Prevention, Forward Thinking, Key to Crisis Management
By Adam Bello | October 31, 2002
Many entrepreneurs develop business plans, sales projections, and investor packages to prepare for their next level of success, but how many plan for their next crisis? According to Toronto communications consultant Allan Bonner, small and early stage ventures are more vulnerable to crisis situations on a daily basis than established corporations. By ignoring the warning signals, the risk of operating crises significantly increases.
"You have to prepare for the unthinkable ahead of time, not after it strikes," says Bonner, a specialist in crisis management and media training, whose firm has trained 15,000+ corporate and government officials from 135 countries. "You can't be blamed for accidents beyond your control, but you can be faulted for not seeing the warning signs or taking steps to lessen the impact."
In his new book Doing and Saying the Right Thing - Professional Risk and Crisis Management, Bonner says businesses of all sizes need to re-think the role of crisis management. Approaching it as a day-to-day operation that prevents crises from occurring can best keep business ahead of disaster.
"Effective crisis management is as important for one-person operations as multinationals," he says. "Many entrepreneurs focus on product development and sales, but get in ruts and don't seek out weaknesses in their operations. You may land a major contract that doubles your business, but not having the administrative support in place to handle it may be your undoing."
He continued saying: "Making acts of prevention part of your daily routine minimizes the effects of a crisis; simple things such as keeping track of inventory, renewing your web site address on time, or anticipating how a parade route will block clients from your main entrance - and taking steps to notify them in advance with alternative directions - can reduce damage control situations that keep you from making sales."
Bonner says entrepreneurs can take practical steps to significantly reduce operational crises:
1. Write down your crisis management plan - and make it practical!
Whether it is several pages or several hundred, Bonner says your crisis management plan should be a practical document in daily use, and accessible to staff at anytime. The plan should include (but not limited to):
- Full contact information of owners, management, and emergency personnel
- A contact list of service and product suppliers (including secondary or alternative sources), major clients, and other organizations relevant to business operations
- Daily, weekly, and monthly routines performed (i.e. invoicing, purchases, payments, re-stocking of inventory)
- Special tasks and reviews (scheduled monthly or annually)
- Hard copies of forms or documentation used in daily operations (i.e. invoices, work orders, requisitions, etc.).
The plan should outline a course of action to minimize crisis scenarios, such as:
- Operational crisis situations (i.e. fire, water damage)
- Anticipated or potential problems impacting the company (weekly, monthly, and seasonal; municipal issues or industry-specific changes)
- Impact of competition (i.e. franchise, Internet competitors).
- Insurance policies appropriate for your industry or operating conditions (i.e. disability insurance, liability, whole-life, term, errors and omissions, condominium)
"Don't worry about having all the answers at once," Bonner says. "Take stock of the means you have to avert certain crises, and be ready to seek out the information you need to head off others."
2. Plan your crisis today.
Unanswered questions about a potential crisis should not be left dangling. The best time to handle disaster, he says, is today.
"In the middle of crisis, it's hard to formulate a course of action when you're tired and distraught, and it's preposterous to wait until you find answers," Bonner says. "The best time to prepare for crisis is now! When your mind is clear, and can turn information into systems and methodologies."
3. Develop a SOCKO
Bonner uses the term 'SOCKO,' - Strategic Overriding Communications and Knowledge Objectives - to identify tangible risks and create clear messages, grouping solutions into strategies, goals, hopes, attitudes, behaviors, aspirations, capabilities, and necessary training to respond in a crisis situation.
"It's the basis of sales, customer service, managing complaints, advertising, and creating brand awareness," he says. "For example, your crisis may be new competition. What if you are a family-owned coffee shop and a Krispy Kreme donuts franchise opens downs the block? How will you stay competitive? Perhaps your unique selling proposition is quality, pricing, variety, or exceptional customer service. Developing a SOCKO and crisis plan based on your strength - before-and-after competition enters - will help win customer loyalty. Even if they go to the competitor during the novelty period, long-term customers will be more inclined to come back because they understand that you met one or more of their needs."
4. Know who does, says what
Just as regular business operations depends on each person doing his or her job to maximize productivity, so do crisis situations. Bonner says a crisis management plan should outline the tasks involved, and who will undertake them.
"What to do could be prepared in checklist-format for each person," he says. "If you know who does what, the situation can be handled without panic."
To avoid miscommunications, and potentially embarrassing comments, designate who in the company will speak to external parties.
"Small businesses are unlikely to hold press conferences, but will probably speak with landlords, clients, and policy makers regarding crisis matters. Make sure employees understand who speaks for the company in daily or crisis situations, and have questions referred to that individual."
He continued saying: "As crises emerge, answers will rarely be available. However, you can prepare effective comments regarding how you will handle them. For instance, responding: 'No one has the answers to these questions at this time, but here's what we are doing to find them', will communicate attentive leadership, a far cry from saying 'I don't know' or making speculative comments."
5. Learn from historical accounts
Learning from the success and failures of others to deal with a comparable crisis can help head off problems. One approach is isomorphic learning, where similar or dissimilar situations are compared to find common crisis outcomes. Comparative research can be made with geographic, cultural/cross-cultural, and historical accounts. Bonner says learning from similar scenarios helps determine the current risks involved, and what live simulations will best test your proposed solutions.
"Look at the Pope's visit to Toronto this past summer," says Bonner, referring to the discarded waste and sleeping bags on the pilgrimage grounds, including the sewage back-up that led to water damage for some nearby businesses. "It demonstrates:
- preparation may work well on paper but not always in the real world;
- to find real problems you have to look for them;
- many times, if you look back you can see patterns of events."
Bonner says other events, such as rock music festivals could have been examined to determine contingencies. "There were crowds before there were Papal visits," he says. "Company owners could have looked at how waste and traffic congestion from day-long concerts in Toronto, Barrie, or other parts of southern Ontario impacted the surrounding community." Even looking back at Woodstock could have been an indicator of the aftermath to expect."
6. Seek out specific expertise.
Entrepreneurs and their staff should develop in-depth understanding of operations and industry regulations. Broadening the knowledge-base beyond daily activities will help identify specific risks affecting the business. This should include those affecting key clientele and suppliers.
"Utilize government officials and agencies to do your foot work on these issues; as they already have sources of up-to-date information, including associated trends and benefits," he says. "Call your Member of Parliament, city councillor, or the civil service to discuss the issues, or determine if government or professional associations already provides professional development seminars on these issues. Otherwise, form a business collective with other companies, and then request government or industry experts to speak to its members."
Bonner added that business-specific risk assessment may require input from relevant experts, such as lawyers, accountants, insurance agents, and financial planners. However, company owners should be well prepared prior to any consultation to best comprehend the insights and projections.
7. Take sweeping action.
Bonner concluded that when faced with crisis, address it promptly. "Doing so may exhaust that year's entire budget for business development, but surviving the crisis today means your more likely to be in business next year."