4 principles to Crisis Management!

Crisis has the characteristic of being unexpected, create uncertainty and affect objectives or goals. It is an inflection point where the previous system or model no longer works well. Thus being necessary to adopt another or reform / update the current one. The correct answer is change!

O process of change:

(1) It starts by recognizing that something is not going well, and this can be confirmed if cash generation is not sufficient to remunerate the invested capital (banks and shareholders) neither to pay for new investments and as a result compromising future growth;

(2) Following by the identification of possible measures: Can we change this? What, How and When? Do we need help? What kind of help?;

(3) And it continues by dimensioning the costs to be incurred: restructuring, sale of assets and/or business units, size reduction, structure adjustment.

And the decision to leave, abandon, discard, cut something that has been important but that limits and prevents the organization from evolving or surviving is very difficult. Mainly if not having faced similar situations previously.

There are, however, basic principles that if applied allow an organization to face a moment of crisis. These principles are the following:

1) Focus
Focus involves making choices and concentrating efforts and resources. This requires prioritization. And there is no way to prioritize without electing what is essential.

Focus, in fact, is the management of shortage or scarcity. Not that a company should act different normally. It happens that in a crisis situation, there is no other option.

And this includes reviewing and re-adjusting the business model (market, product, customers, channels-distribution) and the operational model (processes, infrastructure, organization and people).

2) Discipline
Discipline is linked to execution and performance (measurement). It involves implemented controls that will track execution and measure performance.

These controls-set involves: monitoring financial results (weekly and monthly); Personal interaction (field visits); and process of approval of spending (opex and capex). The latter - the expenditure approval process - should be linked to the need of a justification (in the case of opex) or a return calculation (in the case of capex).

In fact, discipline requires a bit of "micromanagement" from top management. This is not necessarily bad, because in spite of what is thought, this in fact empowers and makes people accountable by showing interest in what they do and also makes them more confident, as they know that (they) are not alone.

3) Communication
In a crisis situation beyond focus and discipline, it is necessary to maintain communication. And this exchange takes place through symbols, signs, behavior, besides of words.

The message to be transmitted must be repeated, consubstantiated, fulfilled and unique. To adapt the message by the public is not to change it, but to make it more easily understood. A message that does not arouse AIDA - Attention, Interest, Desire and Action - is lost.

And the audience to be reached is formed by: team (associates, employees); Financiers (banks and shareholders); Suppliers and customers. This involves both transmitting the message that is desired and also listening, processing and classifying what has been received and acting to obtain an adjustment / alignment between the two - what is transmitted and what is received - when it is necessary.

4) Team
A management team to deal with a crisis situation must have some skills that may not be in the team formed in a situation of "normality".

Among these necessary competencies, the main ones are:

a.    Ability to access goals and establish corrective actions;
b.    Agility in decision making and demand action; and
c.    Ability to understand ones role and the impact of the crisis situation on the team.

If the existing management team does not meet these competencies, it would be important to adopt one of the following alternatives: hire a new team member who can add such skills or, alternatively, hire a specialized consulting firm that can offer such skills through its team.

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At 2B Partners Consulting we aim to help companies to address the questions or problems thru the services of advisory board, interim management, managerial applications and consulting focused on financial advisory, operations improvement and organizational efficiency. Contact us to obtain more information by sending an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

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