How a company responds to crisis should be part of its Business Excellence approach

by Dr. Michael Ohler on 14th January 2010

Introduction

This article compiles experiences from a number of crisis-response teams. These are also aligned with business peers in different industries. The article conveys the following main messages:
Firstly, the mere existence of a crisis-response team is perceived as a threat by the regular organization. This needs to be taken into account when sponsoring and leading such teams. Stakeholder management is a vital part of crisis management.

Secondly, because crises happen “ad hoc”, they are often managed in an ad-hoc manner. This increases their likelihood of failure. Following a disciplined methodology, such as 8D or DMAIC sets them on a more secure path.

Thirdly, besides setting up proactive improvement programs to avoid crises, companies should establish a consistent approach for facing them. Crisis management is an integral part of a company’s striving for Business Excellence.

Response to crisis

“Sorry, I need to hang up – I have to dial into another task force”. Some organizations cherish a fire fighting mode and its action-oriented heroes. They may call “task force”, “focus team” or “core team” their team-based response to crisis. No doubt, crises should rather be avoided in the first place. Imponderability in business, however, makes it that the next crisis WILL HAPPEN. Like cities or countries preparing for major accidents or epidemics, also companies can prepare for their moments of crisis.

Following Donald Rumsfeld’s distinction between “known unknowns” and “unknown unknowns”, companies need to be prepared for both. They can elaborate and have ready to execute plans for what to do if, say, their China plant burns down, their supply chain is disrupted by a terrorist attack or “Murphy” strikes in another way possible to anticipate.

To react to the “unknown unknowns”, when “Murphy” strikes in a way nobody could imagine or just considered too unlikely to elaborate reaction plans for, companies have nothing else to fall back on than an established approach and people trained to apply it. The scope of this article is how to prepare an organization for the “unknown unknown” type of crisis.

To understand what crisis-response (really) is, firstly, one can compare it to its siblings which are projects and continuous improvement activities. Projects undergo a rigorous milestone-planning. The less complex ones are often executed in a “just do it” manner with less planning and execution control. Continuous improvement can be driven through Lean and Six Sigma projects or Kaizen events. These are also executed along well-defined phases. The nature of the solution and the urgency to implement it tell all these activities apart:

Table 1: Crisis-response versus other types of improvement activities

Secondly, one needs to understand that crisis-response teams address an urgent task, born out of a mishap the regular organization is unable to handle. Notice there is nothing bad about that: the regular organization runs the daily business. By its very nature, crisis is NOT daily business and facing it needs a different setup. Therefore, a crisis-team complements this lack of capability or capacity. Even so, crisis response teams are most often perceived as inherent criticism of the regular organization.

For example, over consecutive months, a manufacturing plant had a high rate of customer complaints. The headquarter sent in an expert to drive to a fast closure open cases and to avoid new ones from happening. Where the shopfloor had a warm welcome for this support, local management did all its possible to let this expert fail. In their perception, allowing her to be successful would have been recognition of a supposed own incapability to solve local problems.

Under such pressure and when not managed carefully, crisis-response teams can fall into one out of two pitfalls:
Firstly, a team may not come up with the problem’s original root cause(s) and implement someone’s favored but inadequate solution. This can happen when the team overly values consensus with process owners or champions. The attempt to fix through new software a crisis generated by broken processes is a common example.