Scenario planning can strengthen or doom crisis management

Crises are bound to arise in any organization. But how prepared are they to deal with those crises? The biggest hurdle in crisis management is that humans have an inherent bias that predisposes us to be overconfident of our future. The human brain is very poor in predicting future risks, more so if these have a low probability of occurrence.

Matthew Broderick was the head of America’s Homeland Security Operations Center, which serves as the eyes and ears of the US government in a crisis. 

Several hours before Hurricane Katrina hit New Orleans, Broderick was receiving much data about what was happening on the ground, including 17 reports of major flooding and levee breaches. 

But he ignored these inputs and went home for the night assuming that nothing worse would happen to the city. His brain apparently ignored the intensity of the hurricane because the country had never before faced one like it.

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How do organizations prepare themselves for such low-probability crises? How many have a standing crisis management team? What are the worst-case scenarios this team has taken into account? 

What are the most appropriate behaviours various members of the organization should adopt during crises? Is this important knowledge stored as neatly designed power-point slides or has it been converted into occasional drills that help embed responses in organizational memory?

The more potential crises an organization can anticipate and prepare for, the more quickly and successfully it will recover from any crisis that strikes it. 

So an organization needs scenario planning for various possibilities it could face, enabling it to work out the possible actions it could take in response. The cardinal rule of crisis management is that no crisis ever unfolds exactly as it was envisioned or planned for.

The science of scenario planning originated in the US military, and was adopted by Shell as an important organizational practice. Shell’s scenario outline did not predict the conflict between Israel and Arab nations, the oil blockade of 1973 -74 and its consequences for Western nations. But the team at Shell did forecast a scenario in which large fires destroy oil reserves in Saudi Arabia and Western countries face an oil shortage.

In 2001, after aeroplanes hit New York’s Twin Towers, its mayor Rudy Giuliani later acknowledged that the city administration was startled at first. 

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It was not prepared for planes being used as missiles for mass destruction. But the city administration was prepared for a situation where terrorists would use poisonous gases in the New York Subway system.

Since both Shell and the New York city administration had some form of scenario planning, however, they could mobilize quick responses. So, effective crisis management is not about predicting the exact scenario, but about being geared to respond to a crisis even if its precise nature is unforeseen.

The time taken between a crisis being identified and appropriate actions being initiated to deal with it is of utmost importance. In times of crisis, the worst response is usually silence of the top leadership. In this age of social media, not communicating within few hours of a crisis breaking out is a cardinal error. 

As soon as a crisis happens, communication channels must be opened both to internal teams and the external world. The longer it takes to communicate, higher the chance of unfounded rumours filling a vacuum of information. Such a delay could also be construed as the organization involved being on the backfoot.

What you communicate is as important as when you communicate. To decide what you need to say, one should quickly develop an understanding of the crisis.

In the case of Anna’s tragedy, one look at her mother’s letter reveals the bereaved family’s intense emotions within the mature articulation of her thoughts. That no one from Anna’s office attended her funeral had only multiplied the emotional intensity. These emotionally charged situations demand very well thought-out responses.

In the management of any crisis, it is very important to predict its possible end point and work backwards from there. In some cases, a strong defence might be the best strategy. 

In many cases, a responsible acceptance of the crisis and an honest promise to change the existing situation is the best response. Such a promise should be followed up with genuine action because the worst that can happen to an organization is the same crisis repeating itself.

The Tylenol crisis of 1982 in the US is often cited in crisis management books as a great case study. The company struck by it, Johnson & Johnson, owned up the crisis triggered by its pain-killer, recalled stocks, introduced tamper-proof packaging and used the crisis to reinforce the company’s focus on customer care. 

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Although the company had to take a hit of more than $500 million in the short-term for adopting safer packaging, consumers rewarded it with an increased market share after the crisis had blown over.

Many steps can be taken to prevent a crisis from occurring. But it is equally important to effectively manage a crisis once it happens. So every organization should ask itself this vital question: How prepared is it to deal with its next crisis?