In today’s episode, we’re going to discuss the importance of a crisis management system and ways we can prepare and recover from a disaster.
We will cover the following key takeaways:
- A crisis is something that threatens an organization’s license to do business.
- Generally speaking, a crisis will fall into one of four buckets: societal, political, financial, or operational.
- To effectively manage a crisis, we should acknowledge it, take responsibility, look at the data, apologize, and make improvements.
- Two common crises we may run into are data breaches and issues related to social movements.
The Importance of Crisis Management
I have been an entrepreneur for about 25 years now. During my lifetime, I’ve been through a lot of crises. I know it’s human nature for us to think a huge crisis only happens to others, and not ourselves, but we will likely run into many crises in our lifetime, especially if we run our own business.
One time I was in Thailand when the country was taken over by a military coup and I had to be sequestered in a hotel with tanks out in the street. I was the CEO of a publicly traded SaaS software company during the dot-com bubble and lost $11 million in one day when the bubble burst. We’ve all been through this pandemic, where our world was turned upside down, in ways that none of us expected.
And there are many different crises that could happen. There are political crises that could happen. I’ve dealt with regulation changes in the adoption space since I’ve been at Adoption.com and I’ve also seen some horrific problems caused when one different political party came into power. There are financial crises that can happen. The stock market can change and cause a ripple effect of how that affects industries.
I’ve seen it where politically incorrect articles were published that made it through editorial processes that evoked a firestorm on social media. I’ve seen servers meltdown where a server crashed overnight and all of our websites went down. I saw a hacker that got into our business.
I’ve been through a lot in 25 years. I’m sure you have too. Or at least seen a big crisis hit another company. The point is, crises happen, whether we are prepared or not. The question is, how do we prepare for or recover from disaster? With crisis management.
“I want to be very clear that a crisis is something that threatens an organization’s license to do business. If not handled appropriately, the organization could cease to exist. Everything else in my opinion, is an issue or a speed bump,” Zack said.
If we don’t have proper crisis management systems or experts in place to help us when a crisis happens, we will go out of business. It is essential for our company to prepare for these disasters.
Before anything, it’s a good idea to narrow down what type of crisis we are going through. Generally speaking, a crisis will fall into one of four buckets: societal, political, financial, or operational. Understanding what types of crises can happen is an essential part in preparation. We can set up different systems to manage any one of these types.
“You know these crises are going to happen. It’s how you react to them. And it’s much better to build a plan. You could even go as far as to do template materials,” Zack said. “[For example,] here’s the email we’re going to send when x happens. We have these big playbooks for big companies. You gameplan all this stuff.”
For emergency planning we can create a cash reserve. With digital communication, we will likely have to put money into ads and new content to recover from a crisis. With our ads, we can pay for targeting towards the media community and media influencers, during and after a crisis. We should put aside a budget for this.
“Get your C suite together with some communicators and say, ‘What keeps you up at night? What can we plan for ahead of time, that could really be a big bump in the road for us? How can we proactively plan for it?’” Zack said. By asking the right questions, we can find the best ways to avoid and recover from a crisis.
The key is to look at our plan as a long-term game plan. We don’t want to just prepare for the immediate crisis, but also the ones that could happen far into the future.
Managing a Crisis
When a crisis arises or we’ve made a mistake, the first thing we need to do is acknowledge it. We should spend some time figuring out what we did wrong so we can take responsibility and then find ways to improve where improvement is necessary and warranted.
To effectively manage a crisis it’s very important to look at the data instead of making decisions entirely based on our emotions. Sometimes we may blow things out of proportion so it’s always a good idea to look at the hard facts.
“We use data. We use a lot of different pieces of software to dive into social conversation, search, traffic, etc., all that kind of stuff to help executives and organizations understand what the actual landscape looks like,” Zack said. “[When] you put percentages into it, that really helps.”
With the data, we can look at how many searches our issue is getting, how many people are posting about it, etc. This way we can monitor the trend and find the best time to step in and make an apology. Typically, the best time to make a statement is after the problem has died down a bit. We can also announce our plans to remedy the situation.
Once we’ve done our best to fix the problem, we need to move on. We shouldn’t dwell on it and let it be an anchor that’s going to hold us back as an organization. When a crisis happens to us or others, I believe grace should be a big part of the management process. We all make mistakes. When we mess up or a business does, let’s hold ourselves and them accountable, but also provide a chance to improve.
Here are two common crises we may run into as a business:
1. A Data Breach
A common crisis many of us have seen is a data breach. In addition to putting security measures and protections in place, we can avoid this crisis by doing research.
Zack worked with a very large children’s hospital that was particularly worried about getting hacked. So, they decided to plan ahead. They had Zack and his crisis management team do some research into ransomware attacks on hospitals. They ended up finding one Russian ransomware gang, called the Riot Game, who had hacked over 200 hospitals in the United States.
Zack did further research and looked at how other medical providers handled the situation. He found that the ones who communicated the situation simply and clearly were able to recover much faster. Those who got too emotional didn’t do as well. He said, “The difference in how it affected their reputation is whether they over communicated and got super emotional.”
He continued, “Data breaches are best handled when you give just the facts and move forward. It is commonplace, frankly, it’s probably expected nowadays from a lot of consumers.” Because consumers expect and understand that things like this happen, they are more willing to forgive us when we give the facts and are straightforward with them.
Because Zack did this research, he was able to help the hospital prepare for a data breach crisis.
2. Social Movements
Other common issues that come up are ones related to social movements. There is a new societal issue on social media constantly and if organizations are not careful, they can get tripped up on these. The world will turn on societal issues no matter where you stand.
Societal issues are best dealt with when we can sit down with a management team or bring in an outside expert to help us identify what the biggest risks in our industry are.
For example, Nike ran into a few different societal issues such as sustainability, race issues, and labour issues. They have to manage these crises constantly to stay afloat. Whenever there is a change, they need to update their crisis planning. As soon as something hits online, it gets running. Because they are aware of the issues they may run into, they can prepare and avoid potential issues.
To prepare, we can look at the industry and put systems in place so we know what to do and how to take a stand if we run into any sort of problems related to current social movements.
Connect with Zack
Thank you so much Zack for sharing your stories and insights with us today. To learn more about or connect with Zack: