Tuesday, April 6, 2010

Learning from the Crisis

When you make it through a crisis, don't just try to forget about it. Rather, take the opportunity to learn from the experience and make changes to avoid or prepare for another similar crisis.

Engineers use earthquakes as a learning experience to plan for stronger roads, bridges, and buildings. They use massive floods to determine the best ways for people to adapt to (build dams or dikes) or yield to (move out of a flood plain) the power of nature.

An organization, too, can do a post-crisis audit to learn and even profit from the event.

For example, when everyone in the catalog company mentioned earlier worked overtime to fill a large volume of orders they hadn't expected to receive, they successfully handled the immediate crisis. But operating in crisis mode is an ineffective way to work all the time (even though some businesses don't seem to think so). It takes its toll on morale, turnover, and the health of everyone, especially the manager. After the rush at the catalog company, everyone was given large bonuses and extra vacation time. Then management took steps to plan for the next year, so the company would be prepared to meet a large demand—with less pressure on the employees.

Review how the crisis was handled

Plan the timing of the crisis review soon enough after the event so that people remember details, but long enough for some emotional healing to have taken place.

Analyze the crisis from beginning to end. Pinpoint actions, assumptions, and outside factors that precipitated the crisis. Ask yourself the following questions:

  • Knowing what we knew then, could the crisis have been prevented? How?
  • At what point did we realize we were in a crisis? Could we have recognized the signs earlier?
  • What warning signals went off that we may have ignored?
  • What warning signals did we pay attention to?
  • What were the early signs? Why were they turning points?
  • What did we do right? What could we have done better?
  • What were the stress points in the system that failed?
Look and plan ahead

Knowing what you know now, how can you prevent the same type of crisis from occurring again? Create a plan so that you learn from what you know.

Get input from everyone. You need to get everyone's story, but pay attention in particular to those with expertise in the areas of importance. If the crisis was technological, then listen to the computer experts, the IT group, the network engineers. If the crisis was relational—a critical vendor cuts off your supply of goods—talk to your buyers, but then get out in the field and find out what happened and why.

For example, the management of the catalog company listened to its employees and to outside consultants. Consultants analyzed workflow, looked at bottlenecks and technology. And everyone in the company who had worked in the warehouse to help get through the crunch now understood first-hand how the business was run. Their experience had taught everyone a great deal. The CEO set up a system to tap into the cumulative knowledge of everyone in the company. A suggestion program was implemented, and many suggestions were put into practice. A $100 reward was given each quarter to the employee who came up with the best idea.

Incorporate the ideas and information in your next round of strategic planning. You've already performed your first crisis audit; now, you'll have much more knowledge to improve the revised audit and the crisis-prevention plan.

Track results

Track the results of changes you make in the wake of the crisis. How are they working? Will they actually reduce the negative impact of a future event?

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