The word “crisis” originally refers to a sudden change. Our era, indeed, has no shortage of them: the Internet bubble, the subprime crisis, Greek debt, migration and other humanitarian crises, all of which have hit the headlines, politics and the global economy head-on. Businesses too face disruptions that abruptly throw them off balance. Alongside the unforgettable cases of Swissair and UBS, many other companies, whether well-known or obscure, have experienced a sudden collapse in orders, the loss of a key market, the sudden arrival of a substitute product, a management meltdown and many other abrupt shocks.
Yet this sudden event is often only the trigger. It has in fact been observed that crises are generally rooted in a combination of latent technical, economic and human problems. An older but striking anecdote illustrates the point: NASA’s space programme was called into question after the Challenger shuttle explosion. That crisis was initially triggered by the failure of a seal, a simple technical component in itself. This, in turn, resulted from a design flaw. The problem had already been flagged in internal reports, but the inertia of NASA’s administrative machinery failed to respond to those warnings. This tragic example nevertheless illustrates the chain of cause and effect that can set a crisis in motion within a company.
It is therefore essential for an entrepreneur to do everything possible to minimise the risk of a crisis in the business, or, if one is unavoidable, at least limit its impact. A crisis is often worsened by failure to heed warning signs, the absence of prevention mechanisms, the lack of pre-defined plans to limit damage, or simply the neglect of lessons that should have been learned from the past.
If the company nevertheless finds itself confronted with a crisis, it is then necessary to apply crisis management. This may be handled either by an internal executive or by an external specialist called in for the purpose. Crisis management differs from traditional management through a situation that is adverse on every front, a multiplicity of problems, intense pressure, urgency and risk, and a lack of resources and strategic vision.
The word crisis comes from the Greek krisis, meaning decision. A crisis does indeed require rapid decisions on the emergency measures to be taken. By analogy with first aid for the injured, emergency measures are ultimately few in number, but essential. They do not cure the injured person, but prevent their condition from deteriorating.
The crisis manager must provide strong leadership. Faced with a multitude of emergencies, they must identify the few fundamental decisions that will make it possible to save the company, or at least part of it. It is better to recognise immediately that only part of the business is viable than to let it sink by delaying drastic action.
Benchmarks for crisis management:
