Crisis Management: Leading Successfully Through the Storm

Tylenol and HealthSouth came out of crisis even stronger.

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To paraphrase the bumper sticker: Stuff happens. Fortunately, so does good leadership—but those folks looking for pat solutions to unpredictable situations will be disappointed. First-rate management of a crisis rarely looks the same twice. A case in point from America's military:

Gen. George S. Patton, perhaps the most celebrated of America's modern military men, was first and foremost a student, devouring books on history and war strategy throughout his life. He also was a brilliant tactician who believed in preparation. When Germans snapped Allied lines and poured deep into Belgium during the Battle of the Bulge, Patton had a plan. He stunned Supreme Allied Commander Dwight Eisenhower by claiming he could break off a chunk of the Third Army from its march west through France and redirect it straight north 100 miles into Belgium within 48 hours. Patton succeeded, and his army helped end the Axis powers' last great push. "The things people do before a crisis occurs have a huge impact on what occurs during that crisis," says Gene Klann, author of the book Crisis Leadership and an associate professor at U.S. Army Command and General Staff College at Fort Leavenworth, Kan. "Patton had prepared himself for that situation."

But preparation isn't always the hallmark of triumph in a crisis. Experts say it's a mixed bouquet that often contains preparation but also includes blooms of improvisation, good communication, foresight, a willingness to learn, and a commitment to established values. "Effective crisis leadership is really . . . imagining a future that brings you beyond the status quo," says Ron Dufresne, assistant professor of management at St. Joseph's University in Philadelphia. He and others argue that good crisis management does more than weather a storm. It proactively creates a better future.

Contemporary examples of strong crisis leadership are in surprisingly short supply, experts say. And all too often, the reaction to a crisis is to hunker down and ride it out. But there are a few modern standouts, especially in the business world.

Bad medicine. In 1982, a 12-year-old-girl in the Chicago suburbs woke up feeling ill and took an Extra-Strength Tylenol. Three hours later, her parents found her in the bathroom, dying on the floor. Over the next few days, six similar deaths occurred across the metro area. Officials soon discovered that the culprit was Tylenol that had been laced with cyanide. The news sparked terror across the country and nearly toppled one of America's most trusted and popular brands.

Rather than succumbing to panic, Johnson & Johnson CEO James Burke swiftly ordered a recall of 31 million bottles, which cost the company a staggering $50 million. In the weeks that followed, Burke and his management team went on the offensive. Within 10 weeks, the manufacturer introduced tamperproof packaging that revolutionized the industry. Johnson & Johnson also threw open the doors to the media to give the public an assurance of full transparency.

Within a year, Tylenol had regained more than 80 percent of its market share. Much of the credit goes to Burke and his management team, which decided to stick by the company's core values of putting the customer first—even if it cost Johnson & Johnson dearly. "Values-driven companies do better in times of crisis," says Dave Anderson, a leadership guru who has published several books on the subject.

Killer chemo. Since its founding in the 1940s, the Dana-Farber Cancer Institute in Boston has enjoyed a reputation as an elite and groundbreaking research hospital that promoted the idea of "total care"—a core value that patients were not human guinea pigs. But in 1994, breast cancer patient and Boston Globe columnist Betsy Lehman unexpectedly died in the clinic's care, and another patient was discovered to have suffered permanent heart damage.

A review revealed that a research fellow miscalculated the dosages of highly toxic drugs for the women—an error that went unnoticed by nurses and pharmacists even as the patients' health deteriorated at an alarming rate for two weeks.