Stop the crisis - Monitor the external environment

There have been some really interesting crisis situations faced by companies this year which have moved from issues to crises because of things happening in the world around the company. Toyota faced major issues from incidents of unintended acceleration. As this issue has been around for decades, Toyota initially handled it as planned and expected. However the external environment had changed dramatically. The US Congress had become a major investor in Toyota's competitors GM and Ford to the tune of billions of dollars. Toyota's response failed to take into account the changed nature of their operating environment, one in which US political interests and the long-term access to media for members of Congress would elevate their problem from a serious issue into a major crisis.

Later reports have demonstrated that Toyota actually hadn't done much wrong, though the mistakes they made did have serious consequences. There was no doubt that given the deaths on 28 August 2009, they were always dealing with a serious problem. There is also no doubt that many politicians elevated the problem and sank the boots in, leading to personal, financial, legal, and share price problems for Toyotoa and its people, well above those they would have predicted and included in plans.

Thiess in Australia recently faced similar problems. The issue of the balance between worker's rights, corporate policies and union power would have rated some media coverage because it involved a major government project, the Victorian desalination plant. What elevated it to crisis was the fact that it occurred towards the end of a State election campaign (an election the sitting Government would lose). The result was that two very senior Thiess managers were dismissed, strike action and consequent financial losses. Now the CEO of Thiess is striving for belief that his resignation was as a result of being headhunted for another position, not as a result of the issue itself, and that decisions made were not influenced by the imminent resignation and acceptance of another position. Now the election is over, there's not a lot of concern or coverage, and with facts on side it is likely the CEO will quickly overcome any misperceptions.

Investigations in the Thiess case showed that there was little substance behind the initial sensational allegations. In the end it appears Thiess hired a company disliked by the Unions and that company did undertake some activities that were not in line with the Thiess company values and ethos. The consequences hardly seem to fit the alleged crimes, with Thiess now losing three extremely experienced people at a time when they are undertaking one of Australia's largest capital projects. When you're carrying out a project of this size and you are going to lose a CEO anyway, you don't want to be losing two other senior and experienced people at the same time.

In these cases and many others, we are talking about companies with immense experience and excellent reputations. They are managed well and would have crisis and risk management plans. Yet in each case, the consequences exceeded anything they planned for.

There are a couple of immediate lessons to be learnt from these experiences. The first is that the external environment is constantly changing. The future is not certain and the frameworks in which we operate can change dramatically. At least quarterly, senior management teams and members of crisis teams should spend some time discussing current and potential changes to the external environment to ensure they are up to speed with the world around them.

The second is that it doesn't matter how good your crisis plan is if you don't have a well-trained and effective crisis team, and even then the external environment can create far greater consequences than your plans anticipate. A team can adapt flexibly to even sudden and unexpected changes to the environment in ways that are beyond plans.

We often get consumed at work and focus on what is happening within, only looking outwards when we look at customers, suppliers and shareholders. We need to extend our vision and maintain continuous vigilance of the world around us.