10/7/2014 Crisis As Opportunity: Leadership, Change and Renewal | Ideas for Leaders

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10.13007/078

Ideas for Leaders #078

Crisis As Opportunity: Leadership, Changeand Renewal

Key Concept

Arguably the greatest gift we can glean from a crisis isan improvement in our ability to see the next onecoming, to prevent it coming if possible, and to leadour organization successfully through that next crisissituation. We learn Crisis Leadership. This is essential:crises are inevitable. Similarly, there are essentialcharacteristics and skills required to navigate them,and to ensure your organization not only survives butemerges from the crisis better off.

Idea Summary

In recent years, the capability to lead teams underextreme pressure has become an important asset forleaders. In fact, developing competencies that canassist in leadership during a crisis is now mandatory.With greater natural demand, business schools havebeen challenged to reconsider and revisit thecharacteristics and challenges of crisis leadership; withnear continual, sharp reminders that crisis events areinevitable.

Crises can have a rippling effect and are experiencedby all organizations in some magnitude or another.Leaders in a crisis situation will face a number ofdifferent pressures, including unusual circumstances,limited or conflicting information, and a need forimmediate and decisive action. Thus, the demands ona leader will be unique, requiring a different set ofabilities than general leadership.

Beyond managing corporate communications andpublic relations, leaders need to work on building afoundation of trust—not only within the organizationbut with key stakeholders as well. This goes hand-in-hand with quick and ethical decision-making.

Furthermore, a particular frame of mind accompaniedby a key set of behaviours is the key to leading underpressure. Developing a mindset for reflecting,adapting and learning from the crisis situation and itsaftermath is at the core of crisis leadership.

ShareAuthors

James, Erika HayesWooten, Lynn Perry

Institutions

University of Michigan Ross School ofBusinessUniversity of Virginia Darden BusinessSchool

Source

The European Financial Review

Idea conceived

2011

Idea posted

January 2013

DOI number

Subject

Crisis ManagementLeadershipDecision Making

10/7/2014 Crisis As Opportunity: Leadership, Change and Renewal | Ideas for Leaders

http://www.ideasforleaders.com/ideas/crisis-as-opportunity-leadership-change-and-renewal 2/3

Leaders tend to focus on the negative aspects of acrisis. However, it’s important to remember that crisesare opportunities for organizational change andrevitalization. A crisis can bring to attention issues thathave been neglected, as well as present possibilitiesfor innovation and improvements.

In the full article, attached, successful and not-so-successful crisis leadership examples are giventhroughout, from organizations including; TycoInternational, Carrefour, Mattel and McDonalds.

Business Application

The frame of mind to employ for successful crisisleadership is characterized by:

Openness to new experiences;

Willingness to learn and take risks;

An assumption that all things are possible; and

A belief that even in times of crisis, people and organizations canemerge better off after the crisis than before.

Also be aware that sound and rapid decision-making isoften difficult in crisis situations. In order to tackle thiseffectively, leaders must beware of dysfunctionaldecision-making biases that can lead to errors injudgment, such as anchoring decisions in one type ofinformation or a tendency to make decisions thatjustify past choices. Moreover, we should be attunedto environmental signals, and use these signals toexpedite the decision making process.

In order to establish trust in these difficult times,leaders must become vulnerable to those who havebeen entrusted to handle various aspects of the crisis.

Finally, it is essential that leaders transition fromfeelings of anger, anxiety, guilt and despair to anoutlook of optimism and hope. A collaborative “can-do” attitude should be fostered within theorganization.

Further Reading

Crisis Leadership and Why It Matters. Erika HayesJames & Lynn Perry Wooten. The EuropeanFinancial Review (December-January 2011).

Further Relevant Resources

Erika Hayes James’s personal website (previously at University ofVirginia Darden School of Business)

Lynn Perry Wooten’s profile at Michigan Ross School of Business

University of Virginia Darden School of Business ExecutiveEducation profile at IEDP

Michigan Ross School of Business Executive Education profile atIEDP

10/7/2014 Crisis As Opportunity: Leadership, Change and Renewal | Ideas for Leaders

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