Crisis Leadership: Strategies for Leading Through Turbulent Times

Crisis situations in organisations are inevitable, testing a leader's ability to maintain clarity of vision, balance tradition with innovation, and act with moral courage. Yet leaders must rise above the situation and make difficult, often unpopular decisions by using structured hierarchies to provide the necessary clarity for rapid response. Ethical leadership and adaptability are key to successfully navigating crises and ensuring organisational resilience.

In the landscape of organisational management, crisis situations are inevitable. Whether caused by economic downturns, industry disruption, technological failures, unforeseen natural events, or incompetent leadership, crises test the mettle of managers, employees, and their organisations. The essence of true leadership, as articulated by Aristotle, is not merely to maintaining order during stability but to steer a successful course chaos. Crises present moments where a leader's ability to manage uncertainty, foster resilience, and sustain operations is put to the test.

Clarity of Vision: Guiding Organisations with Purpose

In times of crisis, the first need is for a clear and compelling vision. Leaders who can provide a North Star amidst uncertainty can guide their teams with purpose. The philosopher-emperor Marcus Aurelius (121–180), who faced significant challenges during his reign, argued that 'a man then must stand erect, not be kept erect by others'. This stresses the importance of internal integrity, purpose, and competence. For organisational leaders, this translates into articulating a vision that not only aligns with the company's core values but is also pragmatic enough to navigate the uncertainties of a crisis.

Leaders who have a fault in their internal mechanism—be that a lack of integrity, competence, etc.—may, like the emperor Nero (37–68), enjoy a Quinquennium. That is, several years of effective and relatively peaceful governance. However, without good advisors, leaders with such faults will inevitably descend into tyranny, extravagance, and cruelty.

Historical note: under the guidance of his advisors Seneca and Burrus, Nero pursued policies focused on justice, clemency, and sound administration, avoiding the excesses that later characterised his rule. Historians like Tacitus have highlighted this phase as a contrast to Nero's subsequent descent into tyranny, noting reforms such as tax changes and public welfare initiatives. The influence of Seneca's Stoic philosophy helped shape Nero's early, more humane leadership, but after the deaths and withdrawal of his key advisors, Nero's reign took a more authoritarian and infamous turn.

Research in crisis management by Christine Pearson and Judith Clair demonstrates that clarity of vision is crucial for effective leadership during periods of turbulence. Leaders who fail to clearly define the organisation's priorities and objectives during a crisis risk creating confusion and eroding trust within the organisation. Clarity, therefore, is not merely about communicating that plan effectively across all levels of the organisation, it is first and foremost about having a good plan to begin.

This inversion of emphasis—people usually stress the importance of communication, almost as if a good plan is a given—is vital and due to the trend in organisations since Covid to over-prioritise the communication process: "If we say it clearly, people will follow." Yet this approach is fraught with failure, as organisations regularly deploy well communicated yet highly flawed plans—usually resulting from 'strategies' that are mere platitudes. A broken process which is consistently followed by extended hand wringing, finding a suitable scapegoat, and then a new communications plan to 'fix' what is ultimately a flawed approach to change in the first place.

Awake and aware that good communication without a robust plan is mere marketing hype, Johnson & Johnson (JNJ) were well position to respond to the 1982 Chicago Tylenol murders. The company faced a horrific situation: cyanide-laced Tylenol capsules had resulted in several deaths, triggering widespread panic. Under the leadership of CEO James E. Burke (1925–2012), Johnson & Johnson responded by prioritising customer safety over immediate profit concerns, issuing a nationwide recall of its products and halting advertising—31 million bottles of Tylenol were recalled at a cost of $100 million. Burke's decision was rooted in the company's credo, which emphasised a commitment to the well-being of its customers. By adhering to a clear vision of ethical responsibility, the company managed to recover its reputation and market share in the long run.

Balancing Tradition with Innovation

While clarity of vision is essential, it must be balanced by the leader's ability to adapt to the unique challenges of each crisis. Aristotle's (384 BC–322 BC) notion of phronesis, or practical wisdom, suggests that while traditions serve as the backbone of decision-making, flexibility and innovation are essential for adapting to unforeseen circumstances. Organisations that cling rigidly to outdated procedures and with a limited capability for adaptation are doomed to falter when faced with emerging challenges.

In crisis management, there is a delicate balance between relying on established protocols and being open to innovation. Judith Stiehm argues that organisations which succeed during crises are those that draw on their institutional memory—capitalising on the lessons of past crises—while also fostering an environment of creativity and innovation to meet new challenges. The automotive industry offers a salient example of this principle in action.

During the 2008 financial crisis, Ford Motor Company (F), under the leadership of CEO Alan Mulally, chose a strategy that balanced tradition with innovation. Rather than accept government bailout money, Ford chose to rely on its internal strengths, such as its strong brand and reputation, while innovating through the development of fuel-efficient cars and restructuring its operations. Mulally fostered an environment of accountability and adaptability, enabling the company to survive without succumbing to the severe consequences experienced by its competitors. His strategy combined a respect for Ford's historical reputation with the practical innovations needed for survival in a changing market.

Moral Courage and Accountability in Decision-Making

Crises often call for tough decisions, many of which may not be popular in the short term but are essential for the long-term survival of the organisation. Moral courage, defined as the willingness to act on one's principles even when faced with significant opposition or personal risk, is a cornerstone of effective crisis leadership. In The Republic, Plato ( 427 BC–348 BC) asserts that the chief penalty for declining to rule—being exposed to personal risk—is to be governed by someone worse, and is a principle that speaks to the necessity of taking decisive action in times of crisis. Leaders who shy away from difficult decisions—or have an overt focus on shielding themselves from personal responsibility—often create a vacuum filled by less capable actors, leading to greater harm for the organisation.

Research also suggests that moral courage in leadership during crises leads to greater trust and loyalty within the organisation. This is particularly important when leaders are forced to make decisions that may result in job loss, reduced services, or other painful sacrifices.

One corporate example is the response of General Electric (GE) during the post-9/11 aviation crisis. GE Aviation, a major supplier of aircraft engines, was hit hard by the sudden drop in air travel demand. Then-CEO Jeff Immelt made the difficult decision to cut costs by laying off thousands of employees. While this decision was painful for the workforce, Immelt's moral courage in making the hard call ultimately allowed GE to remain competitive and weather the downturn.

Another instance of moral courage can be seen in the management of Patagonia, the outdoor clothing company. Amidst the rising concerns about climate change, Patagonia's CEO, Yvon Chouinard, made the bold decision to prioritise environmental sustainability, even at the cost of potential profits. During the 2020 COVID-19 pandemic, Patagonia chose to suspend its online sales and shut down its stores in the early months of the crisis, focusing instead on supporting its employees. While financially risky, this decision aligned with the company's core values, demonstrating moral courage in the face of crisis.

For more on the importance of a CSV (Creating Shared Value) approach to business, see Patagonia Traditional CSR, Strategic CSR or CSV.

The Importance of Hierarchical Leadership

One of the more overlooked aspects of crisis leadership is the necessity of strong hierarchical structures. In stable times, there may be value in distributed leadership models, but during a crisis, organisations need clear lines of authority and responsibility. Hierarchies provide the structure needed to make rapid, decisive decisions and ensure accountability throughout the organisation.

In crisis situations, ambiguity can be fatal. Hierarchical leadership models ensure that roles are clearly defined and that decisions are made at the appropriate level. The example of Apple's (AAPL) leadership under Tim Cook during the COVID-19 pandemic provides a case in point. Apple, with its hierarchical structure, was able to quickly pivot its global supply chain and manage employee safety measures without the confusion seen in less hierarchically structured organisations. Cook's ability to act decisively, combined with a strong leadership team, allowed Apple to maintain operations and even grow its market share during the pandemic.

Leading in a Crisis:

Putting this all together, and four keys to leading in a crisis emerge:

In crisis situations, leaders must provide a clear, ethical, and well-communicated vision that aligns with the organisation's core values. This ensures coherence and trust throughout the organisation.
Crisis leadership requires a balance between upholding traditional values and fostering innovation. Organisations must remain adaptable while leveraging institutional knowledge to navigate turbulent times effectively.
Moral courage is vital in crisis leadership. Leaders must be willing to make difficult decisions that may be unpopular or risky in the short term but are necessary for the long-term health of the organisation.
Crisis leadership thrives in hierarchical structures, which provide clarity, accountability, and the capacity for swift decision-making in times of turbulence.

Good night, and good luck.