A bad report from the doctor. An unexpected shift downward in job prospects. A jarring call in the middle of the night. An unwelcomed story on the front page of the New York Times. Each is a crisis.
Crises are inevitable. How we respond says a great deal about our courage and fortitude. It was Stanford economist Paul Romer who coined the famous soundbite, “A crisis is a terrible thing to waste.” Others have used similar language, including former Intel CEO and Chairman Andrew Grove. When speaking of his company’s Pentium Processor flaw in 1994, Grove said, “Bad companies are destroyed by crisis, Good companies survive them, Great companies are improved by them.”
In a recent Politics and Prose presentation, Reed Hundt—author of A Crisis Wasted* and former chairman of the Federal Communications Commission—discussed the global financial meltdown and Great Recession of 2008-2009. While his new book studies the courage and fortitude of those addressing this financial crisis, Hundt goes further to describe key elements in responding effectively to moments of upheaval.
First, correct diagnosis of the problem at the strategic inflection point is critical. This is easy to understand, but difficult to implement. Often this analysis is made with the wrong people in the room. I’ve seen nonprofit boards make decisions around crises without having people who understand their organization’s “industry” in the room. Brilliance and the ability to frame issues in general is mistaken for wisdom in the subject at hand. Dostoyevsky once said, “Intelligence alone is not nearly enough when it comes to acting wisely.”
Diagnosis takes time and should involve consideration of real choices. In the case of the global financial crisis, Hundt argues that the Obama team made decisions before understanding the scope of the problem. That premature leap forward ultimately hamstrung the administration in getting to appropriately sized solutions.
Once committed to a choice, one has to communicate endlessly. “If you can’t sell it, you can’t do it” says Hundt, who adds, “How well we communicate is determined not by how well we say things but how well we are understood.”
Finally, it is important to note when the winds have shifted as a result of the crisis. Hundt argues that Obama’s strong desire to be a post-partisan president ran into the political shifts that occurred as a result of the economic downturn. Not recognizing those shifts until it is too late can have disastrous consequences.
Timely diagnosis. Consideration of real choices. Endless communication. Recognition of the changing landscape. In times of upheaval, consider how these four elements can help prevent looking back later on your crisis as a wasted opportunity.
Have a good week.
More to come…
*See my book review on A Crisis Wasted here.