From crisis to comeback: the art of steering businesses through turbulent times
Warren Partners
How effective leaders tackle corporate scandals and financial challenges.
Although not known a branding expert, it’s fair to say that the renowned investor Warren Buffett knows a thing or two about successful companies and how to weather a financial or reputational storm. Indeed, one of his most famous quotes is that “it takes 20 years to build a reputation and five minutes to ruin it.”
As even the most casual observer of the business world will tell you, every year sees another big company mired in controversy and leadership challenges. From Gerald Ratner’s fateful 1991 speech to the Institute of Directors, describing his products as “total crap” which led to business disaster for the Ratner Group, to more recent missteps such as Mike Jeffries’ notorious tenure at Abercrombie & Fitch, and the dismissal of Tony Danker at the CBI, the resilience of businesses is constantly tested.
Arguably the biggest recent challenge to reputation in the UK came at the beginning of 2024, as an ITV drama shone a less-than-flattering light on the behaviour of senior leadership at the Post Office in the wake of its Horizon scandal, which saw many subpostmasters falsely charged with theft, false accounting and fraud. A situation that led to a significant drop in brand health.
However, amidst these challenges, some firms not only survive but emerge stronger. This remarkable turnaround is often attributed to strategic leadership changes. Here we explore how companies, buoyed by astute leadership and crisis management, navigate through stormy waters to safer shores.
The leadership lifeline
At the forefront of every corporate resurgence is a lesson in leadership. For one UK-based company which had endured a particularly challenging time during the pandemic, combined with less-than-optimal business governance, there was a need for a visible and swift leadership change. Rupert Gibb, a Partner at Warren Partners who was instrumental in this transformation, suggests that while aligning new leaders with the organisation’s core values is key, it’s equally important to remain open-minded about the selection.
“We ended up appointing a Chair from outside this organisation’s sector. It was something of a controversial choice given this had never happened previously,” he says. “But the appointment proved just what this organisation needed at such a critical time, transforming and influencing both tone from the top and the future direction of the business. In other words, the right leader doesn’t just navigate a crisis – they transform it into a stepping stone for future success.”
Gibb believes that a leader who steps in post-crisis needs a particular set of skills “because often they’re coming into a force nine gale”. Resilience is key, as is the ability to look at things through a different lens and be comfortable challenging any norms. Consensus building is critical, as is a readiness to make bold decisions that may not be popular.
However, truly effective crisis management is more than a reactive measure. It’s a strategic endeavour that demands foresight, planning and swift decision-making. Oliver Wheeler is the CEO of creative communications agency Threesixty and the former founder of the corporate and reputation department of Freuds. He believes that many crises can be, if not avoided, then at least planned for.
“When I talk to newly appointed CEOs, their heads are usually in the ‘what do I need to achieve in my first 100 days’ space,” he says. “I always remind them to think about how well they’re protected. They need to be asking ‘what are the weak points of this business?’, because there’s no point in using all that energy and resource to score goals up front if there’s nothing protecting your goal at the back.”
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A crisis playbook is crucial
Wheeler suggests that every company should have a scenario-planning playbook that outlines the most likely things that could go wrong – and how to address them. According to this Deloitte report, however, fewer than half of the organisations surveyed said they had a crisis playbook and one third of them said they were unaware of whether or not they had one.
Gibb points out that the Covid-19 pandemic saw many companies’ crisis preparedness thrown into sharp relief, as few organisations had a contingency plan for a global health emergency. “From soft skills for dealing with teams who found themselves in disarray from this ‘black swan’ event to insufficient continuity management, many firms came out of the pandemic asking hard questions about whether they had the right senior people in place,” he says. “We saw a lot of briefs post-pandemic from companies looking to restructure and strengthen their teams in the wake of Covid-19.”
“There are leaders who are naturally good in a crisis – it’s in their DNA,” he adds. “And we have a knack of unearthing those people.”
Establish the facts, tell the story
But what should those CEOs parachuted into crisis-hit companies do from day one? Wheeler suggests the smart move is to lean heavily on your immediate management team, rather than assuming that everyone expects the new leader to have all the answers. The current team should have the experience to help make important judgement calls.
Arguably the most crucial aspect of crisis mitigation, though, is truth and authenticity. “I’ve been on many conference calls where a company has asked ‘do we really need to go public with this?’ and my advice is always the same – be truthful, be authentic, tell the story, face the issue, have a plan in place to fix it. And get your response out as quickly as you can.”
Because while crisis may be an inevitable part of the business landscape, it’s the response to these crises that defines a company’s future. By embracing change, addressing challenges head-on, and prioritising transparency and communication, businesses can turn even the most daunting crisis into an opportunity for growth and renewal.