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APRIL 17, 2020 //     

Taking Leadership in a Global Crisis: The Six Phases of the Disruption Life Cycle

By Tom Smith and David Wolf

Few things are more terrifying to even the most stout-hearted executive than the prospect of waking up and finding their team, department or company is the focus of a major tragedy or scandal. Fortunately, the craft of managing such crises is so well-established and proven that few companies of any size have failed to take at least rudimentary steps to prepare for that occurrence. Business crises, however regrettable, have become so routine that one of the only significant differences to crisis communications over the past 50 years has been that we now live in an environment of immediacy as digital tools and social channels are a part of the media mix.

Not quite as well understood, however, is something we all face today: how to manage a business during a crisis that affects everyone around the world. The unearned existential threat is just as real as with a scandal or tragedy: the difference is resolution lies as far outside your power as the cause. As Nassim Nicholas Taleb pointed out in his farsighted treatise “The Black Swan,” it is just such events that pose the greatest incipient danger.

Fortunately, while we are unused to facing the consequences of pandemics, the regular cadence of systemic disruptions over the past century have taught us much about keeping the enterprise afloat in the face of a perfect storm. Our study of systemic disruptions and the patterns of business response to them provides a useful framework for understanding the crisis at hand.

In dealing with the disruptions caused by COVID-19, businesses must work through six phases, which we have termed Shock, Orientation, Command, Recovery, Bump and Equilibrium (or “The New Normal.”) Understanding each of those phases, and how and under what circumstances businesses move between and address each, offers us the beginnings of a charted course through and out of them.

SHOCK

Shock describes the phase when the disruption has happened or is in progress. It is characterised by disorientation, a constant lack of sufficient information and an escalating stream of events that threaten to send a business careening out of control. Panic is barely held at bay. Companies either act for the sake of action or are caught in paralysis, unable to respond.

ORIENTATION

This is the first step toward a coherent response – the process of understanding the full potential breadth of the disruption and its potential consequences to the business. During this phase, initial responses get considered and discarded, and they eventually lead to the first concrete steps, often tentative, to begin addressing the disruption.

COMMAND

The process of taking charge of the business in the face of the crisis is Command. The situation still evolves, but company responses become quicker and more assured. And gradually, the company is able to move beyond playing catch-up and start thinking ahead, even as the crisis continues to pinch the company, its people and its customers. For the COVID-19 crisis, this phase will last until the numbers of daily infections have begun to taper off, and then for an additional 28 days after the last significant outbreak. Unlike Shock and Orientation, the business no longer controls the timing of the phase: it can only manage through it and begin laying the groundwork for the next three phases.

RECOVERY

Recovery is the period during which the actual emergency has passed, but either the company, its customers, its supply chain or all of the above have not yet returned to normal operations. This is when a company will be able to assess the damage or in some cases the positive impact to its operating system and begin to adjust to what is likely the new equilibrium for the business. In some cases, this will mean business will remain diminished for some time, necessitating investments in order to enable or speed the process. Businesses that grew during the crisis will now likely return to normal, and adjustments will need to be made.  For both cases, the process will be organic and will show quick progress.

BUMP

At the completion of the recovery, many businesses that experienced significant disruption in demand during the crisis will face its opposite: a sudden and short-term surge in business that represents pent-up demand for its goods or services. While ostensibly a “good problem,” this is an extraordinarily challenging phase. Keeping customers happy while walking the line between meeting the short-term surge and not over-investing in people, plant and equipment requires almost constant adjustment and superior communications with customers, suppliers, the media and employees - sometimes hourly. Indeed, the Bump is a mini-crisis, a sort of aftershock that will again tax the business.

EQUILIBRIUM

Equilibrium describes what many refer to as “the new normal,” a tempo of business sustainable over an extended period of time. For some companies, this will be more business and a larger market. Others will find the shock of the crisis leaves them with a smaller market. This period will require the largest adjustment of all – a recognition that while the crisis is over, the business landscape has been indelibly altered and the company will have to go through jarring adjustments to accommodate that change.

Each of the phases above is its own business continuity challenge, each demanding its own response. Start understanding each of those processes now – if you wait until each phase is underway, you are already behind. The optimal time to begin the effort of planning your way through these stages is during the Command phase, during which the nature of the Recovery, the magnitude of the Bump and the outlines of the Equilibrium will become clear. The sooner you are prepared for each of these, the more likely your business will survive it.

FIRST STEPS

Start by ensuring that your organisation is operating as a high-performing team with all the right players on board, including outside advisors. Make sure everyone on that team understands these phases and their inherent dangers and opportunities and that they share your vision of how to emerge stronger than before the coronavirus unleashed itself on our world. Once you have done that start to ask these questions:

  • Are you using data, analytics, and social listening to understand how your stakeholders are thinking and feeling, and how that is evolving daily?
  • Could you be working more closely with those dealing directly with customers and key stakeholders to understand what they are hearing and what they think?
  • What innovation needs to take place to ensure your organisation is prepared to prosper in the New Normal?

Finally, remember your response may begin with, but cannot be limited to, the matter of your company’s survival and future prosperity, or even monetary donations. Organisations and their leaders will be remembered for how they responded to this crisis and how used their full resources to help resolve it. At some point in the future reporters, employees, new hires, prospects, and customers will all ask, at least implicitly, “what did you do to help?”

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David Wolf is the managing director of Allison Advisory at Allison+Partners. He brings three decades of experience to his role counselling clients on managing the unique operational, communications and marketing challenges that arise when companies undertake change or address significant challenges in their operating environment.

Tom Smith is a strategic, highly skilled corporate communications professional with a proven 24-plus-year track record of leading and implementing corporate campaign programs. He has led numerous multi-million-dollar global accounts and as president of Allison+Partners' North American corporate practice, he brings deep capability in numerous industries, including financial services, hospitality, professional services, technology, education, healthcare and industrial supply. His specialties include integrated communications, corporate brand positioning, thought leadership, executive visibility, B2B marketing, influencer management, media relations and investor relations.

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