Courage in Crisis

When your organization faces a crisis, your initial reaction and subsequent follow-through set a tone that determines your success in navigating the challenge. That tone will also dictate your legacy after the crisis passes.

Today’s post is by Constance Dierickx, author of High-Stakes Leadership (CLICK HERE to get your copy).

One of the biggest cyber breaches in history, in which highly sensitive information for a staggering 143 million consumers was exposed, still has Equifax reeling. The response of the company, its executives and board has been lackluster to say the least. An investigation regarding the timing of insider sales of shares found no wrongdoing. The announcement of this finding was met with a solid thud, not because the results are suspect but because the company still fails to distinguish between being right and doing the right thing.

When this breach was revealed, the shares of Equifax immediately plummeted by 30 percent. A loss of value of this magnitude indicates significant lack of trust and confidence in the company. In a crisis, what a company, or an individual, does immediately sets them on a path. Equifax’s response was very poor and hasn’t improved since it was made public.

In stark contrast, just after Frank Blake, former CEO of The Home Depot, announced that he would be retiring and the board named Craig Menear to succeed him, the company experienced a major breach of its IT system. Blake could have said to Menear, “Well, what a shame for you to have this happen so soon. Good luck.” He didn’t do that. Instead, his behavior provides a model:

1. Admit the problem. Do it quickly and without excuse.
2. Apologize to those impacted.
3. Support those who will be in the cross-hairs while you look for cause.
4. Organize a response and stay close to it.
5. Show that you take responsibility. Don’t just say it.

When data breaches occur, customers want to know one thing: What does it mean for me? The answer came swiftly. In a Fortune article, writer Jennifer Reingold said it beautifully, “Within a few hours of that initial phone call, the company apologized to its customers in a statement – mercifully free of mealy-mouthed corporate jargon – on its website and assured them that they would not be liable for any fraudulent charges.”  A few days later, Frank Blake sent out a personal message apologizing for the breach.

If we scan the history of organizations, it is easy to see how quickly things go terribly wrong when we sidestep, hide, or fool ourselves. Richard Feynman, a Nobel winner in physics, was speaking of very different technology when he made this remark, but his comments are valid: “Reality must take precedence over public relations.” Most leaders would agree with Feynman in principle but when a crisis hits, fear and advice (most meant to be protective), can overtake good intentions.

First, Know You are in a Crisis. Second, Act like You Know

When an oil rig in the Gulf of Mexico exploded and led to death, a catastrophic leak, and significant environmental and economic damage, we watched in horror. British Petroleum, led at the time by Tony Hayward, didn’t respond the way we would hope. The company was overconfident in its ability to stop the leak, vastly underestimated how long it would take, and showed little sympathy for the residents of the coast who would, surely, be impacted.

Tony Hayward didn’t act like he recognized the crisis. Contrast this attitude with the behavior of Frank Blake. Blake knew the company had a crisis on its hands and that it went far beyond a technical matter. Customers would be worried and wonder about the ability of The Home Depot to keep their information safe. Employees would face customers who would have questions, concerns and, perhaps, accusations. The IT team would wonder what they missed, perhaps be worried for their jobs, and certainly be concerned about their reputation, both collective and individual. Blake supported the IT team, expressing confidence in their ability to not only solve the current issue but also improve the company’s systems for the long haul. He looked for cause, not blame.

When Mary Barra became CEO of General Motors, she faced a crisis related to accusations that GM used faulty ignition switches. This resulted in thirteen deaths and a $35 million fine for failing to recall cars with the faulty switches. GM subsequently announced that they were facing multiple lawsuits seeking damages in the billions for losses attributed to the recall.

To her credit, Barra stepped up to the plate in a way her predecessors had not. She, and everyone else, learned about the technical reasons for the failures. But she went further to ask why such failures, which were not a secret to GM’s engineers and managers, were allowed to continue. That is a question about culture, behavior, and an atmosphere in which lying was an acceptable practice. Barra knew that the culture at GM was as responsible as any individual or group. She didn’t settle for easy answers or simple solutions.

Lack of Information is Less Dangerous than Smugness

Ask anyone what they remember about Tony Hayward. Virtually everyone I ask says, “I want my life back.” Whatever he did before the oil spill and whatever he said after, this is what we remember. And what of Richard Smith, former CEO of Equifax? We remember him blaming a single person in the IT department at Equifax for the failure. How does it help to claim that a mistake by a single person could cause this much damage? It doesn’t.

Frank Blake and Mary Barra provide examples of what a leader in crisis can do when they make their objective something besides self-preservation. Yet, their leadership and legacies do more than survive – they are examples that should be studied by other for years to come.

Constance Dierickx, PhD advises boards and executives on high-stakes matters such as crisis, M&A, CEO succession and strategic change. She is the author of High-Stakes Leadership: Leading through Crisis with Courage, Judgment and Fortitude (CLICK HERE to get your copy). To learn more about Constance, click here: www.cdconsultinggrp.com.

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