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Operational Excellence in Crisis Management

Every week we see in the news another example of companies in crisis – customer service crises, supply chain disruptions, critical systems failures and business continuity issues caused by natural disasters. Customers and shareholders may quickly forget the details of what caused the crisis, but how you handle the situation will be etched into their memory, and shape their perception of you long into the future. For many companies, how a crisis is handled could mean the difference between a healthy recovery and going out of business.

You may not be able to predict when a crisis will occur, or even what it will be – but that doesn’t prevent you from planning ahead and ensuring your leaders and your organization know what to do when a crisis hits. Managing a crisis will require all the basic problem-solving skills your employees have learned and the operational excellence strategies you’ve developed. There are a few things; however, that make a crisis unique from day to day operations and require you to up your operational excellence game to the next level.

Impact to the organization

In a non-crisis situation, your organization’s primary focus is resolving the issue and getting business back to normal. A crisis situation is different in that it brings with it an added level of complexity related to managing both the issue and long-term impacts to the organization. These impacts may be operational, financial, or reputational (most crises will involve more than one). Quickly assessing the impact of the crisis (and re-assessing frequently) will influence (if not dictate) the choices you make, how you communicate, and the urgency you place on resolving the issue.

Reputational impact in many cases will out-weigh operational cost considerations when dealing with a crisis situation. News outlets and social media are starved for controversy and companies in crisis are a juicy target, so minimizing, and managing, exposure is critical. Applying problem-solving and operational excellence techniques to the crisis enable you to objectively evaluate the holistic environment and weigh the impacts of different options to make informed decisions for mitigating impact.

Time is of the essence

The longer an organization is in a state of crisis, the less likely they are to successfully return to normal business operations. During a crisis, the risk of making a critical mistake increases significantly – as do operational costs. While crisis operations may be sustainable for a short period, fatigue, loss of focus and resource constraints can quickly diminish organizational effectiveness. Mature operational excellence processes can help your company effectively transition into crisis mode and quickly get back to normal operations once the crisis is over.

By planning ahead and ensuring that key crisis management resources understand the problem management process, are comfortable with the role they need to play and are clear on decision structures – ambiguity and confusion can be reduced once the crisis has begun. Simulation and team based problem-solving exercises can build familiarity with individual personalities, skills and working styles – reducing the potential for stress based conflict and improving problem-solving efficiency.

Effectiveness of solution

Crisis situations often lead companies to set-aside structured governance processes and bypass control mechanisms with an “in case of emergency – break the glass” mentality. While there are clearly times when exceptions to normal operating procedures are justified, it is important not to replace objective reasoning with purely emotional responses. Doing so will often lead to the selection and implementation of “solutions” that don’t actually solve the problem and have the potential to mask symptoms and limit access to information important to the problem-solving effort.

Solutions to crisis situations need to consider both long and short-term efficacy and impact. Structured operations processes and crisis management techniques include methods for objective evaluation of alternatives to help guide decision making and manage organizational risk.

Perception on how you handled the situation

Normal business problems rarely make the news (thankfully) but a leader guiding his/her company through crisis will be subject to play-by-play commentary and instant replays that would rival a professional sporting event. Every action and decision will be questioned and every nuanced statement critiqued for hidden meaning. Regardless of the outcome, it is the perception of how the crisis is handled that becomes the leader’s, and company’s legacy.

What the company communicates, and when play a large role in shaping customer and stakeholder perceptions on how critical the situation is, whether leaders have it under control, and can inspire confidence in their continued business relationships with the company. Crisis situations require far more sophisticated and deliberate communication plans than normal operations.

It is highly likely that your company will (at some point in its existence) find itself in a crisis. Planning ahead and increasing the maturity of your operational excellence processes along with the application of structured problem-solving techniques could make the difference between success and failure. The problem-solving experts at Kepner-Tregoe understand this and have been helping companies just like yours navigate crisis situations for over 60 years. Don’t wait for the crisis to occur to ask for help.

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