Get Started

Decision Making in the Midst of Business Crisis: Think Before You React

No organization is immune to adversity. Whether the result of unavoidable external events, like an earthquake or economic crisis, or internal issues and upheavals, challenging times can—and most likely will—hit every business at some point.

The question is, when crisis inevitably hits, how will you handle it?

Let’s take the example of the recent economic downturn. Often when companies feel the beginnings of a financial crisis, the leadership mentality goes narrow, focusing in on the numbers and “downshifting” to a highly controlled, risk-minimizing approach. When all that matters are the numbers, putting on the brakes is an obvious, visible response to take.

So travel is limited, and expense account rules are tightened. Trade shows are cancelled. Purchasing ground rules are severely tightened, and building for inventory cuts back. Hiring stops, and layoffs start. It’s a classic crisis mentality, and it feels right because people are doing something. They’re taking firm action.

But is it the right action? One CEO candidly told us all the cost-cutting activities he directed during the last downturn actually left his company much worse off than they would have otherwise been. The cuts were so deep and his focus was so narrow on budgets and numbers that he couldn’t focus on growth, and that kept him from making a critical strategic hire. He not only lost sight of the company’s strategic purpose, he lost years of momentum.

In thinking preference terms, this kind of response reflects an emphasis on analytical (A-quadrant) and safekeeping (B-quadrant) thinking almost to the exclusion of the interpersonal (C-quadrant) and future-focused (D-quadrant) preferences we know are equally important from a business and leadership standpoint. It’s a common reaction when you’re dealing with a situation that involves so much unpredictability and ambiguity.

Our colleagues in New Zealand looked at a very different sort of crisis response when they conducted research on how organizations can be more adaptive and resilient during the recovery phase of complex, disruptive events like natural disasters. Here, they discovered the opposite problem can occur. Leadership may feel they don’t have time to spend on the supporting data or process and procedures (A- and B-quadrant thinking), and as a result, there’s a potential to overlook important considerations for decision making, particularly when it comes to what gets priority attention.

Thinking time may feel like a luxury, especially in chaotic circumstances, but being conscious about how you shift and apply your thinking is never more critical than in a high-stakes situation. In fact, if you’re going to apply Whole Brain® Thinking as a leader, there’s no better time than during a period of business crisis.

This is the time to develop multiple options rather than considering only those that are security-focused and safekeeping, to employ savvy leadership rather than single-minded management. This is a time for wide-angle binoculars. Because in crisis after crisis, the companies that fair best are those that are both realistic about the situation and committed to the long-term vision. They are prudent but not at the expense of keeping customers loyal and retaining good people.

With so much unpredictability in our world today, thinking agility has never been more important. Here are some resources for applying Whole Brain® Thinking as an organizing principle for making sense of the issue and making smart decisions under pressure:

  • Enhancing Organizations’ Adaptive Capacity and Resilience: Research report by Dr. Erica Seville and HBDI® Certified Practitioners Dr. Dean Myburgh and Chris Webb, published in The Business Continuity and Resiliency Journal
  • Whole Brain® WalkAround: Making Decisions in a Business Crisis: A handy tool for making sure you have a balanced view of both the short- and long-term implications of your decisions

Get your copy of the Whole Brain Business Book here!

Tags: Research, Decision Making, Thinking Agility, Leadership Advice, Whole Brain Thinking

The four-color, four-quadrant graphic, HBDI® and Whole Brain® are trademarks of Herrmann Global, LLC.

Search

Tags

see all

The Whole Brain Business Book 2nd Edition

Read the first two chapters and order your copy today!