Crisis Leadership: A Turnaround Mindset is Required to Avert Financial Disaster

If you’re in charge of a business of any size right now, outside of the health and well-being of everyone you know, the one thing that’s on your mind is how your company is going to come out of the current quarantine … or if it will come out of it.

In politics, there is a saying that all politics are local. What that means is that no matter how global the issue, for the voter it really comes down to, “How will this affect me?”

So, on the matter of the many issues that have come to play during the current pandemic, the crisis communications rule of thumb is very similar. You must answer the question of each of your stakeholders, “How will this affect me?”

If you run a company, you’re worried about how the economic shutdown will affect you, your company, your employees, your customers, your partners and your collective future together. Will it survive?

This reminds me of many times where I’ve worked with companies in financial crisis.

Missed earnings expectations, restructurings and turnaround situations, Chapter 11 bankruptcy protection filings and subsequent reorganizations. They all had the same concern at their center. How will we move past this? Will we move past it?

Obviously, I can’t speak to your specific situation in a blog post like this, but here’s what I can say. The companies that emerged stronger had the following things in common.

#1 Focus on What it Will Take to Survive – Every successful management team was able to take a sober look at what they had been doing prior to the crisis, and then envision a post-crisis company. They were able to compare and contrast the two different scenarios, and in the process see what changes they needed to make as the crisis was unfolding. And they made those changes quickly and decisively.

#2 Focus on What You Will Need to Survive – One of the biggest mistakes I’ve seen some management teams make is not having a full appreciation for what they would need to survive. It’s almost counter-intuitive, but the successful firms knew what investments they had to make even when financial resources were scarce. But they couldn’t do it without a clear objective of where they needed to take the company in the near-term and the long-term. Sometimes that meant re-allocating existing resources, and other times it simply meant reaffirming their commitments to certain existing plans, strategies and business units in order to re-emerge from crisis stronger than before.

#3 Focus on How You Will Emerge Stronger – This is all about vision. You know the challenges. You know how your peer companies and competitors are fairing right now. You have a sense of how they will try to emerge, how they are positioning themselves for the post-crisis period. So, how will you? What kind of company will come out of this situation stronger? Is your firm capable of being that company? How? It’s not only time to envision it, but to challenge your own vision. Try to knock it down, look for the flaws in your own thinking, and then fix it in those places. Ultimately, you will have a practical and achievable vision of a stronger company post-crisis.

#4 Focus on How You Will Sustainably Thrive – Too many companies focus primarily on cost-cutting to get through a financial crisis, but that’s a short-term fix at best. Once you’ve cut costs, chances are you’ve cut resources, and when you’ve done that, you’ve hindered your company’s ability to realistically sustain itself post-crisis. While cost-cutting is prudent and necessary in many financial crises, there has to be a plan to restore a smart self-investing strategy, fueled by growth, to assure that your company can sustain its post-crisis resurgence and then grow for the long-term.

You Need to Know This Up Front

It’s important to work through this planning process as quickly as possible, because chances are your stakeholders – investors, customers, employees and others – are already waiting to hear from you. What’s your plan? What are you going to do? What are you not going to change? How can we be sure all of it will work?

They want to know, and they need to know. And that’s where an effective communications plan enters the picture. To build and maintain confidence among the people most important to your company’s ability to survive and thrive, the glue is effective communication. And that can’t wait until the quarantine is lifted.

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