Many corporate crises are external, caused by a bad economy, natural disaster, or financial crisis. There’s only so much that can be done about those. But many others are man-made, caused by bad deal-making, poor strategy, or badly misreading the public. Great managers lead well in a crisis, but the best ones learn how to avoid them altogether.
A recent white paper from Kathleen Sutcliffe at the University of Michigan’s Ross Business School and Marlys K. Christianson of the Rotman School of Management breaks down the behaviours of managers who are the best at anticipating, containing, and repairing catastrophes.
They pay attention the right way
There are two ways people can allocate their attention: proactively and reactively. Managers frequently spend too much time reacting to stimuli rather than keeping an eye out for small things that might be big problems in the future.
It’s not enough just to keep an eye out, managers have to be aware of the sorts of cues and problems they’re likely to notice, and those which they’re likely to ignore, and build a network of people unafraid to speak up when they see something on the front lines.
They don’t ignore small problems until they snowball into larger ones
Small problems and passing details are frequently the sign of something larger. But it’s incredibly easy to gloss over them. Mindful organisations catch and fix problems quickly, before they grow. The way to build the capability to catch these issues is by constantly examining failures, resisting the temptation to simplify assumptions, and by finding experts in particular areas and listening to them.
They overcome cognitive biases and update their beliefs
Updating and changing beliefs, then acting on them can be particularly difficult. That’s because unexpected or worrisome information is viewed as a threat, which leads people to restrict information processing. The confirmation bias is a further issue, people tend to prioritise information that supports what they already think. “Updating requires doubt,” Sutcliffe and Christianson write.
This problem is worse when leaders try to solve every problem on their own. According to Sutcliffe and Christianson, individuals are able to effectively update about a quarter of the time, but groups do so half the time. When presented with conflicting information, make sure to get input from elsewhere.
They build the right kind of communication into the business
Companies are often big and messy, and everyone there has a different viewpoint. In organisations that communicate poorly, that ends up creating crises because people get overwhelmed with information without ever understanding it.
Ambiguity and problems thrive in isolation, and can’t be resolved with more data. Catching issues early requires building “dense communication and interaction” into an organisation.
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