Avoiding BP’s mistakes – learning to manage a crisis

Crisis management is a vital skill for businesses of every size. The recent BP Deepwater Horizon spill looks set to become a classic example of how not to manage a crisis – a lack of decisive action, poor media management and, above all, an inability to stop the problem have resulted in significant damage for BP.

Of course, a crisis on this scale is unlikely to affect the average small business owner. But the principles of crisis management remain the same for firms of every size – and they apply to your business just as much as they apply to BP.

Identifying a crisis

Crises can take many forms, and will affect businesses in different ways. What might constitute a crisis for one firm may be of no consequence to another; similarly, each firm will have to contend with a unique set of potential risks and threats. It is unlikely, for example, that you will have to contend with catastrophic technological failure on an oil rig as BP has had to.

Identifying a crisis can therefore be difficult, but it is the first step to efficiently managing the problem. Crises are classified in a range of ways. Here are some of the most common crisis types with which your small business might have to cope:

Natural crises. Natural events like floods and storms can cause significant damage to individuals and property.
Technological crises. This type of event can occur when technology fails, or when technology is misused as a result of human error.
Rumours. Brands can be badly damaged by rumours or incorrect information, whether disseminated deliberately or unintentionally.
Organisational crises. These occur when management mislead employees or other stakeholders, or simply mismanage a problem. Organisational crises often arise as a result of management’s response to an existing crisis.

Four steps to managing a crisis.

A range of models have been developed to help business owners prevent and deal with crises. Perhaps the most flexible is the four-phase approach.

  1. Managing issues. Business owners can often identify issues that have the potential to cause a crisis. For example, if you rely on your online presence or web services, an extended period of downtime or a data loss could result in a crisis. The first phase involves identifying these issues and, where possible, changing the way you do things in order to find systems that are less vulnerable.

  2. Planning and prevention. Having identified relevant issues, you should then consider ways that you can minimise the risk. Where it is not possible to remove the risk altogether, you should plan ahead to ensure you can manage any resulting crisis efficiently. This might involve drawing up plans to minimise business disruption, manage press interest, and reassure your clients or customers.

  3. Managing the crisis. In the event of a crisis, the plan you have formulated should be followed carefully. All relevant parties should have been briefed in advance. Remember, though, that circumstances can change and unexpected events can occur. Make sure that you are flexible enough to deal with these events.

  4. Post-crisis. Having navigated the crisis, you should make sure that you learn any relevant lessons. What could you have done better? Could the crisis have been prevented? If so, what systems do you need to change?
     

Top tips for crisis management

Crisis management can seem rather abstract, particularly for smaller businesses. But firms of every size face potential crises every day – so how can you adapt some of the more complex elements of crisis management to help you deal with these problems?

Don’t ignore it. When faced with a crisis, the worst thing you can do is bury your head in the sand. You need to act quickly and decisively, tackling the crisis head-on.

Learn when to ask for help. It may well be that there are elements of a crisis that you simply cannot deal with inhouse. Big technological failures, for example, might require you to bring in external professional help. Make sure you can identify when you need another pair of hands.

Manage the media. Many small firms underestimate the importance of media relations. In the worst cases, a crisis can completely destroy your brand – and that it is a crushing blow for a business of any size. Make sure that you have an appointed spokesperson to deal with the media, and that you use relevant channels to get your side of the story across.

All business owners hope that they will be able to avoid crises. While you might not have to clean up an oil spill, it is likely that you will face some major incident during your business life. Make sure that you are prepared for a crisis, in order to deal with it efficiently and minimise the damage.