Leaders are facing an inordinate number of crises today that create challenges for day-to-day decision-making
As we watch events unfold in Ukraine, we're reminded of the ubiquity of uncertainty — and even full-on crises — in the world. And it's not just geopolitics: a viral pandemic, supply chain woes, extreme weather events ... it seems leaders are facing an inordinate number of crises today that create challenges for day-to-day decision-making.
But crises and uncertainty have always been a part of life, and good leaders can learn to anticipate and manage these phenomena.
In her research and experience, Professor of Practice and Walentas Jefferson Scholars Foundation Professorship Chair Vivian Riefberg has examined how leaders react when crisis and uncertainty rear their ugly heads — and she’s identified best practices for getting through them successfully. A former senior partner with McKinsey, Riefberg now serves on boards including PBS, Johns Hopkins Medicine and Signify Health. She spoke with Ideas for Action about leading in uncertainty and some of the do’s and don’ts of successful crisis management.
Q: Why is it so important for managers to learn to how to effectively manage crisis and uncertainty today? Riefberg:Decision-making under substantial uncertainty and crisis is different from daily management and leadership decision-making. The magnitude of the impact is often substantial and the situations you encounter are not things you face in the day-to-day realm of what you do, so you don’t have a lot of experience to draw from and you often have to make decisions more rapidly.
Crises can build exponentially. For example, COVID-19 has added an inordinate number of additional challenges, both exacerbating existing issues and creating whole new sets of decisions we need to make. Workers cannot go to work, hospitals get overrun, people have mental health challenges, so all these issues get layered on top of each other and create more challenges.
Q: How does today’s media and social media environment make crises harder to manage? Riefberg: We operate in a 24/7 world, in which there are many members of the public who can comment on what you are doing and shape the outcome of what happens.
In an email and text world, the amount that is written down has gotten greater, and the idea of what is confidential has changed — so there’s often much more information about your enterprise that gets out into the marketplace. As a result, you have many more things coming at you from a greater variety of people, so multiple narratives start to be developed that you are less able to shape.
Q: What are some things leaders should do when a crisis first emerges to develop good “situational awareness”? Riefberg: First, it’s really important to ask, “What do I know about this situation with certainty, and what are the big uncertainties I have?” Not what do I wish was true, or what was true in the past, but what do I know now? There’s a tendency when there is something uncertain to throw your hands up and say, “I can’t handle this.” But in fact, you can often narrow it down to predictable scenarios in which there are two or three different possible outcomes. You want to handle different uncertainties differently during a crisis.
It’s also very important to figure out who your constituencies are and what has to come first, second and third with those constituencies. For example, we have a case I present in class about a hurricane, and most students focus on customers — but as the CEO in the case points out, “If I don’t have employees, then I have no one to call on my customers, so first and foremost I have to figure out the well-being of my employees.” Depending on the company, other constituencies could include investors, regulators or law enforcement, for example.
Q: Once you find yourself in a crisis, what are some things you need to keep in mind to manage it well? Riefberg: One is to recognize as a leader that you don’t have all the answers, and therefore you need to reach out to find others who can help you. You may also want to create a specific group to focus on the problem, while the rest of the enterprise continues with business at hand — so it’s not like a bunch of 8 or 9-year-olds at a soccer game with everybody chasing the ball. That’s not how you score a goal!
Also, you have to put on bifocal lenses, so you are not just looking at the end of your nose at what you are going to do today, tomorrow or next week, but also thinking about the medium and longer term.
And it’s essential to prioritize communication. Even at times when you can’t move quickly, it’s important that you communicate with the varying constituencies and share the processes you are going through, so everyone understands how you are proceeding.
Q: What are some examples of the mistakes leaders make in managing crises? Riefberg: That's an important thing to be aware of, so in my teaching at Darden, I incorporate cases that cover multiple areas of challenge.
For example, there is often not good recognition of the range of potential outcomes — underestimating what the impact can be. Additionally, some executives do not fully consider all the parties impacting the situation and then are surprised by a particular stakeholder’s actions. Another key mistake is not fully recognizing the personal toll large uncertainties and big crises have on you as a leader and as a human being.
Q: How can leaders manage the aftermath of a crisis, including the effects on them personally? Riefberg: Leaders can use the opportunity to really focus on their purpose and take lessons away from the crisis — and embed that in learning in the enterprise. Hopefully, they will never have to face the same thing again, and they can build an even better company for the future. For example, with COVID, we've learned that we can treat many more health care issues virtually, but if we don't change incentives and regulations, we may not achieve the benefits of that knowledge.
And on an individual level: After a crisis, many leaders think that the business going back to normal, that they will be back to their old selves, without recognizing how the crisis has affected them. The handling of a crisis can be talked about for years to come, and for some people, the emotional toll can be substantial. As we are being more honest and destigmatizing mental health challenges, it’s important that leaders realize they don’t have to be all-knowing or perfect.
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[This article has been reproduced with permission from University Of Virginia's Darden School Of Business. This piece originally appeared on Darden Ideas to Action.]
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