Crises don’t give warning. A key supplier that stops delivering. A big customer that doesn’t pay. A supply chain that breaks on the other side of the world and leaves your warehouse empty. Recent years have taught us that the unlikely happens more often than we thought.
My background in supply chain and my years leading in different countries have taught me something: a crisis isn’t managed on the day it arrives. It’s managed with what you did beforehand, and with what you do in the first few hours.
When the style changes
I’ve already said that my natural style is collaborative and that the coercive style, the “do this because I say so” one, has no place in day-to-day work. There’s one exception: a real crisis.
When there’s no time to debate, someone has to decide in minutes. And that someone is the leader. In a crisis, a team doesn’t need a brainstorm. It needs direction, priorities and someone who takes responsibility.
But be careful: that style has a use-by date. As soon as the worst is over, you have to give the team room again. A leader who stays in crisis mode for ever ends up with a team that doesn’t think.
The first 48 hours
What I do in a crisis, in this order:
- Understand the real size of it. What has broken, who it affects and how much each day costs. With data, not impressions.
- Protect cash. It’s the first thing to run out. A week-by-week cash flow forecast tells you how much headroom you have and which decisions can’t wait.
- Set up a small team. Three or four people who decide, with a short meeting every day. Not the whole committee: the people who can fix things.
- Prioritise ruthlessly. Which customers to serve first, which orders to save, which spending to stop. You can’t save everything at once.
- Talk to those affected before they ask. Customers, suppliers, the bank. Bad news shared in time builds trust; shared late, it causes panic.
What I tell the team
In a crisis, the team is watching the leader more than ever. And what it needs most is clarity.
I tell them the truth, in three parts: what has happened, what we’re going to do and what I need from each of them. Without dramatising and without sugar-coating. If you sugar-coat, people notice, and they stop believing you just when you most need them to.
What do I keep back? Speculation. I don’t present what I don’t yet know as if I knew it. I’d rather say “I don’t know that yet; I’ll update you on Thursday”, and keep my word.
And one more thing: a crisis is when a company’s culture really shows. If you’ve spent years saying mistakes are tolerated, now is the time to prove it. People have to be able to say “this isn’t working” without fear.
Afterwards: making sure it doesn’t happen again
Once the worst is over comes the part many companies skip: learning. I always hold a review with the team, without looking for culprits, with three questions:
- What warning signs were there that we didn’t see?
- What worked and should we keep?
- What do we change so it doesn’t happen again, or so it affects us less?
In supply chain, the answers tend to be similar: don’t depend on a single supplier for anything critical, keep safety stock of the essentials, know the real lead times rather than the catalogue ones, and watch cash every week, not every quarter.
The crisis as a test
A crisis is the toughest test for a leader and a team. But it’s also the one that teaches most. The companies that come through a crisis well aren’t the ones that never had one. They’re the ones that were ready to decide quickly, had their numbers under control and a team that trusted its leader.
And all of that is built on the quiet days.
With Your cash flow in 2 minutes you can see your balance week by week for the next three months.
Your actions for this week
- List your three most serious risks: a supplier, a customer, a key person. What would you do if one of them failed tomorrow?
- Prepare a 13-week cash flow forecast. It’s your first insurance policy.
- Identify the three people who would make up your crisis team. Make sure they know.
