Setting and flawlessly executing a business strategy is extremely difficult under the best of circumstances; it’s even harder and perhaps close to impossible if your business is having a crisis. Over the past few years, hundreds of companies have experienced some sort of business-related crisis that has impacted their brand equity, including Chrysler, Toyota, Taco Bell, Jet Blue, Apple, and FIFA.
What’s interesting about these companies is that they represent different business strategies (Operational Excellence, Customer Intimacy, and Product Leadership) which means that no one strategy is immune to a business crisis.
The types of crisis issues can vary, as you can see in the chart below.
In today’s complex global economy and business ecosystem, the chances of a company having some sort of issue are very high. For many, it’s not a question of if they are going to have a crisis, but when it is going to occur. And when it does occur, do the leaders of the organization have the right business acumen skills to solve the problem and save the brand?
In several of our leadership development engagements that feature our sophisticated business simulations as learning tools, we have included a crisis management scenario. For example, in our produce industry simulation, participants are faced with a salmonella outbreak and are required to create an immediate strategy for handling the crisis. Their strategy is evaluated and the results are incorporated into the algorithms that impact their business results. We have similar scenarios in our chemical industry and pharmaceutical industry simulations related to safety and recalls.
The purpose of these additional scenarios is to develop the critical business acumen skills needed to repair a brand in crisis. Below are the top three business acumen skills needed to repair a brand during business crisis.
- Making the right financial investment in resources and crisis management
Most businesses have an existing budget and find it difficult to change or add resources during a business cycle, especially during a crisis. This is a huge mistake. There needs to be an immediate recognition that a significant investment in crisis management is needed and that investment needs to be treated and accounted for like any other business investment with a return on investment. The biggest question facing leaders during a crisis is where is the investment coming from? Do you reorganize resources away from the existing business, or do you acquire new sources of capital?
- Protecting the core value proposition at all costs
Another big mistake that organizations make in crisis is that they try to solve the problem through changing their strategy and value proposition by over compensating. One of the biggest lessons learned is that brands need to protect their core value proposition at all costs. Taco Bell is a fast food company; it can’t all of a sudden increase the quality of its meat and present a new value proposition of a high-quality restaurant just to show the world it fixed the problem. Apple is a Product Leader and innovator; it can’t all of a sudden focus on creating a value proposition of Operational Excellence and show the world that its number one focus is on human rights. Successful organizations coming out of a crisis must focus on fixing the problems the right way so that they can protect the core value proposition both in the short and long-term.
- Communicating and creating internal alignment
The next most important business acumen skill is the ability to create internal alignment around the crises management strategy. Effective leaders need to make sure that there is no “blame game” happening throughout the company. They need to ensure that the organization understands that they must pull together to solve the crisis and pull the company forward. Leaders must make sure they are aligned in the messaging and constantly reinforce both external and internal communications. Many leaders have shared with us that they have learned you simply cannot communicate enough, especially during a crisis.