By Ludo Van der Heyden, Emeritus Professor of Technology and Operations Management at INSEAD and Peter Nathanial, Crisis Management Specialist and INSEAD Adjunct Professor
In recent days, it has become commonplace to call Covid-19 an “unprecedented crisis”. It is a politically convenient cliché, implicitly letting leaders in many Western nations off the hook for their manifestly slow and insufficient responses to the pandemic.
How could they be expected to know what to do, when confronted by a completely unfamiliar enemy?
This way of thinking ignores, however, that Asian countries such as South Korea, Singapore and Taiwan did appear to have adequately prepared. Their swift, effective action in the early days and weeks of the crisis helped them skirt a disaster on the order of what has tragically unfolded in Italy.
These countries had learnt enough from their bitter experience with the SARS epidemic to take the threat seriously and act accordingly. They also reacted and learnt on the spot from each other. Despite having more time to coordinate their response, leaders in many Western nations appeared to have failed the crisis management test.
Surveying the past with an objective, rational attitude should give any leader a general yet accurate enough idea of the threats they may encounter. And once a potential danger becomes actual, there are basic principles that experienced crisis managers can adapt to suit the situation.
Many of the principles one of us learnt through many years of fighting crises in the world of finance readily apply to Covid-19.
These principles can be organised into a five-phase framework that we feel is applicable to a wide variety of real-world crises.
Our recent working paper illustrates how the “5Es” could be used to shape a response to the Covid-19 crisis.
ENGAGE all in framing the crisis and get it right
The relative success of the Asian countries in tackling Covid-19 began with framing, an essential first step if crisis managers are to have any hope of coordinating a meaningful response.
Identifying patterns in how crises unfold and in how people respond to them comes with experience. These patterns repeat themselves and need to be rapidly identified.
The appropriate framing for European countries such as Italy and France would have stressed “flattening the curve” in order to prevent the collapse of the healthcare system.
Another is to immediately protect, and prioritise, the most vulnerable. Once devised, the framing should be communicated to all those whose cooperation is needed or who would be affected.
Unfortunately, early crisis framing from the leaders of many Western countries has been tentative and based on wishful thinking, if not outright paralysis.
EXPLORE the crisis and how to fight it
Priorities and planning must be clearly communicated. Remember, how we got into the situation is not how we get out of it.
A delicate balance must be sustained between realism and hope, between acclimatisation to uncertainty and commitment to transparency. Foster down-to-earth expectations by focusing on the most pressing and achievable goals.
At the same time, generous information sharing removes opacity from the crisis management process and empowers those not directly engaged in decision making.
Finally, there needs to be at least a reflected glimmer of light at the end of the tunnel.
A team or task force should also be designated to investigate the endgame – post-crisis next steps and how to return to normalcy.
This is key to provide hope and resolve, which reduces the chance that the population becomes swamped by only negative news.
EXPLAIN what you have decided, why and how it will work, then commit to action
In a crisis, inaction always makes the problem worse. A failed action may teach you something that leads to a breakthrough. But failure can lead to panic, chaos and a loss of credibility unless you prepare the ground beforehand.
Crisis managers should go into battle with at least three lines of defence, a strategy also adopted in military, banking (business unit, control function, internal audit) and other contexts. Explain the logic informing your plans and convey clearly to all your stakeholders that should the first attempt fail, there are two less preferred, but still possibly viable manoeuvres up your sleeve.
Failure to properly communicate proved disastrous for financial markets when US and European central banks introduced early measures meant to staunch economic decline caused by coronavirus fears. The measures struck the market as a symptom of economic panic rather than the cure, triggering a massive sell-off.
If these initial measures had been conveyed to the public as merely the first move in a much larger bid to bolster the economy, they might have fulfilled their intended purpose.
EXECUTE with focus and constant monitoring
You won’t know whether your strategy is working unless you rely on the right metric, one that authentically reflects results and generates trust in the leadership. Choosing the wrong metric, by contrast, can not only misrepresent success as failure (or vice versa), but also can lead to snatching defeat from the jaws of victory.
Build up your critical resource reserves, preferably well in advance. Even if you are sitting on a mighty cash pile, it’s better not to become complacent. Waiting until a crisis hits could deplete your purchasing power due to rocketing demand for those necessary items, services, etc.
EVALUATE, learn and adapt efforts, as well as your leadership
Humility, a valuable leadership attribute in the best of times, becomes essential during a crisis.
Inevitably, you will make mistakes – it’s how you respond that will prove your leadership mettle. Frankly admitting responsibility, displaying proactive willingness to change course and consulting openly with others on the new direction will prevent errors from fatally undermining the collective effort.
Crisis management should not hinge upon any one leader. Should circumstances or responsibilities change, you may need to remove yourself.
A contingency plan should determine how such a reshuffling amongst the leadership team would play out.
Finally, be very careful about how and when you declare the crisis to be over and begin to wind up your efforts. Thus, leaders must juggle the near-term need to transition back to normalcy with prudent preparation for future outbreaks.
The right time to prepare
As crisis recedes, it reveals opportunities for remedial action. Fresh, painful experiences produce a rare degree of political will to prevent future crises – the exaltation of survival spurs high morale and hopefulness.
The flaws in preparedness and responsiveness that this pandemic has exposed in our supply chains, political leadership, healthcare public policy, among others, should not be forgotten.
This article is republished by the courtesy of INSEAD Knowledge