What should large companies do when experiencing a performance crisis? The answers are situational, but we have a some general observations.
There are the two types of crises:
Our key interest is with slow-burn crises. Sudden crises are so obvious that action is almost always taken.
A. How do you identify a slow-burn crisis? I use the rule of thumb: 50% share price decline over the last 5 years.
B. What should a CEO do? This gets to the graph below.
Many CEOs start change programs that involve lots of people. This is a terrible starting point.
The key is to take actions that have maximum profit impact and involve as few people as possible since people are averse are change.
Structural actions inevitably beat people actions during crises. This is in part why M&A investment bankers make more money than management consultants.
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A final observation: Why does this sometimes not happen? In my experience it is usually because of unsuitable owners and poorly functioning boards of directors. So the first action is to address this.
SAS — Scandinavian Airlines is a well known example of dystopic ownership with government and “industrialists” at heart not being interested in performance.
Tellusant’s expertise and suite of products help companies work through crises in a structured manner, utilizing the Corporate Crisis Response Matrix.
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Tellusant's strategic planning framework allows
companies to set priorities based on the posts logic.