A crisis is not the same as a disaster (although a disaster may prompt a crisis). It is a ‘crucial or decisive point or situation’ or a ’turning point’. Such turning points force a choice between inertia and innovation.
When faced with a crisis ask: How can we use this crisis to inspire innovation?
IKEA’s history is a sequence of such choices:
Competition with other mail order firms led to its first showroom. Supplier boycotts led to it designing and building its own furniture.
Transportation problems led to the flat pack concept. A showroom fire led to a much bigger showroom concept. Insufficient numbers of sales people at the showroom launch led to the self-service idea.
It would have been easy to waste each crisis but instead they inspired innovation.
Waiting for a real crisis to drive innovation may not allow enough time or resources for new ideas to save the company. By the time anyone recognizes a real crisis, it may be too late to do anything about it.
Even if the company survives, the real crisis does not happen often enough to motivate continuous improvement, progress, or growth.
You can look into the future. What may endanger your company? What products could your competitors launch? What new laws may challenge the way your company does business? How will customer-needs develop? What do you have to better to thrive in the future?
You can look into the past. What has threatened your company in the previous years? What has killed other similar companies? What threats have there been to your country?
You can look at the present. What events of the day encourage a sense of urgency? How will political victories or losses impact on your plans? How do new discoveries challenge your markets? What can you learn from the successes and failures of others?
Samsung preaches the gospel of perpetual crisis. That’s why forty percent of employees work in research and development looking for the next breakthrough. It’s also why it has overtaken Nokia in many markets, because it notices and responds to market trends fastest. Before crisis turns to disaster.
That’s why deadlines are never changed. It’s why design teams volunteer to live and work 24 hours a day in their Innovation Center. They pursue perfection against the clock until they deliver. The result? Over 1600 patents each year, the industry’s lowest costs, highest profits, and weekly announcements of the “world’s first” or “world’s best”.
Most people need some reason to make tough choices. An organisation finds it even harder to make progress without knowing that it “has to”, and will usually wait until a real crisis comes along before getting on with the hard stuff that is essential to moving forward.
Intel also believes in using crisis to drive innovation. Since computers don’t really wear out, the only way to convince customers to buy a new one is to make it twice as good.
To achieve this Intel aims to double the speed of its computer chips every two years. They decided that the only way of innovating fast enough is to use fear of future events to motivate urgent focus.
It did this by encouraging what it calls a ‘culture of paranoia’. Everyone worried about real and imagined threats.
Everyone practiced ‘constructive confrontation’ to express opinions bluntly to subject proposals to aggressive, desk thumping, red-faced criticism. All in the hope that it would force tough action before a real crisis wiped out the company.
There are limitations to such a culture. Being paranoid may mean that you notice threats but it does not mean you know what to do about them. Nor does it mean that you can get the company to do what you think has to be done.
Paranoid Intel has known for decades that its success in chips for personal computers was getting in the way of developing new chips for other gadgets. It has tried and failed many times to do anything about the impending crisis.
Yelling is not the same as open discussion. Vitriol is not an effective replacement for reasoned argument. Is it likely that people with the most valuable opinions will also be those with the loudest voices? Won’t managers be most likely to win?
The strength of the Samsung approach to ‘crisis culture’ is that it builds in urgency and focus at the start of the project. This is where it has the greatest impact.
First, it seeks to avoid the main reasons innovations fail – because they are late or incomplete. Second, simplifying and improving the design at the start helps every stage of production. Third, it only demands paranoia from small groups over a short period. This is crisis culture that is attempting to be effective, flexible, and sustainable.
Asking “crisis, what crisis?” is a denial based on either ignorance or self-interest. The problem with such denial is lessons are not learned. The danger to the leader doing the denying is they end up looking out of touch. Events move quicker than they do leaving them far behind.