Why organizations need to sharpen their crisis awareness.

The crisis. A much-used term, and not just since the beginning of last year, when the Covid-19 virus presented us as people and entire organizations with completely new challenges. Crises occur in both private and professional environments. Marriage crises, crises of trust, financial crises, job crises, crises of skilled workers, leadership crises – sometimes it seems that crises have become the norm.

But what exactly is it that makes us perceive a situation as a crisis? When do we define an experience as a crisis? In the private sphere, the hurdle to label situations as crisis-like seems relatively low. In contrast, organizations tend to label crises as an absolutely exceptional situation and come to the realization quite late that they are in a corporate crisis after all.

But what exactly is it that makes us perceive a situation as a crisis? When do we define an experience as a crisis? In the private sphere, the hurdle of labeling situations as crisis-like seems relatively low. In contrast, organizations tend to label crises as an absolutely exceptional situation and come to the realization quite late that they are in a corporate crisis after all.

The crisis in the organizational context

Are there any clear indicators that tell us that organizations or we are in a crisis? There are countless definitions of the term crisis in the scientific literature in various specialist areas. For a long time, the explanation from the medical field was used, which describes a crisis as a turning point in a medical history. However, a turning point did not necessarily mean a problematic condition. For organizations, this description therefore seems to fall short.

But which definition is relevant for organizations? The answer is simple and yet so complex, even paradoxical, when you think of the different uses of the term crisis in private or professional contexts.

Because what exactly is described as a crisis depends primarily on the subjective observation and evaluation of the respective situation: a situation only becomes a crisis at the moment of recognition. The crisis as such is therefore an object of observation that is constructed by us individually. Following this insight, it is all the more important within a company to develop or sharpen a common understanding of this concept between management and members of the organization and to anchor it culturally. Once again, managers take on a role model function here.

Understanding and recognizing the nature of a crisis and its classification are also so relevant for organizations because in today’s business reality, there are hardly any breaks between volatility, uncertainty, complexity and ambiguity. Organizations are now in an extraordinarily dynamic state in which every day can bring different challenges.

The crisis as an opportunity

In this sense, Prof. Dr. Ulrich Krystek developed a helpful and positive perspective on crises in the 1980s, influencing the term in German-speaking countries in particular. He points out that a crisis can be perceived as a risk or even a threat on the one hand, but also as an opportunity on the other. At the same time, the outcome of a crisis is not predetermined. This means that organizations have leeway to influence the ambivalent outcome of the crisis. And this is precisely where the clear recommendation for action lies: organizations can succeed in using the crisis as an opportunity for further development. A look at the different phases of a crisis helps here. Different tasks arise before, during and after a crisis, as each of these phases presents challenges that require different actions. As previously emphasized, preparation must focus in particular on sharpening a common understanding. In addition, measures such as a communication plan should be prepared in this phase. At the moment of realization and the common, shared perception that the organization is in crisis, measures must be initiated as quickly as possible in order to remain capable of acting. After the crisis, it is important to take a look back at the measures and evaluate how effective they were, for example within a lessons learned process.

However, organizations must always be aware of one thing: no two crises are the same. This is another reason why it is difficult to prepare for these challenges in the best possible way. After all, what was learned in the last crisis may be irrelevant in the next one. However, addressing crises in organizations can bring a considerable advantage, because mental preparation alone makes a big difference. The attitude, whether we perceive crises and change as commonplace or not, triggers different things in our mindset.

Confidently heading for the future

Mental preparation can prevent us from suddenly finding ourselves in a state of shock during a crisis that renders us incapable of acting. The surprise effect can be limited and there is an opportunity to deal with the crisis and the associated challenges with confidence.

Challenges do not necessarily have to be interpreted as problematic. Quite the opposite. They often turn out to be drivers for necessary developments and stabilizing changes. Organizations should definitely ask themselves what added value they want to create in the future and what resources they need to devote to this. It would be a fatal mistake to turn a blind eye to the future and hope that everything will revert to its original state and that we can carry on as before. Such ignorance can cost dearly.

Franziska Engelkamp works as a consultant for transformation processes, leadership and team development, as well as virtual collaboration. She supports teams and their members and managers in becoming aware of their own strengths and building on them in order to strengthen cooperation and complement each other in the best possible way. This article is based on the content and results of her master’s thesis in ‘Organizational Development’ at the TU Kaiserslautern.