Article #2 in a series exploring the business world’s response to the COVID-19 crisis. This series was inspired by the America Reopens Handbook, which was created by the BizBreakthru team and is available to members.
It’s clear that COVID-19 is a threat. but is it a crisis? Before we talk about solutions to the COVID-19 crisis, we have to define the problem. Let’s start by defining exactly what we mean by a “crisis”. Simply put, a crisis is any significant threat to operations that can have negative consequences if not handled properly. These “threats” typically come in three forms:
- Public safety
- Financial loss
- Reputation loss
Threats can exist at multiple geographic scales:
- An individual employee
- A department or business unit
- An office or other specific geographic location
- An entire organization or multiple geographic locations
- An entire industry, market or geographic region
Threats can have varying degrees of impact or consequence. Low-impact threats have minimal consequences for public safety, financial health or reputation. Medium-impact threats can disrupt operations and provide significant challenges to public safety, business finances or reputation. High-impact threats present existential risks to the organization by significantly disrupting public safety, business finances and reputation.
A crisis is a specific type of threat. Karl Weick (1988) argued that crises are “low probability/high consequence events that threaten the most fundamental goals of the organization.” According to Pauchant and Mitroff (1992), a crisis is “a disruption that physically affects a system as a whole and threatens its basic assumptions, its subjective sense of self, its existential core.” Crises pose a fundamental threat to the existence of an organization, and are “a primary source of organizational mortality,” according to Seeger et al in the book Communication and Organizational Crisis.
Other lesser threats include disruptions, accidents, incidents, conflicts, warnings, issues and other challenges to business growth, productivity and profitability. We can arrange these different threats in a 3x3x3 matrix, represented by a “Rubik’s Cube” where probability (the likelihood of the threat), consequence (the potential impact of the threat) and rapidity (the speed at which a threat must be responded to in order to successfully address it) are represented by the cube’s three dimensions:
Crises are especially challenging because they “defy interpretations and impose severe demands on sensemaking” (Weick). During a crisis, “established routines, relationships, norms and belief systems break down or no longer function” (Seeger et al). This in turn can “lead to confused, abnormal and illogical behaviors that actually accelerate the level of harm” (Seeger et al).
Charles Hermann (1963) developed one of the first crisis models, and argued that a crisis has three basic conditions:
- It threatens high priority values of the organization goals
- It presents a restricted amount of time in which a decision can be made
- It is unexpected or unanticipated by the organization
So is the COVID-19 threat an existential one? We’ll explore this answer in our next article.
What is your definition of a crisis? Let us know! Share your comments below!