Crises may not be predictable but can be foreseeable with time.

Declared a pandemic by the World Health Organization in March 2020, COVID-19 sparked widespread upheaval, from public protests to international tensions and economic strains. The virus inflicted physical harm and disrupted businesses and households, leading to school closures and the phenomenon dubbed the "Great Resignation." Amidst populist and protectionist pressures, attempts have been made by institutions like the World Bank and the Brookings Institution to quantify the monetary value of lives lost and economic disruption, yet the long-term, less explored consequences remain uncertain.

By March 2020, prevention efforts were too late, and only emergency responses remained possible. Yet, it didn't have to be this way. Since the 1980s, epidemiologists have been warning of future pandemics. After the trauma of SARS in the early 2000s and the worldwide fear caused by Ebola in 2015, there were clear opportunities to learn and prepare.

The world's reaction followed a repetitive pattern of "panic, neglect, panic, neglect." However, crises are unavoidable occurrences. Handling a crisis isn't akin to regular business operations, so readiness becomes the "fourth bottom line."

Cognitive biases hinder readiness and crisis-handling efficiency.

Cognitive biases hinder crisis readiness and effective leadership.

• "Probability neglect": People underestimate how likely a crisis could hit them.
• "Hyperbolic discounting": People often miss seeing danger until it's right in front of them.
• "Anchoring": People trust their initial thoughts too much and base future decisions on them.
• "Exponential growth bias": People tend to expect things to grow steadily instead of exploding rapidly in some cases.
• "Sunk cost fallacy": Once committed to a plan, people find it hard to change course, even if it's smarter.

Our minds carry ancient biases that once helped our ancestors survive. But in today's world, these biases can lead us astray. Preparation and organized systems can help you overcome biases, avoid bad decisions, and get ready for future crises. This kind of readiness isn't just for emergencies; it's handy in normal times too.

Leaders handle crises in multiple phases despite their sudden onset.

When facing a crisis, the first step is to identify what's coming. Take Volkswagen's emission scandal, for instance. It burst into the scene in 2015, but a year prior, senior engineers had already noticed potential issues.

When a scandal erupted, it hit the news worldwide, sparking hundreds of lawsuits and costing the company $30 billion in fines. Recognizing a crisis early on is key. Taking action to prevent it and getting ready for it is crucial.

Some countries acted fast to tackle the risks of COVID-19. Although New Zealand didn't completely stop COVID, Prime Minister Jacinda Ardern's quick response helped to keep cases, deaths, and restrictions low. Being prepared can soften the blow of a crisis. Having solid plans, ready teams, and practicing drills can turn crisis readiness into a chance for improvement.

Crisis Protocol Blueprint

Establish a plan beforehand, and stick to it during crises to contain and localize damage. Then, pave the way for recovery and seize the opportunity to learn from the experience.
Nextdoor swiftly tackled racial profiling by enhancing diversity training, updating guidelines, and redesigning its app after reports emerged of users unfairly targeting ethnic minorities. These efforts led to a remarkable 75% decrease in such incidents within a few months.

Effective crisis leaders require diverse skills for response phases.

Recognizing a potential threat is one thing, but understanding what it means is another. Smart leaders can tell the difference between important signs and meaningless distractions. They grasp the essence of threats. This understanding helps them overcome people's tendency to ignore or downplay risks.

Leaders have to take a stance. They gather various opinions and viewpoints, then they need to blend them and choose the best approach. Leading also means persuading others and making sure everyone works together smoothly. This requires clear communication and coordination.

Prosper in Crisis with Agility

In times of crisis, flexibility is essential for individuals and organizations alike. Mistakes are inevitable, but leaders must recognize that the biggest danger lies in paralysis. Prepared leaders prioritize agility, responding swiftly and decisively to changing circumstances, ensuring their organization remains resilient and ready to tackle any challenges head-on.

After the pandemic, "resilience" became a hot topic. To build a strong organization, give your team the freedom and confidence to learn, make decisions, and take action.

Every crisis is a chance to learn with preparation.

Leaders who fail to instill a culture of learning often find themselves stuck in a cycle of panic and neglect when crises occur. Learning from these crises is essential for effective crisis management. Use "crisis framing" to guide your decision-making process.
When you view tough times as chances to do something good, you're more likely to use your energy on positive actions instead of just defending yourself from what seems scary.

In the middle of the pandemic's first year, Jose Cil, CEO of Restaurant Brands International (RBI), dropped a bombshell for Burger King. He revealed a bold vision for the future of their restaurants. It's called the "Restaurant of Tomorrow" plan, and it's set to revolutionize how food gets to you and make Burger King more eco-friendly. But here's the kicker: to pull this off, they'll need to splash out hundreds of thousands of dollars per Burger King worldwide before 2032.

Risk and Change

The company's bold strategy aligns perfectly with global trends, especially accentuated during the pandemic. Leaders at RBI anticipate not just recovering but surpassing their investment.
Being surrounded by both optimistic allies and cautious skeptics is invaluable. As a leader, do you shy away from challenges or disagreements? Are you focused on short-term gains or long-term stability? How receptive are you to your team's ideas and to change in general? These inclinations heavily influence crisis decisions. Remember, in times of crisis, our biases can cloud our judgment.
Crises change how teams work together.

In tough times, even the best teams can struggle. Sometimes, leaders need to step back and "let experts" take charge. They might have to form a new team specifically for the crisis. This means being open to different ideas and even shaking up the usual order by giving frontline workers a chance to speak up.

Stepping into a leadership role during a crisis is tough, but when Wonya Lucas took charge of Hallmark networks after COVID hit, she faced an even bigger challenge. Instead of the usual meet-and-greets, she hopped on Zoom to chat with her team about Hallmark's future. This helped her bond with them and tackle their worries about the pandemic and her new leadership.

Communication goes both ways. Keep your promises, and make sure your team does too. Make sure everyone has what it takes to do their job. Trust your team, and let them know they can trust you too.

Global crisis escalates complexity "exponentially".

In the face of a global crisis, it's essential to approach it with a broad, culturally sensitive mindset, understanding the impact on different communities. Technology, as exemplified by the UK National Health Service's use of collaborative tools during the COVID-19 pandemic, is indispensable for swift and effective responses to global challenges.

Technology can sometimes trip up leaders. Take Greg Glassman, CEO of CrossFit gyms, for example. He quickly fell from grace after making a disrespectful tweet about George Floyd's death and making inappropriate remarks during a Zoom call with gym owners.

Learn from past crises to handle the next effectively.

Before COVID-19, the NBA faced its challenges. When reports of domestic violence rocked the NFL, NBA Commissioner Adam Silver didn't just sit back because his league wasn't in the spotlight. Instead, he took action. He saw the NFL's troubles and made sure the NBA was ready if a similar situation arose. Silver's leadership was all about being prepared and not waiting for problems to hit before taking action.

In 2014, when a basketball player attacked a woman, the NBA took immediate action. They suspended him and released an analysis of the situation, detailing who knew what, when, and what steps the NBA took in response.

NBA's Game Plan During COVID-19

When COVID-19 became a pandemic, the NBA took action. Silver suspended the season and then came up with a smart idea: a special place where players could live and play safely. They managed to finish a whole season of 172 games there, keeping everyone healthy while still enjoying basketball.

The NBA took a big hit, losing almost $200 million, but it saved itself from a $1.5 billion loss without any loss of life. Adam Silver, the NBA's leader, earned praise for his smart handling of the situation.

Some leaders might think crises only happen to others, but Silver didn't make that mistake with COVID-19. He knew it could hit his organization hard.
Not learning from mistakes leads to future dangers.
When leaders miss signs of an impending crisis, they fail to grasp what's going on and neglect to seek different perspectives. They also overlook learning from past experiences to make necessary improvements for the future. This failure can stem from various factors. For instance, leaders may operate in environments lacking diversity, where everyone thinks and acts similarly. In such cases, organizations struggle to handle crises because their cultures discourage dissenting opinions and alternative viewpoints.

In business, we often gravitate towards success stories, but real growth springs from failure. Good leaders promote a culture of ongoing learning and teamwork. They stay vigilant, spotting warning signs early and taking action before crises hit.

Integrate Learning into Your Business Strategy
Make it a routine part of your strategy to seek out opportunities for learning from others' experiences. Create a system to incorporate that knowledge into your company's decision-making process. It's essential to keep learning, even during a crisis. Once the immediate challenges are managed, review actions taken, share the lessons learned, and make any necessary adjustments.