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Managing Through Crisis: What Is Crisis Management?

Welcome to Managing Through Crisis, everybody.

This is our weekly webcast featuring Harvard Business

School faculty talking on a range of business topics

related to the coronavirus.

Some of you may have seen us talking to Tsedal Neeley

last week about making this move to work from home.

People are now working remotely.

That was, I think, a shock to the system for people

last week.

And they're still adjusting to it.

Today, we want to pull the lens back a little bit.

And we're going to talk to Professor Dutch

Leonard about how to lead through a crisis like this.

Dutch is an expert in crisis management and leadership.

He's the perfect person for us to have

this conversation with today in the midst of the crisis.

Dutch, welcome.

Thank you, Brian.

It's a real opportunity.

And it's hard to say it's exactly a pleasure

to talk about coronavirus.

But thank you for the opportunity.

I think this is a very important subject.

Yeah.

And I know you've been very busy.

You have a dual appointment at the Kennedy School, as well.

And actually, you're joining us today

in advance of speaking to mayors around the country

as part of the Bloomberg Mayors Initiative.

Can you just talk a little bit about that?

Yes.

I have a joint appointment here, as you just observed, Brian.

My work on the Kennedy School side of the river

is focused on crisis management.

And the Bloomberg Harvard Mayors Initiative

is a program sponsored by Mayor Bloomberg

and convenes a set of about 50 mayors for a program each year.

It's an online program, principally.

But as a result of the coronavirus,

we are putting on a special sequence

of sessions for that group, both this year's cohort

and the prior year cohort.

So we're going to be speaking to a couple of hundred mayors

this afternoon.

This is all being put together in real time.

We're going to do a sequence of these,

and we'll probably pick up more of the mayors as we go along.

The subject is to look at the challenges

that they face as the local leaders in their jurisdictions

for trying to help the public and the nation

lead its way through this crisis.

And it feels like we're sort of living minute to minute

and things are changing fast.

And I'm sure mayors are feeling tremendous pressure

as they make unprecedented decisions in their own city.

So I'm sure they appreciate the opportunity to convene

with each other and with you.

Well, that's the idea.

We're going to ask them how things are going

and try to help them think about what the basic challenge is

and how this challenge is fundamentally

different from other things that they've seen before.

And this, I think, is what all of us are living through.

None of us has ever been in these circumstances.

In our crisis management programs,

both at the Kennedy School and also the risk management

program that we teach as an executive program

here at Harvard Business School, one of the things we emphasize

is the fundamental and profound distinction

between what we call routine emergency

events, or more routine risk events, and true crisis events.

A true crisis, for us, is constituted by a situation

in which you have not, you don't have a great deal

of familiarity with it.

There are significant elements of novelty to it.

And that automatically, in effect,

invalidates your playbook.

It says there's no existing full script for how to perform.

In routine emergency situations, a well-trained and well

resourced organization, which has seen something

like this before, will have a playbook,

will know what it needs to do.

And mainly it will face a problem

of successful and efficient execution.

But in a true crisis situation, because

of the significant novelty, no one knows what to do.

And so the challenge is automatically

you're shifted to an innovation, real time problem solving

setting.

And that's a fundamentally different challenge.

And I think that's part of the point we're

trying to make to mayors, that it

feels chaotic and unsettling.

And that's the way it always feels

when you're in circumstances that are unprecedented.

And our message to the mayors is that that's not

going to stop soon.

There will be continuing issues that arise here

that are new, that we haven't seen before,

that we can't necessarily foresee now as we work

our way through this crisis.

So they should imagine that this kind of unsettling feeling

of not fully being in control and not

being able to understand fully what's going on,

that's likely to continue for quite a while.

Yeah.

You know, it's funny, we use the term crisis management.

It almost sounds like an oxymoron, right, to people.

But I'd love to hear from you sort

of how do you define crisis management.

So first of all, we distinguish between routine emergency

or routine management and crisis management in the way

that I just described, to say that when you're

facing a situation with significant novelty,

that automatically means that you have to solve

the problem in real time.

So we say that effective crisis leadership

is constituted by the real time problem solving.

We say it's constituted by rapid innovation

under stress, embedded in fear.

And that's a fundamentally different kind of challenge

than situations where we basically

know the answer and even in dangerous circumstances,

we know what we need to do.

So we define crises as being situations

where you are in a new and unprecedented situation.

And one of the things that characterizes crises

is that often you see competing priorities which you have never

had to trade off before.

So in routine situations, you've figured out in advance

what are the key issues here and which ones take precedence.

But in a true crisis situation, you

have a whole bunch of things which

are colliding simultaneously and you haven't necessarily

had a chance in previous experience

to sort out which one of these--

all of these things are important,

but which is most important?

You know, is it most important to keep kids in school?

Or is it most important for us to protect the health

and safety of the community?

Well, that one wasn't too hard to figure out.

But it's something we haven't really had to trade off before.

So it's that kind of real time decision making that feels

chaotic and unsettling.

And our observation about that is

that what crisis management needs is not answers--

because we don't have answers--

what it needs is an effective process.

And that's what we emphasize to leaders

of all kinds of different organizations.

So Dutch, recently you published a paper,

along with some of your colleagues at the Kennedy

School, 20 Things for Organizational Leaders

to Know About COVID-19.

I'm going to guess that's a living document that

continues to evolve as the situation unfolds.

But I'm wondering, what were you guys hoping

to achieve in publishing this?

Well, you're quite right about the document, Brian.

It started as 10.

And then a couple days later, it was 15.

And then by last Thursday, it was 20.

And now it's probably more.

What we were mainly trying to do was

to help people get a realistic fix

on what the nature of the situation was

and how it was likely to evolve and what the implications were

for how people should be responding.

And again, the main implications are,

we need to be doing forward looking planning

in communities, in organizations,

in the government, in civil society,

throughout the society, we need to be looking at what

are the challenges that this situation is creating for us

and how are we going to solve them.

And we won't know about all of them at once.

Some of them will appear down the road.

And we have to be continually focusing

on what those issues are as they come up.

So our intent in that document was

to characterize the situation.

Part of what we were emphasizing at the time

was that this was a rapidly spreading phenomenon,

and that if it hadn't occurred near you yet, it would soon.

So you shouldn't imagine that any part of the world

was walled off.

And unfortunately, in the last seven days,

we've been proven right about that.

Yeah.

We had some viewers send in questions to us, Dutch.

And I want to get to some of those questions.

I think they're really great questions that people have.

One of them is just, what's the most important thing

a leader can do in a time like this?

Is it just to maintain calm?

Or is it-- should leaders think differently

about what their role is in a situation like this

versus a steady state?

Well, I think, again, the main thing

that they need to emphasize, to themselves and to others,

is that because we are in unprecedented situations,

we're going to be learning our way forward and trying

to figure out what the issues are and to deal with them.

The way we characterize crises, Brian, is to say they're

like a fountain of issues and questions

and decisions and competing priorities.

And in ordinary circumstances, we can pretty quickly

see what the issues are.

The questions are well defined, we know most of the answers,

and we know what to do.

But in a crisis situation, COVID-19, none of those

applies.

We don't know what all the issues are.

We don't immediately see what the competing priorities are.

They emerge as we go along.

We can't define the questions easily.

We don't know the right answers to those questions.

So what we emphasize is that what leaders need to do

is to take their most entrepreneurial and innovative

and forward looking leadership stance

and convene a process to solve these problems in real time.

So let me say something about what I mean by that process.

First of all, the process consists

of the people you bring together and the way

in which they interact.

So who do you need to have?

So if you're taking this from, for example,

an organizational perspective, a firm

that's trying to make its way through this event,

who would be the kinds of people?

I would suggest three groups of people

that you need to have associated with your problem solving

in this circumstance.

The first are people who understand and represent

the different priorities and different values

and different goals that your organization has.

So you want to make sure that you

have all the equities, the things that people

care about, the interests represented

in the conversation.

That means you need, for example, your labor

force has to be represented.

Because they may have different concerns

than corporate leadership does.

So you need to first of all convene a group.

The group needs to include people

who represent the different interests that you have.

The second thing is you need people

who know about this event.

That is, you need good advice, whether it's

from inside your organization, or maybe you

can draw in advisors from outside,

or just have somebody scanning the outside information that's

available in public media and through the press and so on,

about what is the nature of the event.

What are the facts medically?

What are the issues logistically and so on?

So that people who are familiar with the way in which the event

itself is evolving, in your firm and elsewhere.

And then the third group is people who

really understand your firm.

That is, they understand the workings of it,

the things that might not occur to everybody, that people might

not know about, this is a particularly

scarce and difficult thing for us.

Or we only have a few people who know how to do that.

So what are the key things about the way the business operates?

Now if you take those three groups,

you've got a pretty good representation

of what we care about, what is the actual situation,

and how our firm fits that, how we relate to that.

Now, that group should be charged with looking

at the issues overall.

So in other words, we don't want a bunch of separate problem

solving groups.

We may want to delegate from this.

We call this a critical incident management team,

as a standard piece of jargon.

I don't care what you call it.

But it's important to get that group together

and to give them the task of trying

to embrace the whole range of issues

that we are trying to confront.

So that when we say to some subgroup,

here, we want you to work on the logistics of the supply chain

and report back to us about that,

that we don't delegate that in a way that

misses any of the large issues.

We have to have somebody who's keeping track of all of those.

So you charge the group with trying to embrace all

of the issues, to deliberate about the most important ones

for the organization by itself, and then to delegate to others

pieces of the work that you can't.

And then what you want is something

we would call in another setting,

we would call it design thinking or agile

process or a generalized problem solving, just

over and over and over again, that group

wants to ask, what are the key issues that are at risk?

What is the actual situation here?

What are the options that we have?

Which option should we try?

And let's make a decision and go ahead and try that.

And then let's see how we're doing.

And used over and over and over again iteratively,

resolve that problem continuously.

We call that learning your way forward through an event.

And that is the best that we can hope for.

And that's what leadership constitutes,

the ability to get that process together

and to keep it operating.

Leaders need to be confident in the process.

And they also need to be highly communicative to everyone.

One of the key issues here, Brian,

is that because we are learning our way forward,

we will not necessarily get the answer right the first time

or the second time.

We're going to make mistakes.

Perfection is a far cry from what we can hope for.

What you can assure people is, we're doing the best we can,

we're going to learn as fast as we possibly can,

and we'll keep at it until we get better and better answers.

And that leads me to another question

that one of our viewers sent in, which

is in terms of communication, how do you balance transparency

with the fact that you know that you've got a lot of things

that you've got to work on in real time?

What should what should firms and leaders

be thinking about in terms of how they communicate

with stakeholders, with employees, with customers,

with all those important groups?

Brian, that's a whole subject in itself.

And that's one of the things that we emphasize,

we're talking with the mayors about

and with everybody else in this.

The communication strategy has to be

based on truth and reality.

So the first thing is you have to be speaking

to what you actually know, and you should say what

the basis is of what you know.

I think it's really important for firms to be,

and for leaders to be, confident and forward looking.

There's a standard-- this actually

dates from at least Napoleon, it's

often called the Stockdale Paradox,

because it was formulated by Admiral Stockdale, who

was the chief American senior officer in the North Vietnam

prison camps during the Vietnam conflict.

And he formulated this as saying,

in very difficult circumstances--

which I think is fair to say what we face right now--

leaders have to do two things.

You have to be brutally honest about what is happening.

And you have to offer hope.

And the hope can't be a fantasy.

The hope has to be based in something.

So the hope here is, we are a strong country,

we are incredibly resilient.

The thing that will surprise us, in this event,

is how imaginative and creative and resilient we actually are.

And the reason for that is that people are convening

this process that I described.

We have people all over the country

working on their problems and trying

to figure out how they're going to adjust

to these circumstances.

And we will turn out-- and this is one of the great assets

of business and of leadership in the society--

business leadership is constituted

by creative, innovative, resilience, ability

to solve problems.

And that's where the hope comes from.

So I would say in this kind of very difficult circumstance,

leaders on the one hand need to be

very honest about what is happening

and what the circumstances are, but they also

need to offer a rational basis for hope

that we will be able to solve our way through this

and we're going to do as well as we possibly can,

and we need to enlist everyone's support in doing that.

So would you say that this is a time for businesses

to be opportunistic, or should they sort of retrench

and just stick to their knitting kind of thing?

I mean, how should firms think about--

is it tone deaf to try and be opportunistic at a time

like this?

So I think what I would urge business leaders

to do is to find opportunities in which they think what

their business has to offer can be

helpful in the midst of this circumstance.

They can be imaginative about that.

They can see a problem emerging and say,

what could we do about that?

And that's part of our fabric of resilience in the society

and in the economy is that we have tens of thousands

of entrepreneurial people eagerly working

on those problems.

So opportunistic has a little bit the wrong ring to it.

What we don't want to do is to take opportunity at the expense

or to take advantage of others in this circumstance.

That will not be us at our best.

But if we look for opportunities in which our capabilities can

be helpful, that is, I think, a real secret

to improving the outcomes for everyone.

And that's a great role for business leadership.

The way I think about that, Brian,

is as a result of the way you operate your business,

there is a set of things that you have to be good at.

I call these the imperatives.

So if you look at what you do, whether you're a transportation

company, logistics, you're a manufacturing company,

whatever it is that you do in order to compete successfully

in the environment that you've been in,

you've had to develop a certain set of key skills

for your organization.

And so think of those as the imperatives.

Now the issue here is, take those imperatives and ask,

how could we be helpful?

In other words, how could the things

that we already know how to do turn out

to be helpful in this moment?

If that's the kind of opportunity

you're seeking and finding and being

able to help produce for us, that's all to the good.

So the point is, don't try to be good at something

that you weren't already good at.

Don't try to develop some whole new set of capabilities

and imperatives.

Take the ones you've got, and try

to figure out who in this society right

now needs more of what we can do,

and how do we get that to them.

And I think if businesses lean into that

and try to do that on the basis of a public spirited

engagement, we will all come out of this better

and we will come out with a much better reputation for business

than it has recently enjoyed.

And maybe that could be a little bit of a silver lining to what

is, in fact, a very dark cloud.

Yeah.

I agree completely, just in terms

of the reputation of business has suffered quite a bit

over the past few years.

So here's an opportunity for companies

that can contribute to the greater good in some way

to step up and do it.

And so I hope we see more of that.

Let me ask you what are the pitfalls that leaders should

be thinking about at this time?

You've talked about, they're going to make mistakes.

They've got to be brutally honest.

I think that's being honest with themselves as well

as with their stakeholders.

But what are some of the things that you

think they should try to avoid?

Well, one key thing is to resist being

put in the position of giving quick answers.

We have a sort of traditional idea

of what effective leadership looks like,

which is that leaders can promptly and decisively resolve

any issue that we bring them.

That's why we pay them the big bucks.

Well, that's true for routine things.

That is, if you've seen it 100 times before,

if our organization is familiar with it,

we do know the answers to those and we

can be what is often referred to as prompt and decisive.

We can cut through the tape and move quickly.

That is not a good idea here.

Because in this situation, no one knows the answer

and it may take us a while to figure it out.

So one of the pitfalls is that leaders often

feel pressured to give confident answers at the outset.

And I think that's a huge mistake.

What they need to do is to help people understand

why, in unprecedented situations,

what effective leadership looks like is a problem solving,

experimental approach.

So in other words, as we go forward

and as we find better answers as we go

and resolve these problems again and again,

we should think of everything that we're

doing as our current experiment to see if it, how well it works

and to see if it is going to help us.

And that means all of our actions

we should regard as tentative and reversible.

We can decide to do something else instead.

And so the pitfall would be to lock yourself

into a current understanding on the feeling

that, well, I have to show--

in order to be confident, I have to show

that I'm making decisions, so I'm just

going to start making decisions.

That's generally a bad idea.

So I've got time for one more question.

I know you need to get back to work and get ready to go

meet with those mayors.

I know we've got some students watching.

Because one of the questions we had was,

how can HBS students show leadership in a time like this?

And I guess I would broaden that to say,

if there's one thing you want people to take away

from what you've talked about today, what would that be?

Brian, that's a great question.

And it brings us back to our favorite subject, which

is since the mission of HBS is to educate leaders who

make a difference in the world, this

is a profound opportunity for our students to do that.

I think our students are awesome at problem solving.

If you think about what our curriculum is,

the curriculum consists of taking people

through something over the course of their experience

at HBS, 500 to 800 cases.

What's a case?

A case is a problem set.

It's a set of concerns and circumstances and issues,

and a set of goals.

And people have to try to figure out, OK,

well in these circumstances with these goals

and with these resources, what should we do?

And they have to do that over and over and over again.

That's the whole essence of what we do.

Every day is a different examination

of that generalized problem solving approach.

That is what the world needs right now from everybody.

It's looking at what we've got and trying

to figure out how I can be helpful,

how I can bring the things, the skills that I have

and to work on those issues.

And I think our students are awesome at this, in part

because of our training, in part because

of who they were before.

And I look forward to hearing great stories of how

innovative and resilient and imaginative and creative

people have been at figuring out how we can make progress

against this very significant challenge to our society

and, indeed, to our world.

This isn't quite the worst case biological event

that we've ever imagined.

But it's up there in the charts.

And it's going to be a very significant challenge

for a long time.

And the more creativity that our students and others can help

bring to this, I think that is one

of the profound bases for optimism in this circumstance.

So I would just urge them to use the skills you've got,

get engaged, and see how you can help.

Dutch, thanks so much for all these insights

and for joining me today on Managing Through Crisis.

Really appreciate it.

Brian, it's been great to talk to you.

And I wish you and everyone else health and safety.

And we will make our way through this.

And let's all be our very best.

I think one of the things I would say about crisis

circumstances, we're always afraid people are going

to panic and be at their worst.

Actually, most people are at their very best.

And that's what we need right now.

So thank you for the opportunity to talk with your audiences

about these issues.

Good luck and Godspeed to all.

Thank you.