The Art of Crisis Leadership. Kevin Cowherd
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a Baltimore-based crisis management and communications firm designed to help organizations prepare for, navigate through and recover from issues of sensitivity, adversity and crisis. The experienced team I surround myself with has a unique passion for helping others through life’s most critical times—it’s baked into our collective DNA.
For more than two decades, dating back to that fateful autumn morning in Baltimore’s Southeastern District and the tragic shooting of Officer Jimmy Young, I’ve studied how individuals, small businesses, large corporations and governments handle difficult times. Life comes at you fast sometimes and coping is almost never easy.
The case studies, lessons learned and instructional points contained in this book are designed to help readers face their fears, learn from the experiences of others and, ultimately, turn short-term adversity into long-term advantage.
Many of the case studies in this book involve people I’ve worked with personally. They have agreed to tell their stories with the hope that their trials might help others. There are many other public, private and governmental clients I’ve had the honor of working with, and I am grateful for their continued trust and confidence. I remain intrigued by their relentless sense of perseverance and resilience during life’s most critical times. They are an inspiration to us all.
1
The Anatomy of Crisis
It was the scandal known as “Dieselgate” that brought Volkswagen to the brink of disaster.
For decades, the German auto giant had enjoyed a sterling reputation for manufacturing eco-friendly cars designed to the highest standards and beloved by an almost fanatically-loyal segment of the car-buying public.
But that all changed in September of 2015, when the company was accused of secretly installing software on as many as 11 million of its diesel vehicles that allowed them to evade emissions standards.
The backlash was swift and predictable.
More than a third of Volkswagen’s market value vanished immediately. Its CEO, Martin Winterkorn, was forced to step down after saying he was “shocked” by the details of the scandal and “stunned that misconduct on such a scale was possible” in the company. His departure further cemented the leadership principle that you can, at times, delegate authority, but never accountability.
Volkswagen’s new chief executive, Matthias Mueller, earnestly assured all who would listen that the company would “do everything to win back the trust of our customers, our employees, our partners, investors and the whole public.”
With the cost of repairs needed to undo the rigged software expected to reach into the billions of dollars, some German leaders feared it could wreak havoc on the country’s economy.
In what seemed like the blink of an eye, one of the most prominent companies in the world plunged deeply into crisis—its brand severely damaged. And, as of this writing, there was no way to tell what the company would look like when it rebounds. According to a research analyst quoted in Forbes magazine, total estimates for lost business, recalling, fixing and compensating U.S. VW diesel car owners and government and state fines could range as high as $50 billion.
“We are facing a long trudge and a lot of hard work,” Mueller told company leaders, according to media reports. “We will only be able to make progress in steps. And there will be setbacks.”
The dictionary defines crisis in many ways: a turning point; an emotionally-significant event; something that can bring about radical change, pain, stress, disordered function, instability and highly-undesirable outcomes.
We know crises can be natural, like an earthquake, or human-induced, like war. Crises can be sudden or smoldering, high-impact or low-impact. Sometimes organizations and people recover from them. Many times, they do not.
Crises can take on many forms: data breach, social media attack, negative press, natural disaster, bankruptcy, crime, litigation, investigation, compliance issues, employee relations complications, job loss, labor unrest, audit sanction, IT issues, board dissension, poorly-managed mergers, environmental damage, workplace violence, whistle blowers, IP theft, rumors, death, terrorism, war, riots, accidents, homelessness, health issues, strikes, product recall, regulatory shifts, competitive disruption, hostile takeovers, abuse, poor leadership transition, and discrimination—to name some of the more prominent ones.
Life is a complex struggle at times, with a seemingly high level of unpredictability.
But one thing is certain: crisis will strike.
It’s not a matter of if. It’s a matter of when.
In recent years alone, the number of “big brands” that have found themselves in crisis is staggering. Toyota, Penn State, Goldman Sachs, BP, Target, Sony, Uber, GM, Malaysia Airlines, the NFL, Starbucks, Chipotle, The Susan G. Komen Breast Cancer Foundation, Bill Cosby, Paula Deen, Jared Fogle, Johnny Manziel and dozens of others have faced serious reputational issues that have cost them tremendous amounts of time, money, customers, and, ultimately, their careers.
In my decades of managing crisis—the overwhelming number of them man-made—I’ve found premeditated crises are deeply rooted in the issues of power, money, sex and revenge.
As wonderful as the human spirit is, there is often another side to some of us, a side in which these addictive triggers become more important than life itself. And, sadly, it’s generally those who orbit the lives of the afflicted person—and depend on him or her emotionally, financially or spiritually—who suffer the most when that person’s life unravels, whether the issue is personal or professional.
The case of the Volkswagen emissions crisis followed the well-worn path of many corporate crises before it, with a triggering event quickly impacting the organization’s people, assets and brand.
Crises such as the Volkswagen scandal bring leadership and employees under intense scrutiny, with many losing their jobs, forcing them into professional and personal ruin.
Volkswagen’s assets took a huge hit, as its recalled fleet of cars had to be retro-fitted with new emissions software, costing millions of dollars—and millions, if not billions, more will be spent in fines and litigation.
Finally, the Volkswagen brand may continue to diminish as valuation decreases and thoughtful consumers buy elsewhere. Where the floor ultimately is, no one knows.
No one can say with certainty when or where a crisis will occur. However, we can become more predictive and plan for the inevitable, which is why a true crisis leader is invaluable.
In many cases, a sound crisis leader can turn adversity into advantage simply by the way he or she stabilizes then leads during life’s most difficult times.
An experienced crisis leader is one who operates with speed and precision at the intersection of leadership, strategy and communications. Crisis leadership is about instinct. It’s about drawing on one’s diverse life experiences and making the tough decisions that can help a company or individual when others have retreated in confusion or denial.
Effective crisis leadership is focused on building long-term trust with each stakeholder impacted by the trouble. The futurist crisis leader must be able to think far ahead, so that the decisions he or she makes today will positively influence outcomes for weeks, months and years to come.
Crisis leadership is not for the weak or indecisive. Crisis teams must be built to withstand turbulence, embrace risk and build trust. They must turn adversity into advantage—quality of life is in the balance.
Simply put, anyone can lead when times are good. But as former heavyweight boxer Mike Tyson eloquently put it: “Everyone has a plan ‘til they get punched in the mouth.”
True leaders, though, emerge when a crisis is at its very worst.
Don’t miss your leadership moment!
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The Unrelenting