Leadership | Crisis Management

Factors of sovereign crisis management

By Sabine Walter

The coronavirus is forcing us to rethink our lives. The economic cycle is severely restricted, supply chains have been interrupted, sales markets have collapsed overnight. As a result, many business objectives have changed. The focus is on crisis management. For most companies, this means short-time work, dedicated controlling and drastic cost-cutting measures to secure liquidity. But successful crisis management contains another aspect, that often gets lost: investing. Investing in cooperation and innovation.

Crisis management in most companies follows a well-established process or an iterative Loop: Measure numbers, calculate scenarios, Take worst case as a basis, establish urgency for this scenario, align measures to it, adopt and communicate, implement measures and measure effects. The aim of this process is not only to secure the company's liquidity, which is important, but also to restore shareholder returns as quickly as possible after the crisis has ended. This is too short-sighted. The crisis calls for entrepreneurial design in order not to be affected to the same extent in similar crises. Shaping also includes investing in cooperation and innovation.

Factors of sovereign crisis management

Attitude: Openness for new ways

Albert Einstein put it aptly: "Problems can never be solved with the same mindset that created them." That is why new ways of thinking and acting are needed in times of crisis and change. But this is difficult because the crisis significantly affects one of our basic needs - the basic need for security.

This security is taken into account through open and balanced communication:

• What exactly what is to be achieved?
• Why is this absolutely necessary?
• What risks arise if we remain in the status quo?
• What opportunities open up for us when we reach the goal?
• Who is in demand?
• What does it taketo achieve the goal?

Target clarity and Sense of purpose must be in place for staff and managers to follow the new paths. The concerns, fears and questions of all those affected must be taken seriously. Only if we take fears and concerns seriously and clarify open questions, creative thinking capacity is released.

Factors of sovereign crisis management

Encourage the joy of experimentation

In systemic coaching we work with the Development of options for action and ideas for solutions also with the Tetralemma, one of Insa Sparrer and Matthias Varga von Kibéd developed logical scheme. In it, one option and a second option, are related to each other in different ways. How exactly does this work? The following questions outline the process behind it.

• What is a solution (A)?
• Which is another solution (B)?
• What would the solution (C) resulting from the combination of A and B look like?
• What would be the solution (D) that does not take into account either A or B?

The fifth question and thus solution option is intended to go significantly beyond the first four. Therefore the question is:

• What would solution (E) look like that does not take all this and even that into account?

This model also helps in the entrepreneurial context to expand the solution portfolio and experiment with different options.

Factors of sovereign crisis management

Call for cooperation

Currently, many employees and managers work in a home office. This eliminates the "classic" setting for workshops or meetings. But Cooperation is also possible in virtual structures.

It is especially important in a crisis, Use resources sensibly and exploit synergies. This means: the wheel does not have to be reinvented in every team, division or company. While we generally notice a higher level of networking activity with companies from the same or a similar industry among many SMEs, exemplified by managing directors, silo thinking is still widespread, especially in corporate groups. Here it is up to the top management to exemplify and demand cooperation.

Factors of sovereign crisis management

Invest in innovation

Alongside all austerity measures, it is important Investing in innovation, especially during the crisis. The fields in which innovation takes place are diverse:

Revenue model: Classical sales channels are collapsing in the crisis. What alternative business and revenue models can be developed? How do we manage not to have the same problems again in a similar crisis? How can we solve certain dependencies through a new or further developed business model?

Core processes: The current Corona crisis once again highlights unhealthy dependencies in supply and production chains. This calls for ideas on how to reorganise supply chains without losing competitiveness?

Support processes: Support processes help to guarantee the smooth functioning of the core processes. Therefore, the questions arise: Which support processes need to be changed and how, so that the core processes continue to function smoothly after a change in orientation? Which support processes must necessarily be changed, e.g. digitalised, in order to be able to act faster and better in a similar crisis?

These are just a few fields of innovation where creative ideas are in demand. You can read more about this in our article:

Creative and structured. Impulses for more innovation culture.

Conclusion

Crisis management - saving and investing in equal measure

Crises demand drastic changes in a short time. There are opportunities in these changes. They should be used. In concrete terms, this means finding a healthy balance between savings and investment. The focus of investment is on areas that help the company to remain competitive in the long term or to regain its competitiveness as quickly as possible after the crisis.

For this to succeed, employees and managers must have a basic trust in the future viability of their company. This is the case when their fears and concerns are taken seriously, their questions are openly discussed and answered, and they are an active part of the renewal or development process. Employees can be an enormous resource in times of crisis even more than usual. It is important that their creative ideas are heard and that there is room to try them out.

Crisis management in its previously established form is losing importance. Managing a crisis well in today's world means: shaping instead of administering.

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