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Decision making in crisis

A.B.A. ▼ | March 21, 2010
Decision making is always a hard task and in times of economic uncertainties it is even harder because much more is at stake.
Decision making
Decision makingDecision making is always a hard task and in times of economic uncertainties it is even harder because much more is at stake.

A bad decision is better than no decision at all, that's something every manager learn and that's true. Based on circumstances and fact at any given moment, a manager must make a decision as good as possible. The task hard by itself is even harder in the time of crisis.

"I never seen anything like that before" and "This crisis is worst than ever" are sentences that can block even the most experienced managers and we know that fear is the enemy No1 of decision making. However, there are recipes how to prevail such situation and make the best possible decision even in the time of crisis.

The first fact we must have in mind is that we are not the only one who needs to make a decision that looks like life-and-death decision. Sounds very obvious, but mental strength is the first think a manager must have if he wants to make a good outcome in bad times. So, if you have a mental block, recall that pilots, police officers and doctors make decision every day and their every decision literally means life or death.

The rule number one: In the time of crisis you must act fast. If you have weekly meetings change it to daily meetings. Track data in real time and demand information from your subordinate not every day but every few hours. Forget the weekly goals - set daily goals and demand that they should be meet at all levels in your organization.

The rule number two: set the time to explore what-ifs. Summon the best analytic experts in your company and give them task to come with a real solution to the most important what-if problems. What if stock falls very quickly? What if there's no products available for your customers? What if competition sees the opportunity and attacks you? Remember, the crisis is going on and you must not wait for an event and then react, you must be prepared.

The rule number three: trust your experience. Every manager makes a decision based on available data, but when you need it most the data most probably won't be available. So, play with cards you have and try to recall what did you do in a similar situation. If your instinct tells you something, listen to it. Your instinct is in fact a sum of previous experiences, buried deep in your brain, and it will come up to help you if you are in trouble.

The rule number four: in good times devise a plan what to do in crisis. Demand that your subordinates make a plan for their divisions and team what to do in unexpected situations. Such plan must exist at all levels and when the crisis hits you it will be much easier to respond without any significant delay. Now, let's see two case studies and how the real people reacted to real situations.

In December 2008, a huge storm hit Seattle and found the city unprepared, the city official didn't even see the storm coming and they didn't order the basic activity: to salt the roads. The storm paralyzed the big city and FedEx: it was just impossible to deliver packages to their destinations. The pride of the company wasn't the only thing at stake, some deliveries could mean life or death, so FedEx managers needed to solve the problem.

FedEx was well-prepared. Every fleet manager had a plan what to do in such situation. The company had a constant communication with all drivers, followed their drive at real time and had a constant communication with local authorities to find out which street are free. It reorganized routes on the fly and abandoned all usual activities with just one goal in mind: to deliver where delivery seems impossible. The result? Some packages were delayed because of the storm - but all were delivered and FedEx drivers reported no accidents because of the snow. Impressive, isn't it?

In 1989 Exxon Valdez tanker broke and spill the oil in Prince William Sound, Alaska. After the accident the company set a task force to identify hazards and manage risk. They had in hand 64 key safety factors, from minimizing the risk of injury to controlling security breaches. Exxon gave the permission to their line managers, at normal time low in the chain of command, to do whatever they need to do; with that move the company significantly reduced unnecessary calls to higher levels of management and speed up the efforts for recovery.

The company evaluated every operation as soon as possible and gave the general instructions what to do next. They called the trained in-house experts from all around the world to do what they do best. Simply put, Exxon stopped the most of usual activities and it was able to do because it had a plan and managers weren't afraid to act promptly.

The bottom point of these examples is simple: if you have a plan and are not afraid of act immediately, you will succeed. Now it doesn't look so scary, does it?