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A New Twist on an Old Concept: Return on Crisis (ROC)

By Omar Khan and Maggie van de Griend

We've heard people saying "don't waste a crisis." There's something to that. When facing a crisis, we're inevitably invested in it, whether we'd like to be or not. The crisis influences the competitive landscape, our customers, our teams, our financial options, and so on. So how do we get the most out of the investment, the challenge, and the potential opportunities? How do we lead in order to get the best possible return on crisis (ROC)?

Leaders may wish the financial crisis hadn't happened on their watch. On the other hand, one of the key ways leaders are known is by the impact they have on a situation, on the value they add to whatever status quo is around. For leaders eager and willing to show their mettle, this may even be the best possible time. Winston Churchill once said that his entire life had been a preparation for this moment. "This moment" for him was World War II. For business leaders today, it may be what we are calling The Great Recession.

Why Do You Believe Getting a Return on Crisis Is Possible?

Return on crisis is possible. In fact, some of today's major companies were formed during deep recessions, including GE, Hyatt, Burger King, Federal Express, Microsoft, CNN, Intel, and Wikipedia. Some famous companies were born during the Great Depression, among them HP, Revlon, Fortune Magazine (marvelously ironic) and Motorola. And companies like Google and PayPal were able to drive dramatic growth even during the "bursting of the technology bubble."

Crisis does not have to demotivate our teams—it can, in fact, be leveraged better than any other circumstance to foster community when people are focused on a truly important, common bull's eye (if not utilized in this way, it can sadly lead to unproductive panic...a real danger many companies face today).

Common mistakes made by companies that can create difficulties include aiming for across-the-board measures that are dangerous. Judgments should be made on a value basis, not just a cost basis. So if a business unit is performing particularly well, a key brand delivers a big chunk of profitability, a sales executive has historically high closing rates but needs to travel to deliver this, or a service team excels in customer retention and loyalty, perhaps the organization should invest more in these areas rather than less.

The Container Store doubled its training budget postcrisis, arguing they couldn't afford to lose a single customer. But they focused this on service and sales. Non-business-critical investments should indeed be deferred. But that can't be decided by applying an across-the-organization axe.

There are risks as well. For instance, what if a particular newly formed team must perform for the business to have any chance of thriving, and that team is wasting time in pointless go-arounds and ineffective decision-making processes? Perhaps a team engagement conference based on business and interpersonal dialogue and relationship building should be a mandate during these times (even if other conferences in the company have been cancelled).

What if an organization loses the top 10% of its talent because they have decided to find a smaller shop with better work/life balance, head out on their own, or use this year for that long-awaited educational or travel sabbatical? What if a large part of the organization's institutional knowledge, know-how, and key relationships walks out with them? Maybe this is the year to improve employee value proposition.

What about the slump in productivity when people are overworked and under-rewarded? Finding innovative and affordable ways to say "thank you" should be an imperative during these periods. Such engagement and recognition of those who are delivering in tough times is now front and center, and rightly so, on leadership agendas around the world.

To get ahead of the curve and to improve ROC, there is one practical step that all companies would be well advised to take: gather the senior team to decide how they intend to lead at this time. What are some critical "big hits" not only in terms of playing defense but also in terms of making 2010 as productive and profitable as possible?

The team may also have to assess the quality of its own interaction. One of the largest costs in companies comes from the pass-off chains between departments and functions. Members of the team may have to investigate their relationships with each other as well as ensure that their energy is going toward leading the business in key ways for critical outcomes, rather than being squandered in turf protection or agenda promotion.

Equally, they may wish to look at things they can do to improve the business. For example:

  • How can they strengthen customer loyalty?
  • How can they make a compelling case to current non-buyers?
  • What new products or services can be created in light of emerging realities and needs?
  • How can unwanted turnover be reduced, while non-performers are replaced with top talent?
  • What are key corporate makeover areas that were always put on the back burner for lack of slack time?
  • Those with decent balance sheets also now have a chance to make acquisitions and to be market leaders as markets consolidate.

In short, if organizations don't take on some of the deeper destroyers of value, the hit they'll take in terms of "opportunity costs" and temporarily hidden costs (e.g., loss of talent, employee burn-out or apathy, customer defections, poor execution of key strategies due to infighting) will be far greater than any of the more obvious costs they may be taking out.

With ROC, our fundamental message to leaders is to seize the opportunities in this crisis that will bring people together, get them to own the challenges of today and to co-create solutions, thereby being "fit for growth" as the economic tides turn and we learn to create the future in these extraordinary contexts. 

Let's really engage our leaders, our customers, our stakeholders. Let's make sure our organizational behaviors at this time are paving the kind of future we aspire to. Arguably at this time, that's not a merely "nice to have," but the very essence of the leadership required.

Omar Khan is senior partner of Sensei International, a global leadership consulting firm.  He is the author of Liberating Passion: How The World's Best Global Leaders Produce Winning Results and The Global Consultant. Contact Omar.

Margreet (Maggie) van de Griend is a senior partner at Axialent. Her consulting and facilitation are aimed at creating business value through effective corporate culture and human capability. Contact Maggie.

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