Towards an Understanding of When Executives See Crisis as Opportunity
“Towards an Understanding of When Executives See Crisis as Opportunity,” by Joel Brockner and Erika Hayes James, looks at the conditions that allow leaders to create opportunities for themselves and their organizations after a crisis. Two categories of opportunities are discussed: 1) the opportunity to reduce the likelihood or limit the impact of future threats and 2) the opportunity to increase the likelihood or impact of future positive events.
A good example of opportunity fully realized in crisis is the now infamous Tylenol poisoning scare for Johnson and Johnson. After a few incidences of product tampering, in which Tylenol capsules were laced with cyanide and eight people died, Johnson and Johnson took extraordinary measures for a world-wide product recall. They then developed tamper-resistant packaging, an innovation that made them a pioneer in the industry and a market leader in the sale of analgesics. As a result of their actions Johnson and Johnson, and their customers, were able to benefit from what could have been a negative situation. Instead, the firm realized one important opportunity to be gained from the crisis, the innovation of a new product. Had the product tampering not occurred, there may have been no incentive to develop the new packaging technique.
The authors, building on previous research, explain how some managers transition from perceiving crisis situations only as a threat to also identifying them as potential sources of opportunity. Both the organizational context and executives’ dispositions play roles in determining which outcome will prevail.
If the organization supports a culture where divergent thinking and learning are the norm, then conditions are good for positive outcomes to emerge following a crisis. Likewise, when managers lean toward reflection and analysis after a crisis, the more likely they are to see opportunity. And the circumstances surrounding a crisis can contribute to the outcome. Organizations might find their goals more attainable if the crisis is less severe or less public. Whether the executives’ behaviors match the opportunity type is also important. For example, when a manager has a “play to win” mindset (and therefore values experimentation and reasonable risk-taking), and the type of opportunity to be had is one in which positive events are enhanced, then firms are more likely to reap opportunity from crisis.
Based on their study, the authors propose the following ideas:
- When an organization supports reflection and learning in its culture, the executives are more likely to make the transition from damage control to a search for opportunity.
- Executives whose dispositions are more inclined toward reflection and learning will more than likely perceive crisis as opportunity.
- The positive relationship between an organization that supports reflection and learning and executives whose dispositions are aimed at those tendencies promotes an orientation towards finding opportunity.
- When the type of opportunity, such as the opportunity to enhance positive events or prevent negative ones, matches the executives’ focus, more value will be given to the opportunity.
- The better the conditions are for success after a crisis, the greater is the perceived attainability of the goals.
This study has provided a framework for future research that addresses the question: Under what conditions are executives more likely to view a crisis as an opportunity?
To request a copy of the full journal article as posted in the Journal of Applied Behavioral Science, please
contact Erika at www.erikahayesjames.com/contact/.