Enterprise crisis: Are you prepared?

Blog Post Enterprise-Wide Transformation

Sometimes it takes a crisis to jolt an entire enterprise into action. The CEO may have promised Wall Street a deadline his people can’t deliver. Consumers fed up with bad service or product problems may launch a social-media attack. A natural disaster could wipe out a critical link of the supply chain, creating untold delays.

For enterprises operating in business-as-usual mode, things can cruise along pretty nicely for years. But that’s the problem. Business leaders get lulled by the rhythm of mediocrity.

They start to lose understanding of their work force. Some can’t clearly see their place in the market. Others ignore warning signs of potential problems. And over-reliance on past success means they’re not looking for ways to improve, add revenue streams, or innovate.

Seemingly overnight, they encounter a crisis.

The crisis equation

Such scenario prompted those of us at Insigniam to develop this equation for how crises often develop:

Low Grasp of Reality + Low Level of Generating Possibility = Crisis 

Low Grasp of Reality: This portion of the formula describes leaders who ignore the true state of affairs. They continue to do employee surveys, but just file away poor results without resolution. If they feel compelled to dig deeper to uncover the reasons for sore spots, they brush aside those inclinations. If supply chain issues bother them, they just muddle through and hope things will improve. If customer satisfaction plummets, they don’t try to understand why. Sometimes, it’s better not to know, right? Wrong.

Low Level of Generating Possibility: It’s the possibilities that excite workers and executives — how an enterprise can do what it does better, impact the world more. Without stretching, thinking, or innovating, a business stagnates. Stagnation can lead to decay. Decay can contribute to breakdowns, aka crises.

Crisis: Well, this is when business-as-usual-style leaders finally must exert themselves. Having a fuzzy understanding of their enterprise’s reality plus keeping innovation at bay will ultimately equal a business crisis that forces them to respond. It could be a revenue-generation problem, shareholder disappointment, or an exodus of their customer base. But if business leaders want to enter crisis mode, simply add the first two components, and they’ll get one every time.

Once in crisis mode, reactions differ — from finger pointing and action plans that never go into effect to passing the problem on in a game of hot potato. But to truly escape crisis mode, we’ve seen success when leaders:

  • Take individual responsibility.
  • Try to understand how their own actions or inactions contributed to the crisis.
  • Begin thinking about the possibilities for the enterprise future.

That’s when crisis mode gives way to breakthrough thinking that can lead to actual breakthroughs. And that’s when the crisis begins to end.

Connect with other executives through the Insigniam Executive Forum on LinkedIn.