A crisis can take many forms: it can be reputational, caused by supply chain changes, or driven by financial challenges. Responding is difficult—there’s no one recipe for success.
For Lorenzo Nicolosi, an energy executive who has spent eight years working with a leading Austrian Transmission Systems Operator (TSO) of natural gas within Europe, the pandemic in 2020, the sharp increase of energy prices from 2021, and the 2022 Russian invasion of Ukraine brought profound changes to his door, particularly when the flow of Russian gas was severely reduced throughout Europe.
At the time, Lorenzo—who was enrolled in an Executive MBA degree at HEC Paris—worked for a company that had a core focus on transporting natural gas from the East into Italy. The supply shift meant that the management had to rely on experience and business acumen in fostering the change to address the future of the company.
“You can imagine what could happen in a company if you switch from a very stable and comfortable situation to one where you risk running out of cash due to increasing energy costs or you transport radically less volume. You really need to turn on all your leadership and crisis management skills,” he explains.
Operating within a high-pressure environment, crises force leaders to put into practice virtually all the skills and knowledge they've developed throughout their careers. For Emmanuel Coblence, associate professor of management and human resources at HEC Paris, there's perhaps no better place for their development.
"Crises may challenge leaders in a lot of different ways," he explains. "I don't think you do have to go through a very tough crisis to become an effective organizational leader. However, I think that a crisis may accelerate the acquisition of leadership competencies."
So, what exactly is required of a leader during a crisis?
BusinessBecause spoke with both Lorenzo and Emmanuel to identify five key steps they feel an executive must take to successfully manage an organization in crisis-mode.
1. Take a helicopter view
When you’re at the helm of an organization, the first step in a crisis is to detach yourself from the situation. It’s no good focusing on one or two small details, instead you must assess the problem as a whole.
This is typically referred to as taking a ‘helicopter view’. Leaders who can do this effectively are able to use their broad understanding of the situation to come up with a solution that addresses all the various problem areas.
“It’s about how the leader is able to understand exactly what the situation is, zooming out to have this kind of helicopter view or big picture kind of vision,” explains Emmanuel.
“The context, the nature of the crisis and its origin are going to be factors that will determine how the crisis should be managed,” he adds.
2. Assemble a crisis management team
After identifying the exact nature of the problem, a key step is assembling the team who will support you in navigating the crisis and finding the solution.
This should comprise cross functional leaders within your company’s various business lines. The exact makeup of a crisis management team will vary, however often this will include those in charge of areas such as finance, operations, human resources, communications, and legal.
Each division head has their own priorities and brings a unique perspective. An effective leader must listen to all viewpoints and come up with a balanced solution.
“It’s about understanding the situation through different lenses, with different pairs of glasses, and building on the dynamics of the team,” Emmanuel says.
3. Maintain employee and organizational stability
Clarity and transparency during a crisis are essential. One of the major responsibilities your crisis management team will have is communicating your strategy to their own teams. But that doesn’t mean you’re exempt from interacting directly with your employees.
This was a key focus for Lorenzo when the management began to formulate a plan to navigate the changes in the industry and the reduction in the gas flow pattern. “You have to manage the situation and let people feel as protected as possible because you need them to think about solutions,” he says.
If they’re concerned for their own futures or influenced by negative thoughts this may affect their ability to resolve problems, he adds. Creating a sense of stability throughout the organization will therefore help when delivering the solution that you and your team come up with.
4. Identify the appropriate leadership approach
A leader’s actions are never more scrutinized by employees than during times of hardship. Part of the challenge when attempting to instill calm throughout an organization is that the company head is largely responsible for staff feeling.
Self-awareness—a trait all leaders should possess—is therefore never more important than during a crisis.
"With awareness comes choices," Emmanuel explains. "If you are aware of your leadership style, you may be able to adapt your leadership style to what the situation requires."
This means you should be clear and decisive when communicating and make yourself visible and available to staff on a regular basis. You must also decide on the optimal leadership approach that can guide you through the crisis. This could mean taking the reins entirely, or placing more faith in others.
“You need to have situational intelligence. You really need to change your leadership attitude depending on what you are experiencing,” explains Lorenzo.
“Sometimes you need to be more imperative because there is little time to make a decision, sometimes you need to cooperate and let people express themselves and listen to what they have to say because the solution can come from anywhere.”
5. Consider both short- and long-term implications
Finally, when coming up with your crisis management plan, it’s important to consider the long-term implications of any actions you plan to take.
Failure to do this could mean that you’re faced with the same issue a year or two from now. Alternatively, you could implement a solution that will create entirely new problems as you progress.
A proper assessment of both the short and long-term consequences of your actions will help to future-proof your company. It can sometimes even lead to new opportunities.
Lorenzo within the involved team identified the opportunity of a business model shift: rather than importing only in one direction—in the so called 'direct flow'—they act as an interconnector and transport gas in both directions—the so called 'reverse flow'.
The solution, which is now being implemented, provides more flexibility and even the possibility to serve other markets. Moreover, in the coming future gas pipelines will act as a key player for the decarbonization of the EU economy.
“The flexibility of our asset will allow the pipelines, which are currently used for gas, to be used for hydrogen as well as biogas and biomethane in the future. Very recently many projects were selected as Projects of Common Interest (PCI) of the European Union thank to the proposal to repurpose the lines for the transport of hydrogen. This way the industry can contribute to achieving climate neutrality in Europe,” Lorenzo explains.
Having successfully identified a solution and devised a strategy, Lorenzo feels there is no better preparation for navigating a radical change than experience. The best-placed people to manage difficult situations are those who have had similar experiences before.
“When you know how to fly, you need your flight hours in order to become the best pilot,” he says.
However, he adds that the leadership knowledge and skills he developed during his EMBA proved valuable in providing a framework to successfully navigate the process.
“If you experience a crisis or profound change for the first time without having any experienced people in crisis management around, then that framework will help you a lot. I had the luck to have both on my side.”
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