How to Lead in a Crisis Situation
by Grace C. Sorongon
Professor Ranjay Gulati, one of the most respected professors at Harvard Business School, aptly described COVID-19’s crisis situation as quite unique and definitely unprecedented. Hitting most countries almost at the same time, it did not allow enough preparation, thus disrupting a majority of industries globally. For these industries, survival is the call of the times. And many leaders in these industries, while having redirected their strategies, may or may not be successful. As it is, COVID-19 is still looming as a very real threat to the business environment.
Professor Gulati cited a study of about 4,700 publicly-listed companies which survived the last 3 recessions: in 1980, 1990, and 2000. Out of the 4,700 companies, only 9% survived and did better than before the crisis. What made them different? Was there a secret sauce to their success?
In the study mentioned above, Professor Gulati said that new businesses were born out of the recession. The leaders of these companies challenged the status quo. Instead of being immobilized by fear, these leaders adapted to adversity, grew from it and came out stronger. Citing Fuji Film as an example, the company survived unlike Kodak, which went bankrupt during the time when films became irrelevant. Fuji Film pursued a different path. They put their knowledge and experience in chemical products, imaging and x-rays, as well as placing collagen and oxidation into a package that allowed them to become a primary healthcare provider. Fuji Film was able to shift and survive because of this change.
Most leaders, when faced with a crisis situation, will immediately take hold of their cash position and, as a primary strategy, will immediately cut cost. To a certain extent, there are merits in preserving cash and in cutting cost. But in the long run, the whole ecosystem suffers along with everybody in the end. Why? Small players in the said ecosystem will not survive if they are not paid and be allowed to operate. The trick is to achieve a certain balance so that the ecosystem can operate as well.
What is the leader’s role in a crisis situation? More than ever, they have to take the lead. They must learn how to prioritize, clearly communicate their goals, and be able to monitor their progress vis-à-vis these goals. When necessary, they have to learn to pivot quickly when strategy does not work effectively. They have to act swiftly regardless of lack of information at times. Fear should not engulf them and their attitude should revolve around risk taking, experimentation and creativity. Leaders have to treat their business as a clean slate and discover what they do not know. In other words, leaders should be able to see opportunities during a crisis situation.
In a crisis situation, the primary job of the leader is to help navigate his organization and people towards the ultimate mission of survival. He can pursue new opportunities with the end goal of winning despite the ambiguity, unpredictability and unchartered territories. The leader should have the courage to persevere even if the odds are greater than he can imagine. This is crisis leadership at its core.
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About the author:
Grace C. Sorongon was the 2013 President of People Management Association of the Philippines. She has been working with John Clements Consultants for more than three decades now. She is a Senior Vice President and is in charge of various corporate projects, steering these projects towards completion. She also manages the operations of Professional Staffers, a business unit within the John Clements group.
