The Prepared Mind in a time of crisis

I ascribe the expression “the Prepared Mind” to two people. Firstly, to Louis Pasteur, who said: “Fortune favours the Prepared Mind”. Secondly, to Ulf Henriksson. It was Ulf who took Invensys plc into the FTSE-100 – and who headhunted me out of the Army some ten years ago to join the company. He used the expression to describe the state of mind required to deal with potential crises, of which we had many. It was to be achieved through forward thinking, training and teamwork.

Achieving the Prepared Mind is good guidance for all of us when we are faced with crises. And yet a glance at the dramas in the business news, any day of the week, shows that this guidance is often disregarded.

But that’s unwise, because crises happen to all of us. My business surveyed 800 companies from every sector. One in three had a business-breaking crisis in the previous five years[1]. We all have friends who have had crises in their own lives. So this is personal as well as commercial. Governments and nations are also affected. Some never recover.

But most crises are preceded by some indications that they are coming. They might be described as “predictable surprises[2]”. Donald Rumsfeld was ridiculed for talking about “known unknowns” but his expression captured the notion. And in his book “Black Swan”, Nassim Taleb described the phenomenon of unlikely events that have an extreme impact. “Black swans” will appear in our lives at some time or another. My title “The Prepared Mind in a time of crisis” suggests that we can prepare for them. We had better do, if we want to survive.

So I’d like to suggest seven principles for ensuring that we have a Prepared Mind:

  1. Firstly, our families and our businesses need to “Have a plan for when things go wrong – and rehearse it.”
    • The plans that we write for businesses and family offices comprise the mechanics and principles for dealing with potential crises. For example, who is needed round the table to handle the crisis – typically the CEO’s team from all relevant disciplines – and how they can be contacted on a Friday evening. Because that’s when dramas unhelpfully tend to surface. And if any member of the crisis team is not contactable, their deputies, and how they in turn can be contacted 24/7. And key stakeholders: for example, clients, suppliers, emergency services and regulators – dependent on the sector. All those who would expect to hear bad news from us, rather than picking it up on the news on Monday morning. And who holds the relationship with each of them. And guidance on responses to a wide selection of potential dramas of one sort or another.
    • The benefits of having a plan are both practical and psychological. Practical, because it provides time and space to those on the crisis team to think, to work as a team and concentrate on the issues quickly – rather than on the mechanics which have already been put in place through the plan. Psychological, because it reduces the likelihood of “brain-freeze” and bestows mental agility. It also enables people to think further ahead. This is necessary in a crisis where the natural tendency is for people to shorten their timeframes to concentrate 100% on the “here and now”. But there is usually a longer term “tail” to a crisis, whether reputational, financial or legal. That is best thought about early.
    • However, the plan is not designed to cover every contingency. It would be so full of detail that no one would read it. It is not a “black book” that provides a list of everything to be done for every crisis. Herewith two examples from experience. Firstly, in response to the occupation by our employees in one of our factories in China, who were dissatisfied with their severance pay: I flew out there, met our local lawyer and spent time with local authorities to try to resolve the issue. We went to arbitration and resumed production after several months. In the meantime we faced complaints by an angry wholesale customer whom we were failing to supply. Counter-intuitively, we decided to put them in contact with our main competitor. That was making a virtue out of necessity; we decided that the customer would probably contact our competitor in due course. After we had resolved the issue and resumed production, the wholesale customer came back to us, out of gratitude. In the second example, we had to deal with the impact of the Arab Spring on our 600 software engineers based in Egypt. Everyone’s top priority was rightly to keep their people safe. Our competitors pulled their people out. But we found a way to ensure our people’s safety and at the same time enable them to continue to work, whether from their homes or in safer offices nearby. We looked after their families. We kept our people safe, we didn’t break our contracts with our clients and we took business off those of our competitors who had left. This illustrates that a benefit of the plan is to give people the time and space to think “out of the box” in order to determine the best solution.
    • But, for the plan to work, it needs to be kept alive and in people’s minds. The sort of scenario-based workshops that we provide are the best way of doing that. BP’s “Deepwater Horizon” crisis provides an example of where such workshops would have been extremely valuable. I was shown round BP’s offices in St James’s Square some time before the crisis. BP had a crisis plan and a pre-prepared crisis room. They had four massive white boards on the wall, placed according to the priorities for dealing with a crisis: people first; then environment; then reputation; and, finally, business. So why didn’t the plan work? Perhaps because it was disregarded on the day, perhaps because of personalities, perhaps because the knowledge that a plan existed – however unrehearsed – imbued decision-makers with a fatal complacency. Occasional and short workshops with all relevant decision-makers round the table would have overcome all these obstacles.
    • People do know they should have a plan. According to the London Prepared initiative, 84% of managers agreed that having a business continuity plan helped reduce business disruption. Yet only 27% of SMEs have such a plan in place[3]. So, if people and businesses decide not to have a crisis preparedness plan, then at least they should – as a team or as a board – devote some time at frequent intervals to consider the “what ifs”.
    • The Army has such a system enshrined in its doctrine. Leaders at every level of command giving orders for an operation are obliged to include a section entitled: “actions on”. That has to cover everything that might go wrong: loss of communications, ambush, wounded man, lost person etc. And to include a solution for each of those. Those being briefed are expected – indeed obliged – to express their concerns immediately, if they are not satisfied that the boss has covered all contingencies fully and feasibly.
  1. My second principle is simply: “Listen”.
    • We can be the best CEOs or mid-level managers and we can have the best-drilled crisis teams. But unless those at the coal-face trust that we, their leaders and managers, will listen to their concerns and do something about them, then our employees will not escalate issues upwards until too late.
    • Timely escalation is a function of building trust. This requires that our employees are confident that we will listen and bear them in mind at all times. Otherwise the basis for the relationship between leaders and led is purely transactional. People are then likely to do no more than do what they are paid to do, and will not raise issues, especially if to do with things outside their remit.
    • In the SAS, as an officer, I could never have passed the rigorous selection process – nor survived subsequently – if I had not listened to the soldiers. They had built up valuable experience over many years. It would have been crazy not to heed their advice – notwithstanding that the responsibility for whatever decision emerged was mine and mine alone. That is the responsibility of leadership. Indeed, there is a well-known saying in the Army that “if soldiers stop complaining, then you really need to start worrying”. This illustrates the point that lack of complaints likely means that there is no trust that anything will be done in response. In commercial life, the final resort is to have access to a “whistle-blower” confidential channel. The culture needs to be right for that to work. At one company where I worked, less than ten confidential issues were raised in the course of one year – for 20,000 employees. That showed either that the company ran like clockwork and managers almost always listened to their employees and had their full trust – or that the culture was not right for a confidential channel to work. Mr. Jes Staley, the CEO of Barclay’s Bank, demonstrated how to dissuade employees from using the confidential channel, by trying to unmask the identity of a whistleblower[4]. Many believe that Jes was lucky not to be sacked as a result.
    • All those who are not our employees but who are in other ways connected to the business also need to feel that we will listen to them and respect their views. We need to take them into consideration when we make decisions and to explain the basis for those decisions. In the health industry, for example, this extends to compassion and kindness for all patients and their families. And this is good economics because they will get better more quickly.
  1. My third principle is: “Get the right people together”.
    • Handling crises is a team effort. In the aftermath of “Deepwater Horizon” Mr. Tony Hayward, BP’s CEO, upset US Congress by saying very little in response to their questions. I surmise that his lawyers had told him to do just that. But if he had got the right people together from time to time, to discuss the “what ifs”, his lawyers would have agreed with his PR people in advance that much more could and should have been said when facing the public – and found a formula for doing so with which the lawyers were happy.
  1. Which brings me on to my fourth principle: “Be open, be transparent”.
    • Long gone are the days when “no comment” was an acceptable response in the face of public questioning. Today, there is a very reasonable expectation of transparency and openness. We therefore advise companies to ask themselves “what must we hold back”, rather than “what must we tell”. Be open wherever possible.
    • Now, a “good news story” to illustrate the principle: Total plc had their own mini-version of Deepwater Horizon a few years ago: a dangerous leak from the Elgin gas platform off the Scottish coast. They efficiently and quickly evacuated their people. Nevertheless, after the first day of the potential crisis, they suffered a 6% share price hit. But they got senior people in front of the microphones to explain what had happened and what they were doing about it – avoiding speculation and sticking to the facts. Total plc already had a social media community and they proactively reached out to audiences on social media, again to explain what had happened and what they were doing about it. They also used their website for the same purpose. After a week their share price hit was reduced to -1%. They had got onto “the front foot” and trust was restored and maintained.
  1. My fifth principle: “Act early, act decisively”.
    • In the Korean War, US pilots almost always won their dogfights against North Korean enemy pilots. They were more agile, mentally and physically. They had an effective doctrine that enabled that, summarized by the acronym “OODA”: observe, orientate, decide, act. By thinking and acting quickly to suit each situation, they “got inside” the enemy’s “OODA loop”. Rather unfairly, the acronym has been adopted by others and re-translated as “obfuscate; over-react; deny; apportion blame”. But it still holds good.
    • As a test-case, I sometime ask junior managers in big companies what they would do if they, for example, heard during a weekend that one of their people had been killed in a car-crash. Telephone the CEO straight away? Wait until Monday morning? Or not tell the CEO at all, because it is a minor detail? In my view, far better to tell the CEO immediately, than the CEO hear about the fatality from a non-company source – for example on the local news. After all, we all like to think that we work for, or run, family-orientated companies. If you wake up the CEO to tell them, then they can always go back to sleep afterwards. Leaders need to make it clear that they would prefer to be bothered by potential dramas than not. It is easier to de-escalate than to escalate too late.
    • One of the challenges in the face of acting early and decisively is that inevitably a “full hand” of information only becomes available over time. That is where judgment and good leadership is so important: having the experience and the courage to speak – publicly if need be – and to take decisions before knowing every single fact. Especially where early actions can save lives.
  1. Sixthly, “Don’t forget discoverability”.
    • In the event of things going wrong, there may be an inquiry, hearing or court case that will scour in minute detail every email sent and action taken. Understand what legal privilege – what Americans call client-attorney privilege – covers and does not cover. Do not delay reporting or acting. Because if you do, it will be found out.
    • The other day, a friend who works in a FTSE-100 company told me that the company’s top management had been concerned for some months about possible connivance at corruption at MD level in a business division in eastern Europe. Nothing was done. But then these concerns were expressed in an email. I told my friend that it would be right to tell the company’s senior management that they needed to act without delay. I suggested that, worst case, the company should consider closing down that division. No amount of investment in time, energy or money is so great that it cannot be sacrificed in the interests of doing the right thing.
  1. Finally: “Understand and accept fully the implications of accountability and responsibility”.
    • With legislation such as the Senior Managers’ and Certification Regime (SMCR) in place since 2017, British banks and some other sectors are being obliged to get up to where, for example, the Army has been for many years. To illustrate this: I was president of an Iraqi-abuse court martial in the aftermath of the second Gulf war. It was the only court martial, so far as I know, which “sent down” all the soldiers who were the defendants, dismissing them from the service and sending them to prison. It was clear from the statements made by their officers in the witness box that the soldiers had been let down: no leadership, no guidance by the officers who all gave excuses as to why they were not with their soldiers and not taking an active interest in what they were doing. I therefore wrote to the head of the Army after the court martial, recommending that the officers should be held accountable for what the soldiers had done. As a result, the officers were subjected to an administrative process and had their promotion stopped. A number then left the Army.
    • On a more minor level, as a commanding officer, I was questioned under oath by a member of the Special Investigation Branch about the theft of money from my battalion by a regimental accountant who was addicted to gambling on horse-racing. If I had not been able to prove that I had put in place the procedures and the training to minimize the likelihood, my career would have been dead in the water. And rightly so.
    • In essence we as leaders in all and any sectors need to be – and to be seen to be – accountable to those to whom we delegate responsibility. That means that we will:
      1. Select carefully those to whom we delegate responsibility;
      2. Train, resource and support them sufficiently to enable them to fulfill the responsibilities that we give them;
      3. Be clear to them about the parameters within which they can act;
      4. Trust[5] and empower them to take decisions without referring back to us – unless the situation is novel or contentious.
    • We can thus have confidence that those who work for us will do the right thing and will trust us, knowing that they have our full support to put things right in the event of a potential crisis. And if whatever goes wrong becomes public, then we will willingly “carry the can” and be seen to do so.

These are my principles for achieving “the Prepared Mind” at a time of crisis.



[2] “Predictable surprises” is an expression attributed to Michael Watkins of Harvard Business School



[5] Well put by Sir John Harvey-Jones, former chairman of ICI, who wrote that he had given up on most of his beliefs, “Except my basic belief in people, in treating them right and giving them the right incentives. And those incentives are bugger all to do with money, they are almost all to do with recognition and trust.”