Distinguish Crisis from Disaster: 5 Notes for Making Decisions

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By Axelle Bagot and Houman Harouni

One of the most common forms of leadership failure is treating a crisis like it is a disaster, and treating a disaster like it is a crisis. The Greek root of the word crisis means “to decide.” It is a word ancient physicians used to describe the moment when an ill body made the decision to recover or fail. A disaster, on the other hand, means literally “an ill star,” a harmful event beyond our control — a bad year for crops, or a global pandemic, for instance. Crisis, then, is a moment that demands exceptional decisions from us, vital ones about who we are and which directions we must take. A disaster is precisely the end of decisions. The two, in fact, can occur at the very same time. The difference is in our degree of freedom: the line between those things over which we have no control, and those which remain within our decisive powers.

We treat a crisis as a disaster when we abandon our work, withdraw from the zone of impact, or, worse, when we look for others to blame as the cause of the misfortune. We do not take time to understand our freedom of movement. By contrast, treating a disaster like a crisis occurs when we withdraw care and hold people responsible for things they cannot impact. An organization that, faced with the COVID 19 pandemic, stops its work without due reflection and lays off its workers without due consideration has committed both mistakes at the same time.

In a time of rapid and unwanted change, how do can an organization distinguish where its stands and what needs to be done? Based on research and work, we divide the process into five interrelated steps.

1. Re-Dimensionalize Your Work

A disaster is an end-point to the possibility of work. But you will not know if you have actually reached this point without first reconsidering what your work is.

After the 2008 financial meltdown, with so many qualified candidates out of work, the recruitment firm Korn/Ferry should have been in solid disaster mode. Instead, they understood that the work they were doing held other dimensions. Rather than focusing on recruitment, they turned their attention to what had seemed like a secondary aspect of their capacity: their expertise on how to retain employees. The hard turn towards this dimension, and their willingness to change, saved the organization.

In every organization, a small number of essential tasks take the lion’s share of attention — those tasks which bring the most prestige, power, and profit. In a watershed moment, it is essential to quickly change the story of who you are and what you do. This means taking inventory of all that your organization does, large and small. Take a public high school: it is not just a center where students and teachers gather for classes. A school is also a food-service, a social club, a curriculum repository, a mental-health center, and in many poor, working-class areas, it is a daytime homeless shelter. Schools that are adapting well to the current crisis are acknowledging these other aspects of their labor, like Brookline’s Coolidge Corner School in Massachusetts, which avoided laying off its staff by expanding its food services. A hotel chain we recently worked with was, like many others, unable to receive guests as usual. Instead, the team realized their potential as experts in purchasing high-quality bulk food items, and have leveraged such secondary aspects of their capacity to thrive during the quarantine.

2. Remap Your Stakeholders

We said that the difference between crisis and disaster was the degree of freedom. This freedom is almost always exercised in relationship to other people.

In trying times, many organizations fail for the simple reason that shame and fear of difficult conversations keep them from seeking help, advice, or time from their key stakeholders. At non-critical moments, organizations tend to map their stakeholders based on power and interest — high-power, high-interest stakeholders are managed closely, while low-power and low-interest ones are monitored with minimum effort. Such horizontal mapping no longer works in an upheaval. Organizations must quickly reshape their stakeholders map and reassess resources of potential support. Slowing down the key processes of an organization is essential in a crisis, but it can’t be done without first reframing your sense of who your people are.

Another of our clients, a biotech company with a strong social mission, was continuing to move full-force ahead to certify its main product, even though it understood that the governmental process was grinding to a halt during the pandemic. Management was acting as if waiting for the business to go bankrupt, assuming that the investors were not going to give them more time or. The range of options at hand, however, was by no means so limited. In remapping their stakeholders, they realized that their investors were ready to maintain their trust and invest in a second product the lockdown would give them time to develop. More unexpectedly, there was enough social interest in the success of their product to gain them support from the potential users. By facing reality and reaching out to different kinds of stakeholders, they were able to avert total shutdown.

3. Recapture Voices that Seemed Out of Place

Distinguishing between crisis and disaster is a process of reflection. But how do you know if you are using all of your reflective powers?

Those who work on the ground know the most about waste, redundancy, and lost opportunities in an organization. The second project the biotech mentioned above had for instance been previously pitched and discarded. Your complainers, the ones who propose costly and seemingly infeasible ideas, the ones who point out that the organization is moving off mission — these are the heretical voices that need to be recaptured in a crisis. The power of positive deviancy (those who challenge the system but also outperform others through unconventional means) is well-recognized in leadership literature. In times of rapid change, smart organizations go one step beyond that, taking into account the dissonant voices: those that have been hushed in the old context. In the new context, what organizations need is a task-force that listens to stakeholders not just for solutions, but for problems too, seeing which areas of their work have been neglected.

4. Experiment Immodestly

The Iranian poet, Saadi (A.D. 1210-91), wrote that “when crisis comes, and no move is left, the hand will block the sharp edge of a sword.” That last, dangerous, untested feasibility is what determines one’s place between crisis and disaster.

Those who have created and grown businesses or organizations from the ground up know that change is essential for survival, but are still prone to avoiding major shifts. In their work on peoples’ Immunity to Change, Robert Kegan and Lisa Lahey have shown that the most effective way to overcome the counterproductive stories we tell ourselves is to design safe and modest experiments that provide solid data about our biggest assumptions.

In distinguishing between crisis and disaster, our assumptions can keep us from success in dramatic ways, and we must design experiments that push beyond the zones of safety and modesty as much as possible, without risking the life of the organization. Korn/Ferry’s decision, mentioned above, was also a massive experiment with millions of dollars at stake. As shown by Daniel Kahneman’s work on prospect theory, people make decisions based on the potential gain or losses relative to their specific situation (the reference point) rather than in absolute terms. An organization that abandons work and workers before really risking a part of itself on an educated, well-planned idea has gone into disaster mode without facing the potential crisis.

5. Help Your People Face Losses and Opportunities Together

If crisis demands rigor, disaster demands care. Balance between these two aspects is only struck when the demand for rigor and care are shared widely.

In the classic case of Semco, the young CEO, Ricardo Semler, responded to a crisis by reducing a resistant C-suite and asking the workers to make informed decisions about salaries, work-time, and directions the company could take, saving the company and the livelihood of nearly everyone. When management lay off workers while keeping their own salaries intact, delegating losses to others and taking credit for short-term opportunities, organizations implode and stakeholders flee. By convincing stakeholders that the burden is shared widely, solutions will also be shared instead of everyone abandoning ship. The decision of what to give up works most effectively when everyone is empowered.

The key is to enter a process of honorable negotiation with stakeholders. It is essential to think of negotiation as a way of continuing relationships when there is no best alternative to a negotiated agreement. This means that stewardship of the mission, and the credit for new solutions, are shared with as many stakeholders as possible. There, when the work and its fruits are held in common, the line between disaster and crisis finds its proper place among us.

About the Authors

Axelle Bagot teaches public leadership at Brown University. She is an organizational and political consultant, with more than 20 years of experience in the field. Her work focuses on leadership, social innovation and change management in a wide variety of contexts. Bagot is the co-founder and CEO of Leadership Lab International, www.llintl.org.

Dr. Houman Harouni is a full-time Lecturer on education and leadership at Harvard University. His research addresses the potential of learning for creating personal, organizational and societal transformation. He is the Chief Learning Officer at Leadership Lab International.

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