This article was originally published in the Institute of Corporate Directors’ Director Journal in June 2020.
For Canadian organizations, surviving the Covid pandemic will be about more than staying in business. Boards and management must steer an effective response to the harsh realities and social injustices that the global crisis has laid bare, Jaime Watt writes.
In the beginning of Sophocles’ Oedipus Rex, a plague has descended on the kingdom of Thebes that ravages crops, livestock and citizens alike. We find Oedipus, King of Thebes, imploring his subjects to stop praying and instead “act as the crisis demands,” to find a cure. The oracle at Delphi informs Oedipus that the “great pestilence” will only be lifted through an act of justice: The previous king’s murderer must be killed or exiled.
Eventually, Oedipus’s quest for justice — and with it, a cure for the medical, economic and moral devastation of the plague — brings him to the blind prophet Tiresias. Tiresias informs him that Oedipus himself is the killer and that his kingdom was founded on incest and patricide. In the end, the King, no longer blind to his own crimes, gouges out his eyes and stumbles from his palace.
While an imperfect analogy for the challenges of Covid-19, Sophocles’ tragedy bears an important lesson for our time: namely, that pandemics reveal the longest standing, most entrenched and often least visible injustices of our politics and our society. What’s more, no one is immune to these revelations. From dictators and doctors to schoolteachers and presidents, all are doomed if they remain blind to the lessons of our new reality. And that fate extends beyond our halls of government into the C-suite and the boardroom as well.
In short, we all have a role to play in addressing not just Covid-19 but also the underlying issues which it has laid bare. While Canada seems to be successfully emerging from the dreaded “first wave” of the virus, there are nonetheless crucial lessons to be learned from our initial response. But what role exactly should boards and individual directors be expected to play? With the global economy on pause since March, how can directors carve out a place in the response, beyond simply battening down the hatches and working to keep their organizations afloat?
Responding, not controlling
In my view, the fundamental tenet of effective leadership in crisis is a recognition that the popular term “crisis management” is a misnomer, and a damaging one at that. The more productive expression to use is “crisis response.” That’s because, with all the unexpected variables at play, a reactive, responsive stance is more suitable than a “management” approach, which assumes a level of foresight and control that is simply untenable.
The reality is that most crises are made up of far too many unpredictable factors to be managed effectively. And preparing to respond effectively to those “unknown unknowns”— the variables you can’t even know you don’t know — will make or break your leadership in a crisis.
Consider Covid-19. Of course, government and, to a certain extent, business leaders, could and should have anticipated some form of pandemic. But the most critical result of Covid-19 has not been the virus itself — though it has already claimed hundreds of thousands of lives around the world and threatens many more — but rather its accompanying domino effect of unanticipated consequences.
The response to this pandemic has decimated many people’s already crippled confidence in international bodies such as the United Nations and the World Health Organization. In turn, what should be a global response to an international crisis has instead been characterised by parochial self-interest and infighting between China and the United States. As a result, countries like Canada have been left to fend for themselves in a global free-for-all over essential supplies. It is these kinds of issues — unpredictable in the specific but generally based on observable patterns — that leaders must make room for in their approach to crisis response.
Another of these domino pieces and arguably the most important factor for shaping our world post-Covid, is the moral jeopardy it has created. Moral jeopardy, a cousin of reputational jeopardy, comes about when your issue or brand is swept up in a larger societal narrative. The corporate world is full of examples, from airlines caught mistreating passengers to the #MeToo movement. Moral jeopardy is challenging because of the emotional intensity that comes with it and because once your name is attached to a larger story, you have lost control of your narrative.
Covid-19 is rife with moral jeopardy. Business owners have to weigh the burden of closing stores, offices, restaurants and factories, against the risk of exposure for employees who return to work. Policymakers cannot forget that the public health benefits of economic shutdown come with a material toll on the well-being of our most vulnerable citizens. Moral jeopardy exists for well-meaning organizations using their profile to comment on social issues exacerbated by the crisis just as it exists for those organizations that choose not to comment. We are now navigating a minefield of moral jeopardy with massive consequences for business.
I have always said that times of crisis are when directors really earn their keep. That’s because directors are the ultimate inside-outsider: They often have the enterprise-wide knowledge of senior executives without being “too close” to make difficult calls. Directors also bring outside experience which can be hugely important when making decisions with incomplete data.
Before a crisis hits, the role of the director is really to ensure that the organization has a crisis response plan in place. In the thick of it, directors are responsible for monitoring management’s response and must be prepared to take over if management is part of the problem. And when the crisis is over, it is incumbent on directors to ensure the integrity and efficacy of post-mortem evaluations.
We all realize that events of the past few months have turned our world on its head. In the wake of Covid-19, organizations will either stay fixed in their ways or adapt to the demands of our new reality. That means changes to operations as well as a re-evaluation of fundamental principles and a renewed commitment to fulfilling them. Implementing these changes will take the combined efforts of management and directors, in concert with internal stakeholders and external audiences.
In the months ahead, mistakes will be made and real prices will be paid for those mistakes. Crisis response provides an effective tool kit and a productive mindset for organizations and government alike to successfully weather the storm. But more often than not, a boardroom with purpose, clarity of vision and competent directors at the helm will equip its organization well for success in our brave new world.