Goodbye Routine, Hello Crisis Mode!
Reading time: approx. 20 minutesGoodbye Routine, Hello Crisis Mode! Why exceptional circumstances are actually the new normal, and how to use them to your advantage
Intro
In 1992, a book written by Francis Fukuyama and published that year became a bestseller because it seemed to herald the dawn of a golden age. In “The End of History and the Last Man,” the US political scientist advocated a compelling theory that, with the Eastern bloc and the Cold War at an end, liberalism, democracy and a market economy would then prevail around the world. In a nutshell, he predicted that “all’s well that ends well.”
As we know, things turned out very differently. After 9/11, the war on terror, the real estate bubble, the debt crisis and COVID-19, it seems that crashes and crises are instead destined to be a constant presence. A very uncomfortable prospect. For us, emergency situations are like visiting the dentist: unpopular, unpleasant, but unfortunately somewhat unavoidable. With the exception of insolvency practitioners and crisis managers, there are very few people who appreciate crises.However, if you take a closer look, crises turn out to be highly effective catalysts. In crisis mode, you can break up rigidities, question routines, and significantly speed up changes affecting organizations and individuals. With a crisis on your hands, changes that seemed unthinkable under normal circumstances are suddenly possible.
The only question is: how can we achieve this? Here are seven strategies that individuals and organizations can use to capitalize on the next crisis.
Don’t Be Caught by Surprise
FirstDon’t Be Caught by Surprise
Taking an objective look at the past, our history is like a loose sequence of crises and disasters, interrupted by relatively short periods of deceptive calm and uniformity. In other words, crisis situations are in fact the rule rather than the exception. Investment banker Nassim Nicholas Taleb has dubbed these major, irregular events “black swans,” the existence of which we deliberately try to ignore. Yet it is absolutely clear that they nevertheless have the unpleasant effect of ruthlessly thwarting personal plans and business strategies. If we persistently convince ourselves that only white swans exist, we are caught off guard each and every time a black swan appears. It is better to anticipate surprises as part of our personal or organizational strategy.
Relax
SecondRelax
Such acceptance of a crisis is a rather unusual exercise for the human psyche. “Our minds turn history into something smooth and linear, which makes us underestimate randomness,” Taleb says. “But when we see it, we fear it and overreact.” A few archaic basic patterns are to blame, which continue to determine how we deal with the unknown. According to Ortwin Renn, a risk researcher at the Potsdamer Institut für Transformative Nachhaltigkeitsforschung (Potsdam Institute for Advanced Sustainability Studies), humans have three typical reactions to risks: fight, flight or playing dead and hoping that everything will somehow pass. The trick is to first assess yourself better, to find out which archaic type you belong to – and then to question your personal behavior patterns. “The second step is to determine how you can behave appropriately within your type.”
If you don’t want to let (nasty) surprises throw you off course, you first have to prepare yourself and your company for them. Be aware that not every crisis is a disaster. Anticipating exceptional circumstances allows you to benefit from them – or at least to develop a willingness to do so.
Don’t Trust Forecasts (Especially the dramatic ones)
ThirdDon’t Trust Forecasts(Especially the dramatic ones)
“Nothing stays the same”:This sentence will be uttered sooner or later in every profound crisis because, along with the unavoidable horror scenarios, the public perception soon spreads that the world as we know it will inevitably implode. Mass unemployment, global depression, the rise of populists and the imminent collapse of social order – these were all predicted again during the coronavirus crisis. “There is already talk on social media of a second plague, which is completely insane,” criticized risk researcher Renn. The only thing that is certain about these extreme predictions is that they too will not come true. This puts them on a par with similar doomsday scenarios that always see a rise in popularity in our darkest hours.
In the financial crisis of spring 2009, for example, Time magazine officially announced the “end of excess.” The magazine columnist reported that the recession had changed everything and that the party was definitely over. Mark Zandi, chief economist at the rating agency Moody’s, also noted a turning point for American consumers. Faced with such a gloomy outlook, the automobile manufacturer General Motors abruptly stopped producing off-road vehicles. “These higher gasoline prices are changing consumer behavior, and rapidly,” predicted the CEO of GM. “We at GM don’t think this is a spike or a temporary shift. We believe that it is, by and large, permanent.” However, more objective voices were drowned out. The German business magazine brand eins, for example, was published in November 2008 with the headline “Don’t panic – this too is not the end.” And it was absolutely right. A little later, the longest stock market boom in recent history started, consumerism began in earnest and with it the rise of the SUV. The high-horsepower, off-road vehicles are now the most significant vehicle segment in the world – and even General Motors produces some under its GMC brand.
Hold Off Rationalization
FourthHold Off Rationalization
Humans have two kidneys, so they can still survive even if one fails. Nature is already designed so that any epidemic, drought or fire will make it stronger. It makes itself “antifragile,” as Nassim Nicholas Taleb would call it, by retaining seemingly superfluous things that may be useful in an emergency.
In contrast, when it comes to our companies, we act as if there were no emergency situations at all. Businesses and processes are trimmed for maximum efficiency, the “deadwood” is removed and processes are streamlined until they run smoothly. This is a mistake, according to organizational sociologist Stefan Kühl, because“in crises, the costs of this rationalization become clear: There is a lack of interim storage facilities to be able to deliver spare parts quickly, hospital beds are not available in sufficient numbers and personnel to maintain internal order become scarce.”
The same applies to closely linked value chains – the failure of a single factory in the Far East is enough to tear apart entire global manufacturing processes.During crises, “frantic attempts are made to cushion the impact of this lack of buffers and to mobilize additional resources without considering the costs,” says Kühl. How much wiser would it be to keep these buffers available, even if they seem a little wasteful under normal conditions?
Use the Momentum
FifthUse the Momentum
Digital lessons for hundreds of thousands of students; the abolition of fixed working hours and attendance regulations; a departure from traditional hierarchies; flexible working models and entire workforces that have moved to the home office and switched to remote working: No change program, however rigorous, could ever have brought about the huge changes that the coronavirus managed in next to no time. “Crises always depict complexity in fast forward,” says Sabine Kluge, organizational consultant and head of management development at Deutsche Bahn, “This also applies to organizations that did not previously have a clear picture of their complexity.”
She explains that, during crises, companies have no choice but to learn more efficiently and implement changes more quickly. Reforms are suddenly accepted that two days ago would have sent the works and staff councils on the warpath. Kluge reports on her experiences in a major German bank, in which supposedly cast-iron departmental boundaries, hierarchical wrangling and competence claims disappeared overnight during the coronavirus crisis. “Where executives used to hide behind ‘My cost center, my resource, my kingdom,’ the functional areas now work together seamlessly – the emergency mode simply forced them to do so.” This is because the crisis is the moment when even the most stubborn skeptic has to accept that business as usual is no longer an option. It is therefore the golden hour for those who are eager to see change.
Maintain the Change
SixthMaintain the Change
But what happens once the crisis is over?“The crisis caused by coronavirus broke down old cause-and-effect relationships, which are always complex and therefore cannot simply be ‘started up again,’”confirm researchers from the Frankfurter Zukunftsinstitut (Frankfurt Future Institute). Exceptional circumstances are like a testing ground where new forms of work can be tested, iterated and established under laboratory conditions. The only question is what will happen when the organization gets back into calmer waters.
“The trick will now be to transfer the findings and accomplishments to the new normal,” says organizational consultant Kluge. In many cases, the initial successes of the working modes and structures tried and tested during the crisis are already visible – anyone who has ever experienced flexible working across departmental boundaries and outside of rigid working time regulations will be in no hurry to return to the old system. The crisis can therefore become a catalyst for transformation and the crisis mode a blueprint for more agile, self-determined working. The “new normal” becomes a post-crisis “better normal” for companies and their employees.
Stay Flexible
SeventhStay Flexible
Where markets start to change, gaps in the market always open up. These can only be used by those who, in the face of a crisis, do not go into a state of shock but act more flexibly than before.“An opportunity like this will not arise again anytime soon,” enthuses Ernst Prost, CEO of LIQUI MOLY, referring to the coronavirus pandemic. Last time, the lubricant manufacturer went on the attack during the financial crisis, thereby making up enormous ground and overtaking a number of its competitors. The time has come to do the same again. The reason: “Under normal circumstances, our chances of both breaking into and making up ground in several areas of this market are not half as good as they are now during the crisis.”
For many companies, the road out of the crisis initially involves pragmatic adjustments to their business model. During the coronavirus crisis, the operators of the FLYLA flight portal, for example, used their mediation skills to help farmers find harvest workers (who were desperately sought after) instead of helping customers find flights (which nobody needed). Hoteliers rented their vacant rooms to remote workers, for whom it had become too cramped or too monotonous at home. Fashion brands such as TRIGEMA switched to the production of protective clothing. Clearly, this is not a business strategy, but it is a new beginning at a time when nothing seems to be going well.
Remember, in times of crisis, the cards are reshuffled. It’s an opportunity for shrewd players to play their trump cards. Even cards with which they would not come out on top under normal conditions.
Conclusion
Conclusion
“Crises are opportunities – in disguise,” says fund manager Gottfried Heller, partner of the legendary André Kostolany. In fact, there is no other moment in the lives of companies and individuals that can unleash such forces and set things in motion – purely because it would suddenly be much riskier to do nothing. But first you have to be prepared to consider crises as an opportunity – which is just as challenging as if you want to see a jump in ice-cold water as an excellent opportunity to check your own health. On reflection, this is absolutely true.
Crisis management therefore starts off as a kind of brainteaser, according to Max Frisch. The architect and writer pointed out that “A crisis is a productive state. You simply have to get rid of its aftertaste of catastrophe.”
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Goodbye Routine, Hello Crisis Mode!
In 1992, a book written by Francis Fukuyama and published that year became a bestseller because it seemed to herald the dawn of a golden age. In “The End of History and the Last Man,” the US political scientist advocated a compelling theory that, with the Eastern bloc and the Cold War at an end, liberalism, democracy and a market economy would then prevail around the world. In a nutshell, he predicted that “all’s well that ends well.”
The only question is: how can we achieve this? Here are seven strategies that individuals and organizations can use to capitalize on the next crisis.
Don’t Be Caught by Surprise
Relax
Don’t Trust Forecasts
“Nothing stays the same”:
Hold Off Rationalization
Humans have two kidneys, so they can still survive even if one fails. Nature is already designed so that any epidemic, drought or fire will make it stronger. It makes itself “antifragile,” as Nassim Nicholas Taleb would call it, by retaining seemingly superfluous things that may be useful in an emergency.
“in crises, the costs of this rationalization become clear: There is a lack of interim storage facilities to be able to deliver spare parts quickly, hospital beds are not available in sufficient numbers and personnel to maintain internal order become scarce.”
Use the Momentum
“Crises always depict complexity in fast forward,” says Sabine Kluge, organizational consultant and head of management development at Deutsche Bahn, “This also applies to organizations that did not previously have a clear picture of their complexity.”
Maintain the Change
“The crisis caused by coronavirus broke down old cause-and-effect relationships, which are always complex and therefore cannot simply be ‘started up again,’”
The “new normal” becomes a post-crisis “better normal” for companies and their employees.
Stay Flexible
“An opportunity like this will not arise again anytime soon,” enthuses Ernst Prost, CEO of LIQUI MOLY, referring to the coronavirus pandemic.
Remember, in times of crisis, the cards are reshuffled. It’s an opportunity for shrewd players to play their trump cards. Even cards with which they would not come out on top under normal conditions.
Conclusion
“Crises are opportunities – in disguise,” says fund manager Gottfried Heller, partner of the legendary André Kostolany.
Crisis management therefore starts off as a kind of brainteaser, according to Max Frisch. The architect and writer pointed out that “A crisis is a productive state. You simply have to get rid of its aftertaste of catastrophe.”
