. Jim Collins is right. I’ll share how to emerge even stronger, based on my experience.
Crisis Triggers
A variety of events can trigger a crisis:
- A massive technology shift that threatens to make a company’s products obsolete
- A lawsuit threatening bankruptcy
- A financial crisis such as when a company’s auditors discover that the firm’s managers have “cooked the books”
- A competitive move that may capture key customers
- An event that wipes out a firm’s senior leaders
- A cyberattack that wipes out a company’s records
- A natural disaster such as a hurricane or earthquake
I was the new leader in several of those types of crises:
- A company threatened by a massive technology shift. We reinvented the company around the new technology and thrived.
- A high-tech company unable to deliver a new generation of systems facing a non-performance clause and bankruptcy.
- A company misreporting its revenue.
- A competitor:
- Offering free systems if our customers would buy supplies from them.
- Challenging the safety of our technology, leading to government hearings that could wipe us out.
I made some mistakes during those crises. My colleagues and I also learned some valuable lessons.
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The Reality of a Crisis
When disaster hits, chaos reigns.
Until you have been through such a crisis, most people have little idea how bad it can be.
- Facing a cash crunch, you’ll likely be unable to pay your workers and vendors.
- Customers abandon you.
- Suppliers only ship if paid cash-in-advance.
- Creditors stop paying the bills they owe you.
- Your best people quit.
- Your worst workers stay but are checked-out zombies at work.
- Bankruptcy looms.
One turnaround I led seemed to have no bottom. Every time we thought the worst was over, the bottom fell out again. We called that crisis an “organ donation.” We felt like we gave up vital organs in our bodies.
Ten Lessons for Leading through a Crisis
I’ll describe ten lessons I’ve learned to help you lead through a crisis.
1. Create a High-Performance Culture Now
The turnarounds I went through were delayed by unexceptional or toxic cultures.
If you haven’t already built a high-performance culture, then please start now.
It takes time, but it’s essential to do it before the crisis. One of my turnarounds took four years; another took six. Both were delayed because we had to create a new culture. That’s too much agony for too long. Start now.
“If you don’t choose to do it in leadership time up front, you do it in crisis management time down the road.” –Stephen R. Covey
Create a high-performance culture before trouble hits.
2. Prepare a Crisis Plan
Draft a general plan now of what you’ll do in the crisis. Use the ten sections of this article as your outline.
Decide if you want to be the crisis leader. Such work is not for everyone. It takes courage, a huge effort, and persistence. If you’re not ready to endure that challenge, identify who you can enlist in your crisis plan. It may be a former executive of your organization, a board member, or an outside expert with credibility in your business or industry.
A crisis needs one clear leader. It’s not work for a committee or competing voices from the board or senior management team.
After drafting your plan, secure an agreement from your board about who the crisis leader will be. That leader must have the full support of your board from the outset. You don’t want to be debating who does what when the crisis breaks.
Prepare a crisis plan and update it periodically.
3. Compose Yourself
If you’re the crisis leader, you must first find time to compose yourself. If you appear rattled, it will shake your colleagues. They need to see steady, sound leadership. You can’t be running around with your hair on fire. Find a private place to breathe deeply. Quiet your mind. Be cognizant of how you appear to others.
Put your personal values and the shared values of your organization foremost in your mind.
Personal Values Exercise
Complete this exercise to identify your personal values. It will help you develop self-awareness, including clarity about what’s most important to you in life and work, and serve as a safe harbor for you to return to when things are tough.
You’ll need a personal support team outside your organization. They should be a few close and trusted confidants to whom you can unburden yourself. They might include a spouse, relative, mentor, or close friend. Define who they are by name. There will be times when you need their support to sustain you personally. Let them know you may call. Invite them to check-in with you occasionally to learn how you’re doing.
Then, during the crisis, remind yourself daily that you need to be composed. Sometimes, I wasn’t. An exhausted appearance didn’t help. It detracted.
Compose yourself.
4. Engage Your Crisis Team
You will also need a workplace crisis team. Don’t undertake an existential crisis alone.
Your crisis team must include a few trusted, experienced colleagues who know your organization. They should be tough-skinned and able to maintain their composure under incredible stress. They may be current or former colleagues. Often meeting daily with you, they will be your critical sounding board. They also must be strong enough to challenge you constructively to help sharpen your judgment.
The crisis team shouldn’t include your attorneys. You must consult with your lawyers often, but you can’t let attorneys run the show. They’re not organization builders. They wish to avoid liability. You must make business judgments about potential liability versus credibility with your stakeholders. Listen to your crisis team and the lawyers. But trust yourself with those judgment calls.
Engage your crisis team.
5. Communicate Often
In a crisis, no news is worse than bad news.
With no information, people often imagine the worst. You must acknowledge reality. Tell the truth. People have probably assumed there will be layoffs. If you plan layoffs, acknowledge them. Clarify as much as you can.
Emphasize how your culture of shared values will guide your decisions.
If you’re the crisis leader, you need to be the prime communicator. Use multiple channels regularly to update people. One speech or a few memos won’t cut it. Open your group sessions for questions. Don’t duck the hard questions. Answer them truthfully. If you don’t know, say so. Indicate when you might know. Communicate to all stakeholders. Set up a message line where anyone can leave questions or comments anonymously. You’ll know better what’s bothering your customers and workers.
Most importantly, show that you believe that you can get through this crisis. Show it by what you say, how you say it, and how you look. Let that firm belief show in your face, your posture, how you walk, your entire presence. People will be observing everything about you and drawing conclusions from your body language.
Communicate often.
6. Stabilize People Psychologically
All crises involve an enormous amount of work. But people must be psychologically stable first. If fear runs rampant, if they’re angry, feel like victims, or want to lash out at others, they can’t work effectively. You and your crisis team must find ways to ventilate those feelings. People can’t listen until they’ve been listened to.
In one turnaround, I found value in convening my key people and having them list all the issues, fears, and angers they had until we were sure we had written everything down. We organized the issues into groups and prioritized them into A, B, and C priorities. We would do some of the A’s, and the rest would have to wait. Afterwards, we would reprioritize and address what we had to do. We needed to operate by the shared values and grant amnesty to others for past grievances. We had no time to play blame-games of who-did-what-to-whom.
Until people were heard and learned what would be done now versus later, they weren’t able to function as needed. We had no time to waste with whining about past abuses. Ventilation, amnesty about the past, and clear direction were essential.
Stabilize people psychologically.
7. Focus
In a crisis, “business as usual” stops. Virtually everything must focus on a few priorities, such as conserving cash and fixing the root causes of the crisis. Virtually everything else stops or goes on a “do later” list.
As the crisis leader, I learned it wasn’t enough to say we had to conserve cash. I had to swoop-in personally using the hard edge of steel leadership.
In one company where cash was dangerously low, I had every direct report come in with their by-line-item budget. I went down each line item with them. For example, in Travel and Entertainment, I asked, “Have you stopped all travel and customer meals? We’ll be out of cash soon unless we stop all non-critical expenses.” Personal involvement like that got people’s attention. Training stopped. Free coffee stopped. Subscriptions stopped.
I asked people to find a better way to do what they’d always done. I was often impressed that they did find a better way.
Frequent updates on the status of the top priorities are critical. For example, I got daily reports of our cash balances. When a balance went down, I wanted to know what we could do about it.
To maintain your credibility, when the jobs or earnings of workers will be hurt, senior managers must first cut their costs to share the pain. To do otherwise is unfair. You’ll lose the support of those people you need now and later.
In one firm, my co-CEO and I were working for $1 a year. When we had to slash the headcount by 40% to survive, people knew we were suffering too.
The crisis leader must orchestrate focused execution.
8. Establish a Cadence
A clear cadence—an operating rhythm—is essential in a crisis. Reacting to events helter-skelter creates fear. Rumors run rampant. Predictability calms chaos.
I used a variety of daily and weekly meetings in a regular cadence. The format was:
- Status updates
- Assessments of new options
- A pivot to a new option, and
- Action plans of “Who will do what by when?”
As we repeated this process over and over again, people calmed down. They saw progress.
Establish a cadence.
9. Use Tiger Teams
Your formal organization structure is too calcified to be effective during a crisis. I learned to use two types of what I call “Tiger Teams”:
- Task Teams: These are groups of volunteers who work on short-term projects. If working on the project part-time, they still had to get their regular work done. The goals were clear and listed in priority order. The project had a deadline. Operating by the shared values was mandatory. The whole team would periodically brief me. I would coach them. At the project’s end, we disbanded the team to applause.
- Skunkworks: These are teams of full-time, hand-picked volunteers to work on specific, “moonshot” projects. We guaranteed volunteers their former positions, regardless of the outcome. We relieved the team of all administrative rules and had them operate in a special, secure location. The prioritized goals were clear, with a deadline and a budget. I often delegated all my CEO authority to them to remove roadblocks. Other than operating by the shared values, they were free to work as they wished. I received periodic briefings by the whole team. At the project’s end, we invariably celebrated fabulous results.
Use Tiger Teams.
10. Find Sanctuary
Some crises are resolved in weeks. Others take much longer. You need sanctuary, a private place or practice to which you can retreat for renewal periodically. A place in nature is ideal. Or meditation, mindfulness, or yoga. Nutritious food and drink are helpful. Never alcohol, pills, or drugs, which will only degrade your capabilities.
My sanctuary practice was running. I got up every morning to run four or five miles. I set a goal to run a thousand miles a year. It took me until the third year to achieve it. But I finally did. Running was my morning sanctuary. You can’t lead others well if you haven’t led yourself properly. It’s “inside first.”
Find sanctuary.
From Surviving to Thriving
A crisis can be a great danger as well as a wonderful opportunity. Massive change is frequently the outcome of a crisis. That change can cripple an organization or be the gateway to new and better places.
“Bad companies are destroyed by crises; good companies survive them; great companies are improved by them.” -Andy Grove, former CEO of Intel
If a crisis strikes your organization, I’m confident that using these lessons will help you emerge even stronger. Good luck.
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Tools for You:
- Leadership Derailers Assessment to help you identify what’s inhibiting your leadership effectiveness
- Personal Values Exercise to help you determine and clarify what’s most important to you
- Alignment Scorecard to help you assess your organization’s level of alignment
PostScript: Quotations on Leading in Crisis
- “Any deep crisis is an opportunity to make your life extraordinary in some way.” -Martha Beck, author
- “In a crisis, don’t hide behind anything or anybody. They’re going to find you anyway.” -Bear Bryant, former Alabama football coach
- “I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts.”-Abraham Lincoln
- “Faced with crisis, the man of character falls back on himself. He imposes his own stamp of action, takes responsibility for it, makes it his own.” -Charles de Gaulle
- “When written in Chinese, the word ‘crisis’ is composed of two characters. One represents danger and the other represents opportunity.” -John F. Kennedy
- “A crisis is an opportunity riding a dangerous wind.”-Chinese Proverb
- “That which does not kill us makes us stronger.”-Friedrich Nietzsche
- “Conflict builds character. Crisis defines it.”-Steven V. Thulon, author
- “The two qualities people need most in their leaders during times of crisis are trust and competence.” -Brigadier General Tom Kolditz
- “Real transformation takes time. Complex efforts to change… risk losing momentum if there are no short-term goals to meet and celebrate. Most people won’t go on the long march unless they see compelling evidence within six to eighteen months that the journey is producing expected results. Without short-term wins, too many employees give up or actively join the resistance.” -John Kotter, Leading Change
- “The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty and we must rise with the occasion. As our case is new, we must think anew and act anew. We must disenthrall ourselves, and then we shall save our country.” -Abraham Lincoln
- “Never waste the opportunity offered by a good crisis.” -Niccolò Machiavelli, Italian diplomat and philosopher
- “I know of no case study in history that describes an organization that has been managed out of a crisis. Every single one of them was led.” -Simon Sinek
- “Inside the word emergency is emerge; from an emergency new things come forth. The old certainties are crumbling fast, but danger and possibility are sisters.” -Rebecca Solnit, Hope in the Dark
- “What matters most is how well you walk through the fire.” -Charles Bukowski, German-American poet
This article is by Bob Vanourek. It’s based on a chapter Bob and Gregg wrote for Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations, revised and updated for a presentation by Bob to the Vail Valley Partnership in October 2022.
Bob, now retired, is the former CEO of five firms, ranging from a startup to a $1 billion New York Stock Exchange company. He is co-author of Triple Crown Leadership and author of Leadership Wisdom: Lessons from Poetry, Prose, and Curious Verse. After his 30-year business career, Bob taught leadership as an instructor at Colorado Mountain College and the University of Denver. He served on eleven for-profit and non-profit boards and chaired four of them. He is a Baker Scholar graduate (top 5%) of the Harvard Business School, magna cum laude graduate of Princeton University. Bob was awarded a Lifetime Achievement Award by Trust Across America—Trust Around the World. Bob is a decorated Army officer and a lifelong student of leadership. He is married to his high school sweetheart, June.
Bob Vanourek and Gregg Vanourek are leadership practitioners, teachers, trainers, and award-winning authors. They are co-authors of Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations, a winner of the International Book Awards. Join their community and sign up for their newsletter. If you found value in this, please forward it to a friend. Every little bit helps!
