Originally posted on The Huffington Post, May 8, 2012
Let me state my main thesis at the outset: There is a dangerous class of companies and organizations that are Severely Crisis Prone. (For brevity, I shall simply refer to them as companies.) These companies pose a severe threat to our health, safety, and the environment. Since they are largely unable and unwilling to learn from those companies that are prepared for crises — Crisis Prepared — and thus do everything in their power to mitigate major threats to health, etc., government must play a far more active role in regulating and overseeing Crisis Prone companies. If only for this reason alone, I am not and will never be a Libertarian!
For over 30 years, my colleagues and I having been studying crises and disasters of all kinds. We have not only found why crises happen, and ideally what can be done to prevent them, but why we need strong government oversight and intervention to protect the public from unscrupulous companies. In short, if companies won’t do everything in their power to lower substantially the odds of major crises — BP is a prime case in point — then the government needs to step in and force companies to have adequate crisis plans and procedures.
Let me make the case by contrasting two very different types of companies. One type is Severely Crisis Prone while the other is Crisis Prepared. Of course, these two are merely the end points of a broad continuum. Thus, many different types of companies exist in between. Nonetheless, while the two are definitively extremes, they do exist. If anything, they help us see clearly the nature of the full spectrum.
More to the point, at best only 10 to 20 percent of companies are Crisis Prepared. Roughly 10 to 20 percent are Severely Crisis Prone. This means that some 60 percent of companies are Crisis Prone to varying degrees. Since crises are increasingly a major fact of life, this puts all of in jeopardy.
Severely Crisis Prone
Severely Prone Companies don’t believe in Crisis Management, period! They feel that proactive Crisis Management is a complete waste of time and money. Their general thinking is captured by the following: “Haven’t we always reacted well no matter what the problem or crisis is? Isn’t reacting sufficient? We’re big and powerful enough to withstand anything that the world can throw at us.” Unfortunately, as BP shows all too well, such beliefs are dangerously wrong.
Severely Crisis Prone Companies also tend to believe that outstanding companies didn’t have major crises, period! In the highly unlikely event that they did have a crisis, they are supremely confident that they can handle it. Haven’t they in fact handled everything well so far? In short, why waste time and money even thinking about, let alone preparing, for that which no one could foresee or predict with certainty? They have far more immediate and pressing things to consider.
The only thing that matters for Severely Crisis Prone companies is the bottom line. Everything is measured strictly and solely in terms of it. All executives and managers are held strictly accountable in terms of what they’ve added to the bottom line. God help those who detract from it! Executives or managers don’t stay around long if they are a drag on profits.
Needless to say, Severely Crisis Prone companies don’t believe in programs such as Environmentalism or Sustainability that divert precious time and attention away from the precious bottom line.
Unfortunately, as it must, when the “big one hits,” they are totally unprepared for it.
Crisis Prepared companies are at the other end of the spectrum. They believe deeply in broad-ranging programs of Crisis Management. They understand that Crisis Management is not only the right, ethical thing to do for their employees and communities, but that it actually makes them more profitable.
Studies show that Crisis Prepared companies experience significantly fewer crises. As a result, they are significantly more profitable than Crisis Prone companies, which ironically believe only in profits.
Crisis Prepared companies are prepared for a broad range of crises such as ethical breaches by senior executives, acts of sabotage by disgruntled employees, explosions, economic downturns, fires, natural disasters, terrorism, etc… They realize that in today’s world, merely reacting is not sufficient to get out and stay in front of major crises. But even more, they understood implicitly that no major crisis is ever a single well-defined, contained crisis. If one is not prepared for the simultaneous occurrence of multiple crises by integrating one’s crisis plans and procedures, then any single crisis can quickly zoom out of control and trigger an uncontrolled chain reaction of other, and potentially even worse, crises. In short, it is never enough to prepare for individual crises in isolation.
Crisis Prepared companies understand that in today’s world, it is not a question of “if” a company will have a major crisis, but only a matter of “how, when, and why” it will occur, and how well prepared they are to handle it.
The bottom line is extremely important for Crisis Prepared companies as well. The big difference is that everything is not measured strictly and solely in terms of it. Unless one has a good culture that treats employees and their families, customers, the media, and even one’s competition with dignity and respect, how can one truly prosper in the long run, let alone survive in today’s complex world?
Crisis Prepared companies also have robust programs in Environmentalism, Safety, Sustainability. They not only support such programs, but they realize that they have to be integrated with Crisis Management. For instance, Crisis Management and Environmentalism share many of the same components such as picking up and acting on early warning signals of impending, potential crises and problems. Thus, it makes perfect sense to integrate these two and others. Indeed, integrating them not only makes each of them more effective and stronger, but also more efficient and cost-effective. In this way, the programs are an integral part of the profitability of Crisis Prepared companies.
Thus, as it must eventually, when the “big one hits,” Crisis Prepared companies recover far faster with far fewer injuries, economic, and environmental consequences than Crisis Prone companies.
If the benefits of being Crisis Prepared are so clear and strong, then why then don’t more companies do what’s clearly in their and our best interest? The great English poet T.S. Eliot put his finger on it best of all, “Humankind cannot bear much reality.” In short, very few companies have the emotional fortitude and will to face a world that is painfully complex. For many companies, just thinking about the worst causes far more anxiety that they can bare.
If Crisis Prone companies can’t and won’t learn from the best Crisis Prepared companies, then government has no choice but to step in. It is the only thing standing between us and disaster.
Originally posted on The Huffington Post, May 8, 2012