Can crisis be good for you?

Some companies emerge stronger — and even experience revenue growth— after a crisis, while others falter. What’s the secret sauce?

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As crisis specialists, we know that the potential damage of a crisis — and whether or not you emerge stronger from it — is not so much governed by the nature of the crisis as it is by how well you handle it once it arrives. And there are three bedrock elements to successful crisis management: preparedness, a fact-based approach, and effectiveness of (all!) stakeholder communications.

In crisis, getting facts quickly and basing your response on them, are key to successful outcomes. In a world of split-second virality, incorrect, insufficient, or misleading information (or even correct information spread at the wrong time or in the wrong way) can increase your exposure and amplify the crisis.

There’s plenty of work to do on this front. While 87% of respondents agree on the importance of establishing facts accurately, nearly 4 in 10 report that they didn’t actually have the facts they needed to mount an effective response. And one-quarter of organisations acknowledge that they did not communicate effectively in their most serious crisis. This presents a significant opportunity for companies to learn from the mistakes of their peers by investing more in fact finding in the early days of a crisis.

We also uncovered a disequilibrium between internal and external information flows: while executives are generally confident in their internal communication dynamics they feel most vulnerable in communicating with external stakeholders, with nearly 4 in 10 (38%) ranking this as one of their top three areas of vulnerability. 

This makes sense, considering that internal teams are naturally more familiar to business leaders. But it doesn’t make sense when you consider the well-documented risks of an incomplete or inaccurate public response to a crisis, or the fact that your greatest risk can arise from any stakeholders — customers, regulators, shareholders, the media — kept in the dark.

So when can crisis be good for you?

Our data shows that companies that emerge stronger and create competitive advantage in the wake of crisis do these 5 things:

1. Allocate budget to crisis management — before it hits.

More than 4 in 10 (41%) of those that came out in a better place post-crisis allocated budget to crisis management before the crisis hit — and a nearly identical share (39%) actually saw their revenue grow as a result. This underscores the reward for investing proactively in having a clear crisis response program and governance structure. 

2. Have a plan — and test it.

When a crisis hits, there is no substitute for muscle memory. By a margin of nearly 2-1 (54% vs 30%), organisations that had a crisis response plan in place fared better post-crisis than those who didn’t. And those that keep their crisis plan up to date and implement the lessons learned are four times more likely to come out on top. Being prepared doesn’t mean you can anticipate every eventuality: while being mindful of the specific kinds of triggers that could pose risks in your industry, make sure your crisis response plan is not tied to just one or two scenarios. Make it holistic and flexible. Test it and revise it. Then test it again.This is the difference between being confident in the decisions you are making during a crisis and making knee jerk reactions in the heat of the moment.

"By failing to prepare, you are preparing to fail."

Benjamin Franklin

3. Adopt a fact-based approach — and don’t neglect key stakeholders.

Three-quarters of those in a better place post-crisis strongly recognise the importance of establishing facts accurately during the crisis. They are more likely to say that in the midst of the crisis, they did gather facts accurately and quickly — and they used those facts effectively to inform their response strategy. 

As you focus on your fact-finding and communications strategy, however, it’s critical to avoid over-rotating to one or two primary stakeholder groups. Cast a wide net on the perspectives of every important stakeholder, internal and external. Carefully consider, in advance, their wide diversity of needs and interests, as well as the appropriate mechanisms for two-way communication for each stakeholder — and ensure all your bases will be covered when the time comes to communicate in an emergency. An often hidden upside of comprehensive stakeholder engagement and transparency is that it can actually lead to external stakeholders rallying to advocate for you during a crisis.

4. Perform a root-cause analysis — and follow up.

Those who ended up in a better place performed a root cause analysis of their crisis handling, and 8 out of 10 acted on the results — one-third (33%) made a few changes, a quarter (24%) defined several projects to be completed, and another quarter (24%) are taking substantial action. That substantial action takes the form of:

  1. Identifying and following through on key remediation initiatives to prevent or reduce the impact of the same type of crisis; 
  2. “Looking around the corner” by scanning the longer term horizon for key risks and opportunities related to the ciris. Most were also likely to incorporate changes into their crisis response plans and documentation from lessons learned.

5. Act as a team, and hold to your values.

No surprise here: there’s a strong correlation between great teamwork and great outcomes. A huge majority of companies who self-identify as “in a better place” (93%, including 66% who agreed strongly) confirm that they acted as a team in response to the crisis, with similar majorities agreeing they’d acted with integrity. Conversely, a lack of internal harmony can make managing crisis more difficult. Of those who ended up in a worse place from the crisis, only 39% said they acted as a team. Use crisis experiences — real or simulated — as an opportunity to galvanise your team and strengthen your internal culture.

Crisis is a magnifier. The experience of going through one can bring out the best (or worst) in both your company and your people. Surviving a crisis together can bond individuals to each other and to the organisation far more deeply than any values statement. And on the flip side, a poorly planned and executed response can send a company or team into a tailspin from which they may never recover.

Crisis presents not only as a threat, but also an opportunity.

Taken together, these findings should give all organisations both pause and hope. The marquee finding is not about how many companies have endured major crises in the last half-decade. It is, in fact, that crisis presents not only as a threat, but also an opportunity. An incident managed well allows you to develop your immune system, enabling you to take on riskier opportunities, with the confidence that future threats will be spotted and addressed quickly. That’s the key to sustainable competitive advantage.

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Kristin  Rivera

Kristin Rivera

Partner, Global Leader, Forensics & Crisis, PwC United States

Dave Stainback

Dave Stainback

Principal, US Territory Crisis Leader, PwC United States

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