Why Leaders Should Be Thinking About the Next Crisis

Erika H. James, dean of the Wharton School at the University of Pennsylvania and Lynn Perry Wooten, president of Simmons University, are leaders in their field who are also experts in leadership. The pair have spent two decades researching and writing about the topic and previously wrote the 2010 book Leading Under Pressure. Their new book, The Prepared Leader, was written during the COVID-19 pandemic and draws on years of research and interviews with leaders about their experiences leading during the tumult of 2020.

James and Wooten did all this while themselves transitioning into their current jobs at the height of the pandemic, in 2020. James became the first woman and person of color to lead the Wharton School, while Wooten became Simmons’ first Black president.

“We were living out what we were writing in this book as leaders of the Wharton School or of Simmons University,” says James. “That duality of experiencing it, trying to be effective leaders while also writing about it, and leveraging our research at the same time, is a really powerful part of our professional history.”

James and Wooten spoke with TIME about why they believe preparedness should be the “fourth P” in a company’s bottom line, along with people, profit and the planet. They also discussed the importance of establishing—and maintaining—diversity in crisis management teams, and the role of what they call “mega communities” like the #MeToo or Black Lives Matter movements—broad and diverse collectives of stakeholders that can span organizations, sectors and, sometimes, societies.

This interview has been condensed and edited for clarity.

(For coverage of the future of work, visit TIME.com/charter and sign up for the free Charter newsletter.)

Why do you think that leaders were so woefully unprepared for the pandemic and other crises before it?

James: We don’t generally like thinking about or anticipating bad news, and the notion of a pandemic of this scale, we’ve seen signals or smaller versions of this in the past 20 years or so. But we’ve always been able to navigate them. They didn’t have hardly at all the effects that the pandemic of COVID-19 had on a country or certainly around the world. And so I think we are easy to dismiss the notion that something as catastrophic as a crisis would actually materialize and that we would be affected by them. So, because our brain doesn’t like to think about negative news, we tend not to prepare for bad things.

Wooten: It’s not only that our brains don’t need to think about it, we don’t educate leaders for it. So people have to study accounting and HR and strategic planning and finance and marketing. But when you talk to leaders about their on-the-job training, their formal training, their college training, very little time gets them to think about the skill sets, the competencies you need for leading in a crisis situation. And how you take those skill sets that we talked about in a book and become this prepared leader means that you also think about it in the context of the people who work in your organization, whatever your profit model is, or your effective model—and the planet.

Some might argue that if you’re, as a leader, constantly focused on what crisis might be ahead, perhaps you’re not as focused on the day-to-day running of the business. How should leaders be balancing those two priorities?

James: We have to do both, quite frankly. And I think the most effective leaders are constantly thinking about what we need to do to achieve our strategic objectives, while also being mindful that we rarely ever perfectly achieve the goals and objectives that [we] set out to achieve. Things are always happening, and the best leaders are those who think about where their vulnerabilities—either internal to their organization or where there might be external threats that prohibit their organization from achieving the results in the timeframe that they had desired. So, we’re unprepared because we don’t like to think about them, we’re not taught to think about them—the best leaders understand that being effective means doing both strategic leadership and crisis preparedness.

You write in the book about “sudden” and “smoldering” crises. Could you explain how leaders’ responses to those should differ?

Wooten: The smoldering crises are the ones, hopefully, that you have time to prepare for—you’re constantly scanning the environment, you’re looking for signals. You’re saying “what could happen, possibly.” Even the pandemic, when you started to see it happening in other countries, leaders had to ask themselves, “what’s going to happen if it comes to the United States?” So those smoldering crises have been gradual. Sudden crises: you don’t know they’re going to happen—they take you off guard. But if you have the skill set [to think] “OK, how are we going to communicate? How are we going to build trust? How are we resourceful? How do we mobilize all of our stakeholders?” then you may not know the crisis [is coming]—a national disaster or a lawsuit or something—but at least you have the skill set to activate your leadership team.

James: I’ll add that typically, we spend our time thinking about those external sudden crises. Most organizations have an active shooter plan, most organizations have a weather events strategy if a hurricane or something happens. So we plan for the things that are generally least likely to happen—those sudden events. What we don’t tend to plan for are the smoldering events which generally are things that are happening inside the organization that are oftentimes a function of bad decision-making, ineffective behavior, a poor culture—those kinds of things that sort of simmer under the radar until they erupt because nobody has paid attention to them.

Not paying attention to these sorts of issues can have a very serious financial impact. How important is preparedness to a company’s bottom line?

Wooten: Crises can cost money—it’s how much money do we leave [behind] because we have to stop business: money that we lose from lawsuits, money that we lose from reputational effects. And this is where we talk about the intersection of being a prepared leader with your profit. The better that you can be a prepared leader, you can prevent crisis so you’re saving money. You can preserve your reputation. You can make sure that your operations can go on.

How have you both drawn on your own experiences of fighting fires as leaders for the learnings that you present in the book?

James: I’ll share a quick story. Lynn and I wrote an initial book several years ago called Leading Under Pressure. And when I was sharing that book with some neighbors, they said, “Oh, is that a parenting book?” That was such an unusual response to a book titled Leading Under Pressure, but in hindsight, you realize that, as parents, we’re constantly doing the work of crisis leadership. We’re constantly scanning to see what could go wrong with our kids. We’re constantly trying to prepare them for the next step in their life. We’re constantly trying to put out fires when something bad happens to our children. So I think as parents we’re very well, attuned to naturally thinking about things going wrong. We don’t oftentimes make that shift to the workplace. That’s not to say that employees are like children, but it’s the same level of responsibility that a leader has, and understanding what we need to be mindful of is the active part of preparation.

Wooten: For me, I’m constantly scanning my environment and trying to make sense of what’s going to happen, what could be the next crisis on the horizon. I lead a small university and in the United States. We talk about the demographic cliff, especially for small universities, as fewer students are going to college as people are moving from different sides of the country. And so I’m thinking about, “OK, how is this demographic cliff going to require me to innovate, to rethink the business model of my university?” So the sense-making, creativity, the innovation… We have a tool where we talk about how you take a crisis and look at it as an opportunity to do something different. In the book, we talk about the National Basketball Association and how they used the pandemic. There are many examples where we’ve seen organizations reinvent themselves and the crisis has become an opportunity to do something better—either the way you organize people or how you do technology or how you change your business model. So I’m constantly thinking about opportunities too.

What are the biggest lessons for businesses from the pandemic?

Wooten: We can be agile. Never before have we seen industries and businesses and communities reinvent themselves. You take healthcare and telemed, you take universities and K-12 systems going online, so we can be agile. And so how do we do things quicker? The other big lesson is looking for examples of effective communication. We know that in crisis situations, leaders have to communicate, communicate, communicate. We talk about that in the book. It’s important, because you want to build trust. And so being competent, having a psychological contract as you communicate with people, are so important—and having compassion.

James: I would add that one of the key lessons is recognizing that our tendency, generally, when we experience threat, is to retreat and become very limited in how or where we seek information. And because a crisis means it’s something that we’ve not experienced before, whatever is in our history, our past is not going to inform us in terms of how to respond to this crisis. So the need for creativity—the need for intentionally seeking out information and ideas and new perspectives to help us solve a problem that we’ve never experienced before—that sort of goes against our psyche. But the leaders who have been most effective are those who are actually able to expand the sources from which they draw information and problem-solving.

What should leaders today be thinking about when it comes to leading through the next crisis, big or small?

James: To me, it’s thinking about understanding the lessons that they’ve learned or what they’ve experienced going through the pandemic and evaluating honestly, “what did we do well, in responding to that, what didn’t really do well and responding to that? What structures or policies or procedures do we have in place that can help us mitigate the next crisis?” Guaranteed, the next crisis probably will not be another pandemic, but it will be something else. And there’s muscle memory. If we are intentional about learning from what we just went through, we can leverage that muscle memory to help inform us the next time something else happens—but only if we are intentional about reflecting and learning the lessons having just gone through the previous crisis.

Wooten: We talk about mega communities [in the book.] It’s not only looking inside your organization to say what did you do well, or what did you need to improve, but “who do I need to partner with? How do I expand my network so I’m a better organization?” Mega communities say a lot of tough problems need the three sectors: you need government, you need the nonprofit sector and you need the corporate sector. We saw that in the pandemic. Who else managed that last crisis well? What can I learn from them?

What are the key skills you’ve identified that leaders need to be able to handle a crisis?

James: Generally, effective crisis leaders will engage in signal detection to understand what are the vulnerabilities and what do we need to be on the lookout for? The next phase is around crisis planning and prevention. When a crisis does hit, there’s the notion of damage control or containment—how do we limit its impact? And the fourth stage is business recovery. And then lastly, there’s the learning phase.

Within each of those phases, Lynn and I have identified several key leadership traits or competencies that are necessary, so in the signal detection phase, for example, one trait is sense-making. How do I make sense of all of the information that’s coming at me, how do I put it together in a way that allows me to communicate to the broader organization? Here’s what we’re learning, and here’s what we can start to prepare for it.

Wooten: I [also] want to talk about our risk taking. Sometimes during a crisis, when you’re reinventing yourself and adapting to the world, you have to think about what risks we’re going to take. [For example,] we’re going to take all the basketball players and create a bubble in Orlando. Some of that was risk taking. But it’s assessing the risks and understanding what the pros and cons are. Erica and I talk a lot about how one of the leader’s roles in the crisis is to ensure resiliency. Yeah, you’re going into this panic, you’re going to become paralyzed, but at some point, you’re going to have to bounce back. Resiliency is “how am I going to bounce back and what is it going to take for me to be better? What are the investments I have to make—the team I need, the financial investments, the infrastructure—so that I can be resilient in that recovery mode?”

And with that kind of risk-taking, when it is something like the pandemic you are having to make those decisions very quickly as well.

Wooten: Yep. Part of being quick is you’ve got to have the data, and you have to have the theory of change—”why am I doing this? What does the data show me?” And being ethical. All the stakeholders are going to be involved in your risky decision. What are you doing to ensure their well being in a crisis situation?

James: I think it’s important to highlight that not all stakeholders are equal. You have people who are advocates for your organization and want to support everything that you’re doing. You’ll have people who are sort of ambivalent, they may know your company, but they don’t feel one way or another about it. And then you have people who are potentially very aggressively antagonistic to your company. And in times of crisis, it might be [that] the people who might be most vocal might not be the ones who need the most attention. So those who are antagonistic to you might be very much all over social media. They might be very much present and vocal and you might feel like you need to devote your attention to that group. But they’re less likely to want to support you no matter what your efforts are, because they are naturally antagonistic to what it is you do. The real key, especially in a time of crisis is to pay attention to those who are ambivalent, so that you avoid those from becoming antagonistic, and you potentially are able to influence them to become your advocates. And I don’t think leaders oftentimes recognize [that]—they’ll go to the loudest voices, but the loudest voices are not always the stakeholders that need and deserve the leaders’ attention.

Diversity is something that you identify as an important element when building a team that’s equipped for a crisis. There was a recent study from Imperial College Business School, which found that diversity on boards is something that’s often sacrificed when companies are struggling. How can organizations prevent that from happening?

James: I think it really is a matter of the intention of the leader. If the leader understands the value that comes from having diverse perspectives on the board and the management team—wherever—then he or she will facilitate creating a diverse and inclusive environment in both of those settings. And then it becomes making sure that the board is aligned with the values of diversity. It becomes the board’s responsibility to ensure that the leader and the managers are, in fact, engaging in practices that create an inclusive communities such that the value of diversity, the voices—the perspectives that allow a leader to make the most effective decisions—are, in fact, being heard.

Wooten: I believe most leaders want to have diverse inclusive organizations but haven’t thought about the roadmap. And so it’s asking yourself “When I look around the table, especially the boardroom, who’s missing, especially relevant to this organization?” And then, “what is my plan to make sure that the people who are missing can be in the room to make it happen?” And part of that, once you get them in the room, is that they have to feel like they belong. We talk about in the book, going to all different types of experts to resolve the crisis and hearing various voices from outside the organization, at the top of the organization and at the bottom.

And crisis always calls for you to really think about diversity and equity and inclusion. We definitely saw it in the pandemic, as we saw, for example, women exiting the workplace, as we saw how people were dealing with the social reckoning. So, sometimes, crises—a natural disaster or something like a medical crisis—will have a parallel to diversity issues.

James: Oftentimes when we now use the phrase diversity, we immediately turn to demographic diversity and think we need more women, we need more people of color. And, while that continues to be true for most organizations, we’re also inclusive in our approach to diversity, especially in a time of crisis, because our tendency as leaders is to go to the content experts. So in a crisis we’re gonna go to the legal counsel, and we might go to public relations or head of communications. And those folks are important contributors to understanding how best to navigate the crisis. But if those are the only two perspectives and we’re not going to people who are interfacing with customers on a daily basis, if we’re not going to our customers, if we’re not going to shareholders to understand the perspective that they bring, then we’re not going to have the most fulsome set of information and data upon which to make a decision. So for us, demographic diversity is important, but it’s not the only kind of diversity that matters in a time of crisis.

(For coverage of the future of work, visit TIME.com/charter and sign up for the free Charter newsletter.)

Do you have any tips for people who have that perspective and are struggling to have their voices heard within an organization?

Wooten: When I’m coaching people like that, I [say] “think about where are opportunities to showcase your knowledge in multiple communications. Maybe you don’t feel comfortable speaking up in a meeting, but it could be an email, it could be a water cooler conversation, it could be a text message, but think about various communication pathways that you can showcase your expertise.” The other thing is, I always say partner with someone—the CFO partnering with the chief marketing officer. Spend some time with a person from a different background to share what you’re working on, and how you can manage through the crisis, and get their perspective.

James: I would add, aligning your work—or the communication that you want to get upward into the organization—with the strategic priority of the organization. That way it’s more likely to get the attention of top management, because it’s already an area or a topic or an issue that they’re focused on. So if you can align whatever it is you’re trying to get communicated in the context of that strategic priority is much more likely to get attention.

What role does technology play in both creating and combating crises?

Wooten: We all have seen crises be birthed from social media, or cybersecurity, so the chief information officer, the chief technology officer, is an important member of any organization’s crisis leadership team. They always have to be on the lookout. But technology is an efficient solution to a lot of crises. I gave the example of technology being the solution for how we get medical appointments during the pandemic—the telemed. Likewise, we’ve seen that a lot of organizations were successful communicating on social media, for example, using technology to find out where there were outbreaks of COVID or using technology to find out where you can get vaccinated.

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Write to Ayesha Javed at ayesha.javed@time.com.

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Write to Ayesha Javed at ayesha.javed@time.com.