Think back to the year 1999, 2000 in the United States. Something very interesting was happening.

The dot-com bubble burst.

I was a young assistant professor teaching at a business school, mainly MBA students, many of whom were expecting to enter a career into an industry where they would get to explore the role of technology and this new dot-com universe.

And all of that goes by the wayside.

The following year, Enron collapses.

And then you see a series of CEOs trapesed across the news media, either in handcuffs or headed to court because there was just a collapse of the business sector in the United States.

As a business school professor, looking out at the scores of young impressionable minds who all thought they were going to enter this industry, I was really grappling with what do I say to these young people?

How do I convey that to them that business actually is and can be a force for good when everything they see is that business is bad, that leadership is bad, that something in the system is broken?

Well, fortunately for me, that led to an interest in understanding organizational crises, but not so much because I was curious about what goes wrong.

I really wanted to answer the question, how do those companies that come out of organization that come out of crisis, how do they do that?

How do they succeed?

What are the leadership characteristics that are necessary to drive organizations through the most tumultuous times?

So that led to decades of research for me and studying organizational leadership, organizational culture, particularly in times of crisis.

So I want to share with you a little bit about what I've learned.

The first thing I've learned is that we have to be really clear about what we mean by a crisis.

Raise your hand if you have said or have heard people say as they go into the office, "Well, what crisis are we managing today?

Anyone hear that?

Anyone said that?

How many fires do we have to put out this week?

Right?

We use this language as if everyday problems that are inconveniences are actually crises.

And when we do that, we make impotent our the ability of our workforce to actually manage something that is significant.

So what is significant?

A real crisis is any negative event that has the potential to threaten an organization's financial well-being, reputation, or legitimacy.

I think it's pretty safe to say that what we're experiencing now, the tumult across the world, there are real crises that people are dealing with.

That is what we should be focused on.

How do we help people and leaders operate in these kind of environments?

Not the daily barrage of inconveniences that we'd rather not deal with.

But we also talk about crisis as if all crises are the same.

And I want to have you think about two different types of crises.

One is well, we talked about the financial well-being, talked about reputational risks.

Look familiar?

And I've talked about the legitimacy.

We're going to go into a little more detail on all of these in just a moment.

Two different types of crises. Sudden crises and smoldering crises.

Sudden crisis are those kinds of events that are typically externally imposed on an organization.

something happens to the company that for the most part you have very little responsibility for or control over.

Natural disasters, a terrorist attack, CEO death, etc.

These are sudden events that happen that sort of throw you offkilter.

How many of you spend your time thinking and planning for a sudden crisis?

Raise your hand.

Handful.

Okay, another type of crisis, smoldering crisis.

Smoldering crisis are those things that start out small and internal in the organization that should be spotted as a problem, but oftentimes go ignored because we think, "Oh, that's a little thing. It it will be fine."

But because we've ignored it, it tends to grow and fester and over time can erupt into something more significant.

You see on the screen examples of sudden of smoldering crises, product defects, labor disputes, safety violations, class action lawsuits.

All of these things are signals that something is not right in the organization.

How many of you spend your time planning for these events?

For those of you on the screen, very few hands are raised, right?

We don't often prepare ourselves as leaders or our organizations for these kinds of events.

Which are you more likely to encounter?

A sudden event or a smoldering event?

A smoldering event?

Right?

These are much more common place in organizations.

The good news is that we as executives, as leaders, have a bias for action.

So when something happens, we immediately want to go into containment mode.

We want to engage in damage control.

Makes perfect sense.

But I would argue that containment and damage control is a necessary but insufficient aspect of leadership particularly in times of crisis.

That's all we focus on. We're not creating a culture of a workforce that understands and knows how to deal across the crisis landscape which happens before the event happens, not just once something happens and you have to go into response mode.

So I want to spend a little bit of time talking about what are the characteristics, what are the actions that leaders should be engaged in to build a culture of resiliency in order to respond to crisis.

So, first is paying attention to the signals in your environment.

Those signals could be uh information that you're receiving from employees, could be insights that you're receiving from your customers or clients, it could be feedback going on in the industry, it could be something that's happened to a competitor.

Right?

All of these are pieces of information that leaders should be paying attention to, recognizing that what's happening in the environment could just as easily happen to their organization.

So, paying attention to the signals.

Next, once you have that information, what do you do with it?

Great leaders actually take the time to work with their teams to prepare for some of those eventualities.

Of course, we can never identify or predict or prepare for everything that could possibly go wrong.

But getting into the practice of even thinking about one possibility or recognizing some signal that is happening within your industry and going through the exercise with your teams, what would we do if it's the scenario planning?

It's the preparation and the planning for something that goes wrong.

By doing that, you're building m muscle, leadership muscle, crisis leadership muscle, so that when something does happen, you've already got some foundation from which to to start.

Now, inevitably, you will face, you will have some kind of experience that you'd rather not, some crisis.

And at that point, you do need to go into response mode.

You need to think about damage control.

How do I manage this impression?

How do I deal with how do I stop the bleeding of what's happening in this moment?

That's the stuff we're generally already really good at.

But what happens after we engage in our recovery practice or in our our containment practices, we wipe our brow and we think, "Glad done.

Now we can get back to business as usual.

Now we can get back to normal.

But here's the problem. If this were a crisis that only happened to your company and you exist in a broader industry, what is everybody else doing while you were managing your crisis?

They were continuing with their strategic objectives.

So if your goal post crisis is to get back to normal, chances are you're going to come out of that crisis many more steps behind your peers who were able to leverage that time to continue to advance their strategy.

So the focus around containment, containment and damage control isn't about getting back to normal.

It's about thinking where can we go from here?

What is the phoenix rising from the ashes after this mess that we've been a part of?

Asking yourself, asking your teams those questions. How do we recover from this circumstance in a way that will position us to be better, to be stronger, to be resilient?

Right?

And then lastly, something we've been talking about all afternoon, learning.

The best leaders and therefore the best companies are those that take these moments of crisis, of tumult, of extreme change and recognize how do we engage in an activity of reflection.

In the military, they call it the afteraction review.

How do we go through this methodical process to understand what lessons we should take from what we've just experienced?

What role did we play in creating this crisis?

What ways were we prepared or not prepared?

That process of learning will position you for both preventing or mitigating something like this from happening again.

And even more importantly, it can enhance the likelihood that you will use these learnings to actually innovate.

You've all heard the phrase never waste a good crisis.

I don't particularly like that phrase because I phrase because I think it's kind of trit, but what underlies it is actually true.

Those companies who have come out of really tumultuous circumstances the best are the ones who have gone through the learning reflection process and identified opportunities to lead to create a new product to be innovative to drive the sector forward in ways that they never would have considered doing had it not been for the crisis.

This this is crisis leadership. all five of those stages, not just engaging in the damage control or the response.

So what does that mean for you as a leader?

When you think about over a period of time, what is your response mechanism?

If our focus is on damage control, if our focus is on simply responding to or reacting to the here and now, we might fix that problem, but we're not setting ourselves up to really reap the benefits that could come from the learning that takes place from those situations.

The management behaviors, you see them here.

You're reactive.

You're focused on damage control.

It's a short-term focus.

limited stakeholder engagement because you surround yourself by a very small group of people and you hunker down in the war room and you say here's what we're going to do, right?

Some of what we heard earlier today is how do I engage more people?

How do I go to the person who's five levels down from me but is on the ground floor and understands what or why we're in this situation and how do I build that information into my decision-making going forward?

Okay, these management practices are not bad.

They're not wrong.

They are in fact necessary.

But if that's all we do, then we're not building a culture for success.

If instead we think about, yes, we have to be responsive in the moment, but over time there's still more work to do.

We need to identify what the opportunities are around the business recovery.

We need to start engaging in learning practices.

That's what differentiates those companies, those leaders who are successful in managing a crisis from those that are not.

Here are some examples of leadership behaviors during crisis.

You're building trust into your system.

The worst thing is if a crisis happens and you have not created that foundation of trust within your workforce or with your clients or customers.

when something happens and you then need them to be there for you.

If you don't have that foundation of a trusting relationship, they don't want to be in that context.

They don't want to be stuck in a really bad situation.

That's when most people find the door and exit immediately.

But if they've been with you all along, if they trust you as a leader, if they believe that you've had their best interest at heart, that's when you get the team of people that you need and you go through this together.

Building trust is a critical aspect of leadership and building culture.

Again, being prepared, thinking about what are the possibilities that might come from this experience, engaging in reflection and engaging in learning.

This is what we teach our students and this is what I know the best companies and the strongest cultures engage in.

So, what are the opportunities to be realized?

one, decreasing the limit the possibility or likelihood of future negative events or two increasing the possibility of future positive events.

It's that simple.

You operationalize what those outcomes are, but it's either going to be good or bad.

I will end by sharing that we think about the triple bottom line.

I like to think of it as a quadruple bottom line.

One of the things that we must be thinking about as leaders is preparing.

Preparing ourselves, preparing our teams, preparing our organizations for the unexpected.

And Lord knows we are in an environment right now where a lot of things feel unexpected.

And those who have been prepared are the ones who will come out of this context the best.

Thank you.

[Applause]