SME Challenges: Small Business Charter


Small Business Charter

    Crisis prevention, management and leadership: lessons from Covid-19

    The Covid-19 pandemic has underlined that no organisation, whatever its size or nature, is immune from crisis. Trouble can strike at any time and in any form, testing the resilience of the tiniest enterprise and the largest corporation – and everything in between.

    Small businesses might be regarded as especially susceptible to shocks, given that many will encounter disruptive forces while still seeking relative security. Generally speaking, a fledgling company that’s endeavouring to find its feet is more easily derailed than a global conglomerate that’s firmly established.

    So what can be done? What has the tumult of Covid-19 taught us? A good starting point is to recognise that crisis, while remarkably hard to avoid, might at least be anticipated. If we appreciate what crisis actually is and how it comes about – and, by extension, if we understand how to prepare for it – we should have a better chance of weathering the storm and returning to less choppy waters.

    With this in mind, crisis can be usefully thought of in terms of risk – a concept once associated with acts of bureaucratic tedium but now applied to a vast range of potentialities that could negatively impact on a business. As sociologist Anthony Giddens famously observed, we live in a “risk society” – one that’s “increasingly preoccupied with the future and with safety”.

    Of course, risk is often innately unpredictable. That’s why it’s likely to catch us by surprise, as the  events of the last eighteen months have shown. It could stem from external factors, such as an environmental disaster or a data breach, or from internal factors, such as sabotage or inept bookkeeping. It could even, as is the case now, manifest itself in ways that we’ve scarcely dared imagine.

    Protecting against each and every prospective crisis is therefore impossible. Even the biggest, most successful entity in the world couldn’t lay claim to such a feat. Yet the next best thing – an organisational culture that endeavours to analyse, frame and manage risk – is eminently attainable.

    Engagement, planning and responsibility

    There are myriad sources of risk within any company, and different people will have different perspectives on them. It’s vital to devise a strategy that draws on these multiple viewpoints to amass a wealth of information about a business’s operations and the dynamics that shape them.

    This requires effective engagement between stakeholders of all kinds – senior managers, line managers, other employees, external experts if budgets allow, even customers. The fundamental aim should be to research and define the issues that each group might face and to establish how much influence the firm has over these issues.

    The next task should be to outline how to manage the fallout from a specific crisis and how to mobilise each stakeholder group to tackle the problem. This should provide some notion of what an ideal outcome might be and how it might be brought about. In short: we need to identify areas of insecurity and think about planning around them.

    A regular and comprehensive flow of information is imperative if executives and managers are to stay on top of any situation. Equally, protocols and procedures are essential in ensuring that everyone is aware of risk’s role in a business’s day-to-day functioning.

    It’s important to realise, too, that complacency is a major enemy. Sometimes, particularly when things are going well, it’s dangerously tempting to assume that risk is no longer part of the picture. The truth – as we’ve all been reminded in the most extraordinary fashion – is that risk is always present, even when it seems that there are no storms on the horizon.

    We also shouldn’t forget who, above all, should assume responsibility if and when crisis does strike. Although everyone has a part to play, it’s a company’s leaders who have to navigate a route back to comparative calm – so how they should go about it?

    From turbulence to transformation

     Many leaders who find themselves confronted with crisis rapidly resort to self-preservation. Their knee-jerk reaction is to set about covering their own backs. Such a response is unlikely to aid the cause of a business as a whole, not least if that business is still in its early and most vulnerable stages.

    It’s better to face the music. Leaders should reflect on what they might have done wrong and what they should now do right. Consensus, transparency and commitment – as opposed to self-interest, concealment and quick fixes – tend to be conducive to meaningful solutions.

    Again, dialogue is critical. As the foremost victims of the uncertainty that crisis generates, employees need to be both reassured and kept in the loop. Clarity and honesty hugely improve the likelihood of satisfactory outcomes, whereas uncommunicativeness can imply instability or – perhaps worse still – aimlessness.

    Maybe most notably, employees are more likely to stick around if a company’s leaders are open and inclusive in addressing developments. By contrast, the rank and file are more likely to jump ship if those in charge seem secretive or clueless.

    It’s also well worth remembering that crisis can serve as a platform for positive change. Turmoil demands novel and creative ways of thinking – a process from which nobody should be excluded. The resulting transformation can even be refreshingly radical, with proposals that have routinely fallen on stony ground during periods of tranquility suddenly finding favour amid times of turbulence.

    Ultimately, there’s no miracle cure-all for crisis. The experience is a tempestuous one, especially for small businesses, and there are frequently casualties – as, alas, we’re seeing now. But highlighting would-be problems, guarding against indecision and involving everyone in the response can help make crisis survivable – and might even sow the seeds for longer-term benefits.

    David Falzani MBE is a Professor at Nottingham University Business School’s Haydn Green Institute for Innovation and Entrepreneurship and president of the Sainsbury Management Fellowship.

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