Managing Through Crisis: What Is Crisis Management?

Welcome to Managing
Through Crisis, everybody. This is our weekly webcast
featuring Harvard Business School faculty talking on
a range of business topics related to the coronavirus. Some of you may have seen
us talking to Tsedal Neeley last week about making this
move to work from home. People are now working remotely. That was, I think, a shock
to the system for people last week. And they’re still
adjusting to it. Today, we want to pull the
lens back a little bit. And we’re going to
talk to Professor Dutch Leonard about how to lead
through a crisis like this. Dutch is an expert in crisis
management and leadership. He’s the perfect
person for us to have this conversation with today
in the midst of the crisis. Dutch, welcome. Thank you, Brian. It’s a real opportunity. And it’s hard to say
it’s exactly a pleasure to talk about coronavirus. But thank you for
the opportunity. I think this is a very
important subject. Yeah. And I know you’ve
been very busy. You have a dual appointment at
the Kennedy School, as well. And actually, you’re
joining us today in advance of speaking to
mayors around the country as part of the Bloomberg
Mayors Initiative. Can you just talk a
little bit about that? Yes. I have a joint appointment here,
as you just observed, Brian. My work on the Kennedy
School side of the river is focused on crisis management. And the Bloomberg
Harvard Mayors Initiative is a program sponsored
by Mayor Bloomberg and convenes a set of about 50
mayors for a program each year. It’s an online
program, principally. But as a result of
the coronavirus, we are putting on
a special sequence of sessions for that group,
both this year’s cohort and the prior year cohort. So we’re going to be speaking
to a couple of hundred mayors this afternoon. This is all being put
together in real time. We’re going to do a
sequence of these, and we’ll probably pick up more
of the mayors as we go along. The subject is to
look at the challenges that they face as the local
leaders in their jurisdictions for trying to help the
public and the nation lead its way
through this crisis. And it feels like we’re sort
of living minute to minute and things are changing fast. And I’m sure mayors are
feeling tremendous pressure as they make unprecedented
decisions in their own city. So I’m sure they appreciate
the opportunity to convene with each other and with you. Well, that’s the idea. We’re going to ask them
how things are going and try to help them think about
what the basic challenge is and how this challenge
is fundamentally different from other things
that they’ve seen before. And this, I think, is what
all of us are living through. None of us has ever been
in these circumstances. In our crisis
management programs, both at the Kennedy School
and also the risk management program that we teach
as an executive program here at Harvard Business School,
one of the things we emphasize is the fundamental and
profound distinction between what we call
routine emergency events, or more routine risk
events, and true crisis events. A true crisis, for us, is
constituted by a situation in which you have not, you
don’t have a great deal of familiarity with it. There are significant
elements of novelty to it. And that automatically,
in effect, invalidates your playbook. It says there’s no existing
full script for how to perform. In routine emergency situations,
a well-trained and well resourced organization,
which has seen something like this before,
will have a playbook, will know what it needs to do. And mainly it will
face a problem of successful and
efficient execution. But in a true crisis
situation, because of the significant novelty,
no one knows what to do. And so the challenge
is automatically you’re shifted to an innovation,
real time problem solving setting. And that’s a fundamentally
different challenge. And I think that’s
part of the point we’re trying to make to
mayors, that it feels chaotic and unsettling. And that’s the way
it always feels when you’re in circumstances
that are unprecedented. And our message to the
mayors is that that’s not going to stop soon. There will be continuing
issues that arise here that are new, that we
haven’t seen before, that we can’t necessarily
foresee now as we work our way through this crisis. So they should imagine that
this kind of unsettling feeling of not fully being
in control and not being able to understand
fully what’s going on, that’s likely to continue
for quite a while. Yeah. You know, it’s funny, we use
the term crisis management. It almost sounds like an
oxymoron, right, to people. But I’d love to
hear from you sort of how do you define
crisis management. So first of all, we distinguish
between routine emergency or routine management and
crisis management in the way that I just described,
to say that when you’re facing a situation with
significant novelty, that automatically means
that you have to solve the problem in real time. So we say that effective
crisis leadership is constituted by the
real time problem solving. We say it’s constituted
by rapid innovation under stress, embedded in fear. And that’s a fundamentally
different kind of challenge than situations
where we basically know the answer and even
in dangerous circumstances, we know what we need to do. So we define crises
as being situations where you are in a new and
unprecedented situation. And one of the things
that characterizes crises is that often you see competing
priorities which you have never had to trade off before. So in routine situations,
you’ve figured out in advance what are the key issues here
and which ones take precedence. But in a true crisis
situation, you have a whole bunch
of things which are colliding simultaneously
and you haven’t necessarily had a chance in
previous experience to sort out which one of these– all of these things
are important, but which is most important? You know, is it most important
to keep kids in school? Or is it most important for
us to protect the health and safety of the community? Well, that one wasn’t
too hard to figure out. But it’s something we haven’t
really had to trade off before. So it’s that kind of real time
decision making that feels chaotic and unsettling. And our observation
about that is that what crisis management
needs is not answers– because we don’t have answers– what it needs is an
effective process. And that’s what we
emphasize to leaders of all kinds of
different organizations. So Dutch, recently
you published a paper, along with some of your
colleagues at the Kennedy School, 20 Things for
Organizational Leaders to Know About COVID-19. I’m going to guess that’s
a living document that continues to evolve as
the situation unfolds. But I’m wondering, what
were you guys hoping to achieve in publishing this? Well, you’re quite right
about the document, Brian. It started as 10. And then a couple
days later, it was 15. And then by last
Thursday, it was 20. And now it’s probably more. What we were mainly
trying to do was to help people get
a realistic fix on what the nature
of the situation was and how it was likely to evolve
and what the implications were for how people
should be responding. And again, the main
implications are, we need to be doing
forward looking planning in communities,
in organizations, in the government,
in civil society, throughout the society, we
need to be looking at what are the challenges that this
situation is creating for us and how are we
going to solve them. And we won’t know about
all of them at once. Some of them will
appear down the road. And we have to be
continually focusing on what those issues
are as they come up. So our intent in
that document was to characterize the situation. Part of what we were
emphasizing at the time was that this was a rapidly
spreading phenomenon, and that if it hadn’t occurred
near you yet, it would soon. So you shouldn’t imagine
that any part of the world was walled off. And unfortunately, in
the last seven days, we’ve been proven
right about that. Yeah. We had some viewers send
in questions to us, Dutch. And I want to get to
some of those questions. I think they’re really great
questions that people have. One of them is just, what’s
the most important thing a leader can do in
a time like this? Is it just to maintain calm? Or is it– should
leaders think differently about what their role is
in a situation like this versus a steady state? Well, I think,
again, the main thing that they need to emphasize,
to themselves and to others, is that because we are in
unprecedented situations, we’re going to be learning
our way forward and trying to figure out what the issues
are and to deal with them. The way we characterize crises,
Brian, is to say they’re like a fountain of
issues and questions and decisions and
competing priorities. And in ordinary circumstances,
we can pretty quickly see what the issues are. The questions are well defined,
we know most of the answers, and we know what to do. But in a crisis situation,
COVID-19, none of those applies. We don’t know what
all the issues are. We don’t immediately see what
the competing priorities are. They emerge as we go along. We can’t define the
questions easily. We don’t know the right
answers to those questions. So what we emphasize is
that what leaders need to do is to take their most
entrepreneurial and innovative and forward looking
leadership stance and convene a process to solve
these problems in real time. So let me say something about
what I mean by that process. First of all, the
process consists of the people you bring
together and the way in which they interact. So who do you need to have? So if you’re taking
this from, for example, an organizational
perspective, a firm that’s trying to make its
way through this event, who would be the
kinds of people? I would suggest three
groups of people that you need to have associated
with your problem solving in this circumstance. The first are people who
understand and represent the different priorities
and different values and different goals that
your organization has. So you want to
make sure that you have all the equities,
the things that people care about, the
interests represented in the conversation. That means you need,
for example, your labor force has to be represented. Because they may have
different concerns than corporate leadership does. So you need to first
of all convene a group. The group needs
to include people who represent the different
interests that you have. The second thing
is you need people who know about this event. That is, you need good
advice, whether it’s from inside your
organization, or maybe you can draw in advisors
from outside, or just have somebody scanning
the outside information that’s available in public media and
through the press and so on, about what is the
nature of the event. What are the facts medically? What are the issues
logistically and so on? So that people who are familiar
with the way in which the event itself is evolving, in
your firm and elsewhere. And then the third
group is people who really understand your firm. That is, they understand
the workings of it, the things that might not occur
to everybody, that people might not know about, this
is a particularly scarce and difficult
thing for us. Or we only have a few people
who know how to do that. So what are the key things about
the way the business operates? Now if you take
those three groups, you’ve got a pretty
good representation of what we care about, what
is the actual situation, and how our firm fits that,
how we relate to that. Now, that group should
be charged with looking at the issues overall. So in other words, we don’t
want a bunch of separate problem solving groups. We may want to
delegate from this. We call this a critical
incident management team, as a standard piece of jargon. I don’t care what you call it. But it’s important to
get that group together and to give them
the task of trying to embrace the whole
range of issues that we are trying to confront. So that when we say
to some subgroup, here, we want you to work on the
logistics of the supply chain and report back
to us about that, that we don’t delegate
that in a way that misses any of the large issues. We have to have somebody who’s
keeping track of all of those. So you charge the group
with trying to embrace all of the issues, to deliberate
about the most important ones for the organization by itself,
and then to delegate to others pieces of the work
that you can’t. And then what you
want is something we would call in
another setting, we would call it design
thinking or agile process or a generalized
problem solving, just over and over and
over again, that group wants to ask, what are the
key issues that are at risk? What is the actual
situation here? What are the options
that we have? Which option should we try? And let’s make a decision
and go ahead and try that. And then let’s see
how we’re doing. And used over and over and
over again iteratively, resolve that problem
continuously. We call that learning your
way forward through an event. And that is the best
that we can hope for. And that’s what
leadership constitutes, the ability to get
that process together and to keep it operating. Leaders need to be
confident in the process. And they also need to be highly
communicative to everyone. One of the key
issues here, Brian, is that because we are
learning our way forward, we will not necessarily get
the answer right the first time or the second time. We’re going to make mistakes. Perfection is a far cry
from what we can hope for. What you can assure people is,
we’re doing the best we can, we’re going to learn as
fast as we possibly can, and we’ll keep at it until we
get better and better answers. And that leads me
to another question that one of our
viewers sent in, which is in terms of communication,
how do you balance transparency with the fact that you know
that you’ve got a lot of things that you’ve got to
work on in real time? What should what should
firms and leaders be thinking about in terms
of how they communicate with stakeholders, with
employees, with customers, with all those important groups? Brian, that’s a whole
subject in itself. And that’s one of the
things that we emphasize, we’re talking with
the mayors about and with everybody else in this. The communication
strategy has to be based on truth and reality. So the first thing is
you have to be speaking to what you actually know,
and you should say what the basis is of what you know. I think it’s really
important for firms to be, and for leaders to be,
confident and forward looking. There’s a standard–
this actually dates from at least
Napoleon, it’s often called the
Stockdale Paradox, because it was formulated
by Admiral Stockdale, who was the chief American senior
officer in the North Vietnam prison camps during
the Vietnam conflict. And he formulated
this as saying, in very difficult
circumstances– which I think is fair to
say what we face right now– leaders have to do two things. You have to be brutally honest
about what is happening. And you have to offer hope. And the hope can’t be a fantasy. The hope has to be
based in something. So the hope here is, we
are a strong country, we are incredibly resilient. The thing that will
surprise us, in this event, is how imaginative and creative
and resilient we actually are. And the reason for that is
that people are convening this process that I described. We have people all
over the country working on their
problems and trying to figure out how
they’re going to adjust to these circumstances. And we will turn out– and
this is one of the great assets of business and of
leadership in the society– business leadership
is constituted by creative, innovative,
resilience, ability to solve problems. And that’s where
the hope comes from. So I would say in this kind of
very difficult circumstance, leaders on the one
hand need to be very honest about
what is happening and what the circumstances
are, but they also need to offer a
rational basis for hope that we will be able to
solve our way through this and we’re going to do as
well as we possibly can, and we need to enlist everyone’s
support in doing that. So would you say that this
is a time for businesses to be opportunistic, or
should they sort of retrench and just stick to their
knitting kind of thing? I mean, how should
firms think about– is it tone deaf to try and
be opportunistic at a time like this? So I think what I would
urge business leaders to do is to find opportunities
in which they think what their business has
to offer can be helpful in the midst
of this circumstance. They can be
imaginative about that. They can see a problem
emerging and say, what could we do about that? And that’s part of our fabric
of resilience in the society and in the economy is that
we have tens of thousands of entrepreneurial
people eagerly working on those problems. So opportunistic has a little
bit the wrong ring to it. What we don’t want to do is to
take opportunity at the expense or to take advantage of
others in this circumstance. That will not be us at our best. But if we look for opportunities
in which our capabilities can be helpful, that is,
I think, a real secret to improving the
outcomes for everyone. And that’s a great role
for business leadership. The way I think
about that, Brian, is as a result of the way
you operate your business, there is a set of things
that you have to be good at. I call these the imperatives. So if you look at what you do,
whether you’re a transportation company, logistics, you’re
a manufacturing company, whatever it is that you do in
order to compete successfully in the environment
that you’ve been in, you’ve had to develop a
certain set of key skills for your organization. And so think of those
as the imperatives. Now the issue here is, take
those imperatives and ask, how could we be helpful? In other words, how
could the things that we already know
how to do turn out to be helpful in this moment? If that’s the kind
of opportunity you’re seeking and
finding and being able to help produce for
us, that’s all to the good. So the point is, don’t try
to be good at something that you weren’t
already good at. Don’t try to develop some
whole new set of capabilities and imperatives. Take the ones
you’ve got, and try to figure out who in
this society right now needs more of
what we can do, and how do we get that to them. And I think if
businesses lean into that and try to do that on the
basis of a public spirited engagement, we will all
come out of this better and we will come out with a much
better reputation for business than it has recently enjoyed. And maybe that could be a little
bit of a silver lining to what is, in fact, a very dark cloud. Yeah. I agree completely,
just in terms of the reputation of business
has suffered quite a bit over the past few years. So here’s an opportunity
for companies that can contribute to the
greater good in some way to step up and do it. And so I hope we
see more of that. Let me ask you what are the
pitfalls that leaders should be thinking about at this time? You’ve talked about, they’re
going to make mistakes. They’ve got to be
brutally honest. I think that’s being honest
with themselves as well as with their stakeholders. But what are some of
the things that you think they should try to avoid? Well, one key thing
is to resist being put in the position of
giving quick answers. We have a sort of
traditional idea of what effective
leadership looks like, which is that leaders can
promptly and decisively resolve any issue that we bring them. That’s why we pay
them the big bucks. Well, that’s true
for routine things. That is, if you’ve seen
it 100 times before, if our organization
is familiar with it, we do know the answers
to those and we can be what is often referred
to as prompt and decisive. We can cut through the
tape and move quickly. That is not a good idea here. Because in this situation,
no one knows the answer and it may take us a
while to figure it out. So one of the pitfalls
is that leaders often feel pressured to give
confident answers at the outset. And I think that’s
a huge mistake. What they need to do is
to help people understand why, in unprecedented
situations, what effective leadership looks
like is a problem solving, experimental approach. So in other words,
as we go forward and as we find better
answers as we go and resolve these
problems again and again, we should think of
everything that we’re doing as our current experiment
to see if it, how well it works and to see if it is
going to help us. And that means
all of our actions we should regard as
tentative and reversible. We can decide to do
something else instead. And so the pitfall would
be to lock yourself into a current
understanding on the feeling that, well, I have to show– in order to be
confident, I have to show that I’m making
decisions, so I’m just going to start making decisions. That’s generally a bad idea. So I’ve got time for
one more question. I know you need to get back
to work and get ready to go meet with those mayors. I know we’ve got some
students watching. Because one of the
questions we had was, how can HBS students show
leadership in a time like this? And I guess I would
broaden that to say, if there’s one thing you
want people to take away from what you’ve talked about
today, what would that be? Brian, that’s a great question. And it brings us back to
our favorite subject, which is since the mission of HBS
is to educate leaders who make a difference
in the world, this is a profound opportunity
for our students to do that. I think our students are
awesome at problem solving. If you think about
what our curriculum is, the curriculum consists
of taking people through something over the
course of their experience at HBS, 500 to 800 cases. What’s a case? A case is a problem set. It’s a set of concerns and
circumstances and issues, and a set of goals. And people have to
try to figure out, OK, well in these circumstances
with these goals and with these resources,
what should we do? And they have to do that
over and over and over again. That’s the whole
essence of what we do. Every day is a
different examination of that generalized
problem solving approach. That is what the world needs
right now from everybody. It’s looking at what
we’ve got and trying to figure out how
I can be helpful, how I can bring the things,
the skills that I have and to work on those issues. And I think our students
are awesome at this, in part because of our training,
in part because of who they were before. And I look forward to
hearing great stories of how innovative and resilient
and imaginative and creative people have been at figuring
out how we can make progress against this very significant
challenge to our society and, indeed, to our world. This isn’t quite the worst
case biological event that we’ve ever imagined. But it’s up there in the charts. And it’s going to be a
very significant challenge for a long time. And the more creativity that
our students and others can help bring to this, I
think that is one of the profound bases for
optimism in this circumstance. So I would just urge them to
use the skills you’ve got, get engaged, and see
how you can help. Dutch, thanks so much
for all these insights and for joining me today
on Managing Through Crisis. Really appreciate it. Brian, it’s been
great to talk to you. And I wish you and everyone
else health and safety. And we will make our
way through this. And let’s all be our very best. I think one of the things
I would say about crisis circumstances, we’re always
afraid people are going to panic and be at their worst. Actually, most people
are at their very best. And that’s what
we need right now. So thank you for the opportunity
to talk with your audiences about these issues. Good luck and Godspeed to all. Thank you.

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2 thoughts on “Managing Through Crisis: What Is Crisis Management?

  1. I agree with everything been said #Respect
    "Strategy has to be based on truth and reality" "How to be helpful not opportunistic"

  2. Thank you so much Professor Leonard.

    In terms on deciding yet unforseen problems, how should we started to mapping those problems?

    Even some solutions already exists, some could cause a new problem. Especially to a society where the solution not fit and lack of ready supporting system? Should we first validate whether it just rumors or quickly jumped into a plan to handle that? Thank you

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