This post on navigating crisis is co-authored by Ashford Chancelor, Dallas Practice Manager & Consulting CFO with vcfo, and James Savage, CEO at Kingsbrae Global, a corporate brand reputation and communications firm based in Dallas.

How Businesses Can Navigate Crisis to a Path of Prosperity

In a previous blog, we wrote about the four historical cycles, described in The Fourth Turning, by William Howe and Neil Strauss, that repeat themselves sequentially, each lasting for a period of 20-25 years. These cycles, or “Turnings”, as named by the authors, are the High, Awakening, Unraveling, and Crisis, each carrying their specific attributes of changes in culture, politics, economics, and institutional structures.

The book notes that the U.S has experienced three prior crises during its history- the American Revolution, the Civil War and the twin crisis of the Great Depression and World War II. According to subsequent writings by the authors, the current Crisis began in 2008 and one does not have to look far to realize that the times in which we are living hold a turbulence, intensity and an immediacy of change that far exceeds anything that we have felt or experienced in our lifetimes.

Many businesses are experiencing an extraordinary maelstrom of converging riptides and undertows as they attempt to navigate through this historical cycle.

In all this, there are both sweeping undercurrents and historic megacycles, mostly unseen and unknown to most people, that are sweeping through the landscape remaking everything in our civilization’s complex ecosystem.

In the upcoming vcfo Thought Leader Series webinar on Thursday, May 20, 2021 – The Evolving National Crisis and Its Impact on Business, Part II REGISTER HERE, we will examine these mostly unseen megacycles and undercurrents to help business leaders understand the contextual framework that is so dramatically impacting our nation and world. We will also delve more deeply into the concepts described in this blog.

Today we will examine the path through Crisis to emerge in the next turning, High.

Both seen and unseen tensions have developed and grown for many years now across virtually every aspect of life in the United States. As tensions have intensified, fractures have inevitably developed and will ultimately be resolved, one way or another. Left alone or untreated, the breaks will not heal, swelling and discomfort will intensify as conditions continue to worsen over time. However, if the causes of fracture are addressed and the right actions are taken, pain will be minimized or avoided, recovery will be accelerated, and even higher levels of long-term business health can be achieved.

The degree to which businesses can capitalize on crisis intervention will largely depend upon their ability to do three things – understand the broader context in which they are operating, recognize and act on macro patterns and trends, and effectively manage and shape their corporate reputation. Let’s dive deeper into each of these areas below.

Understanding Operational Context

Business leaders must have a clear understanding of where the world is now as well as a practical sense of where it is headed. This situational awareness is vital if one is to navigate the tides of the Crisis (as described in The Fourth Turning) effectively and emerge in a positive position as the world emerges from this current phase and moved on to the to the following prosperity phase or High, a time of greater national unity, purpose, and a rising economy.

As noted previously, Milestones of previous national Crisis Phases included the Revolutionary War, Civil War, and the twin crises of the Great Depression and World War Two. All of these were times of well-founded fears where the nation’s very survival was in question. In each instance, an understanding of what was at stake was met by remarkable ingenuity, determination, and perseverance that enabled citizens to reap the rewards of a new “High,” an era marked by a renewed sense of common purpose and progress in addressing an array of pressing issues.

Recognizing and Responding to Patterns and Trends

Pattern recognition is incredibly important, but recognition alone will not get businesses where they wish to go. Businesses must understand what is happening in the business cycle and take action to ensure they achieve desired results. Legendary American investor Ray Dalio talks about recognition informing action by using markers to “identify where in the cycle” we are so that we can intelligently “form our expectations of what the probabilities of different next developments will be based on the conditions at hand.”

Critical to navigating this stage is having people in place that are innately wired to pinpoint these patterns and situational markers. Personalysis, a strength-analysis profiling tool, describes these individuals as “motivated to anticipate the future and create clarity. They focus on context, purpose, and potential impacts. They are sensitive to subtleties, are curious, and innovative.”

With emerging technologies ranging from blockchain to serverless computing and 5G among so many others, and societal shifts including post-pandemic personal and workplace interactions and consumerization expectations, businesses have a lot to unravel. At the same time, they also have virtually endless opportunities to apply these trends for the good of their organizations and the communities they serve.

Managing and Shaping Corporate Reputation

Reputation is critical at all points of the life of a business. In navigating a crisis, businesses need to proactively position their organizations and act in a manner that anticipates and averts obstacles related to reputational risk. Cultivating a high level of trust, admiration, and respect with customers and communities entails, in part, a heightened awareness of risk and preemptive action. Organizationally, we find three main traps associated with reputational risk that businesses often fall into:[ref]Savage, James, “Debunking Three Myths About Corporate Reputation” (white paper), Kingsbrae Global, 2021.[/ref]

• Equating awareness with reputational risk. Some businesses incorrectly believe that attempting to fly below the radar is an effective approach to reputational risk. Businesses should instead strive to be both well-known and well-regarded for who they are and what they do.
• Statements and actions that don’t withstand scrutiny. United Airlines’ brand promise of “Fly the Friendly Skies” was not well-served in 2017 when a viral video showed a passenger being forcibly removed from one of its planes. The same was true when Chipotle’s “food with integrity” brand promise was smacked by instances of food-borne illnesses amongst the chain’s patrons. A company’s reputation is not what one says it is, it is what one shows it is.
• Confusing risk with reputation. In some cases, organizations lump reputation in with functions such as GRC (Governance, Risk Management, and Compliance) and ERM (Enterprise Risk Management). These groups are often isolated from one another, challenged in cross-communication, and focused more narrowly on financial and regulatory risks than overall reputation.

Business leaders have been known to ignore or avoid societal factors that they may rationalize as irrelevant to their organization. Research has shown, however, that even organizations who adopt potentially polarizing value-based viewpoints (e.g., Nike, Hobby Lobby, Chick-fil-A) garner respect within their customer bases by taking a stance and showing a willingness to sacrifice some revenue as a result. There are of course limitations to these positions, but an organization’s willingness to impact and demonstrate support for societal issues is generally rewarded.

Emerging from the Crisis and into the Next Season of History

While there is no de facto rule book for navigating the current Crisis, there is an abundance of opportunity to put ourselves and our businesses in a better place as we move into the next Turning, referred to as High and defined by prosperity. Understand the operational context of the current climate, capitalize on emerging trends and technologies, and cultivate the space you want to occupy as the world enters the next Turning are your critical current deliverables.

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Need new strategic perspectives and insights to help your business navigate the current Turning while preparing for the next? Request a complimentary consultation from a proven vcfo expert who can help you identify how to better adapt to the current environment and optimize your opportunities ahead as we enter the next Turning.