Deciding without knowing everything: crisis management lessons for managers
In a crisis, information is always incomplete and time is short. Waiting to be sure often means deciding too late. Three real situations, in the nuclear industry and in business, show how teams managed to decide in time, and what it cost those who waited.
In brief
- In a crisis, you decide with what you know, then adjust as the facts change.
- Sharing the same picture of the situation is the condition for a collective decision.
- Waiting for a certainty that will never come is also a decision, often the most costly.
- Clear values speed up difficult trade-offs.
Fukushima Daini: a shared picture, a revised plan
On 11 March 2011, the Fukushima Daini plant, near Daiichi, lost much of its cooling capability. Its director, Naohiro Masuda, wrote the times and intensity of the aftershocks on a whiteboard so that the whole crisis cell shared the same picture. He revised his plan as the facts changed, and had around 200 people lay 9 kilometres of cable in about thirty hours. All four reactors were brought to cold shutdown.
Lesson
A collective decision starts with a shared picture of the situation, kept up to date and visible to all.
Nokia and Ericsson: the same information, two decisions
In March 2000, a fire hit a Philips chip plant in New Mexico that supplied both phone makers. Nokia reacted immediately: it reserved capacity at other plants and suppliers, and redesigned some phones. Ericsson accepted the first reassurances and waited. The group reportedly lost around 400 million dollars in sales.
Lesson
Waiting to be certain is also a decision. When the stakes are high, it is better to act early and revise than to react too late.
Tylenol: values that decide
In 1982, seven people died in Chicago after taking Tylenol capsules poisoned by a third party. Johnson & Johnson recalled 31 million bottles, at a cost of around 100 million dollars, and relaunched the product two months later in tamper-proof packaging. Its CEO explained that the company’s credo, which puts customers first, made the decision obvious. The brand regained a 35% market share by the end of 1983.
Lesson
Clear values, known to all, speed up trade-offs when there is no obvious right answer.
Reflexes to remember
- Hold a short, regular situation briefing shared by the whole team.
- Separate what you know, what you assume and what you don’t know.
- Decide in time, setting when the decision will be reviewed.
- Designate who decides, who anticipates and who manages resources.
- Rely on principles known in advance to settle trade-offs.
Train before the crisis
These reflexes cannot be improvised on the day. Crisis cells train them in exercises; companies can do the same with a crisis management serious game, where the team experiences uncertainty, decides under pressure and debriefs calmly afterwards.
FAQ
Frequently asked questions
How do you decide when information is missing?
By separating what you know from what you assume, choosing the most reversible option when possible, and setting when the decision will be reviewed.
Who should decide in a crisis?
A clearly designated person, who listens to the team and then decides. A decision with no identified owner often never gets made.
Sources
- Nippon.com, the mission to save Fukushima Daini
- Husdal, Ericsson versus Nokia (after Sheffi)
- Knowledge at Wharton, Tylenol and the legacy of James Burke
