“As a student of history, I am always fascinated by how we arrived where we are. It is both a discovery and a lesson to study the events, the circumstances, and the external and internal factors that created wherever it is we find ourselves today.” Mark Emmert, NCAA President
When it comes to the financial crisis, shouldn’t we all be avid students of history? As business leaders, who experienced the trauma first hand, we can uniformly confess that no one among us had prepared for such a catastrophe. Even if history proves it to have been a once-in-a-lifetime event, the financial crisis revealed shortcomings in nearly every business model and permanently altered the direction of consumer preferences.
In the role of leader, it is not enough to survive a crisis, we must learn from events that challenge our worldview. Leaders are responsible for others, and therefore, must always know the way to higher ground, identifying where the flood waters rose in the past, and anticipating their possible return. That is the role; these are the tools:
Lesson #1: Build confidence during a crisis. Cultivate trust during uncertainty.
Although the financial crisis is referred to as a single event, it comprised two distinct periods of business abnormality. The first, beginning in early September 2008 and lasting through the fall, was an acute period of fear and urgency, correctly referred to as a crisis. By early 2009, however, the crisis had evolved into a period of prolonged uncertainty that was less traumatic but deeply unsettling.
During a crisis, people are in a state of shock and fear. Something has gone wrong, and until all the facts are sorted out, that fear can turn to anger quickly. Therefore, the primary objectives of crisis communications are to demonstrate competence while prioritizing human needs over business needs. Messaging is particularly pertinent during a crisis. People hang on every word and expect a company to “tell” them how critical the situation is, how to protect themselves and their families, and how the problem will be resolved.
Uncertainty is different. In the absence of urgency, people don’t want to be told what to do; they want to be understood. Although customers are less frightened during uncertainty, they feel extremely vulnerable, which heightens distrust. The primary communication objective is to reduce anxiety while strengthening the customer relationship. Importantly, trust is established through non-verbal communication. Therefore, leaders are challenged to demonstrate trustworthiness, actively listen to stakeholders, and connect with people on the issues that matter most to them.
Lesson #2: Know the mindset of your customers
Mindsets reveal a person’s motivations, values, and attitudes about a product or company. With this information, it’s reasonable to anticipate customers’ reactions to change, thereby creating a more accurate and proactive communication strategy.
Thanks to the work of behavioral economists, it’s now widely understood that people are not rational maximizers of their own self-interests. Emotions impede decision-making under normal circumstances and are intensified by uncertainty.
Mindset segmentation, the process of identifying people based on their desires and attitudes brings customers to life within an organization. Internal teams, inundated with product and service knowledge, may never meet a customer in person. Mindset personas fill this void and enable communicators to develop personal and emotional messages for audience segments. Consequently, communications become more meaningful, which can sustain goodwill even through uncontrollable business environments.
It’s never more essential to understand what your customers are thinking than during a crisis, when focus groups and analytics are useless. Business leaders cannot afford to guess what customers are thinking during a traumatic event. That lack of understanding exposes a risk of inflaming the situation, or a paralysis when leaders effectively say nothing. To comprehend how this affects trust, imagine walking by an injured person without communicating. Yes, that’s how customers feel about silence during a crisis.
Lesson #3: Develop rigor in your communications practice
A crisis is the ultimate litmus test for preparation. Core competencies and systematic processes must be established during periods of stability. These fundamental practices provide a foundation for consistent, high quality, and brand-aligned messaging in unpredictable business conditions.
Business interruptions are an acknowledged inevitability. Therefore, planning strategies that seek to maintain customer goodwill during these periods should be commonplace.
Specific customer segments with known sensitivities create ideal targets for scenario planning. For example, in the financial services industry, the market regularly cycles through rough periods, which create investor anxiety. Knowing ahead of time that a particular customer segment reacts more emotionally to market swings can inform communication strategy months, if not years, in advance of the actual event. Through empirical study, this expertise can develop into a new core competency and competitive advantage.
Traditionally, we’ve been trained to manage a crisis. However, one of the biggest societal changes from the financial crisis is the dearth of societal trust. Because a crisis is a time of vulnerability for customers, it is a remarkable opportunity for businesses to build trust. During Hurricane Sandy, that’s just what the banking industry did, and it’s described in this article.