Key Factors in Coping
with Crisis

Management Professor Randall B. Dunham,
Keenan A. Bennett Chair of Industrial Management,
tackles issues affecting organizations in crisis and
decline in a course he teaches in the Executive MBA
program, which he directs. According to Dunham,
key factors that contribute to an organization’s
ability to cope with a crisis can include:

• Age of the organization: Older, more established firms
may be at risk if they rely too heavily on legacy practices.

• Size of the organization: Large firms with many vertical levels
can have trouble adapting due to logistical complexities.

• Financial success and past performance: Past success can lead
companies to follow the same path, even when change is needed.

• Ownership and equity structure: Is there accountability at all times
to outside agents? If not, the risk of decline increases.

• Environmental influences: External shocks can have a major
impact.

• Ability to learn and discern patterns: A lack of a learning culture over time can have a large negative impact on an organization’s ability to adapt.

• Certainty/uncertainty: Effectiveness of change management is key. For change-resistant firms, ambiguity can cause paralysis, particularly in times of crisis.

• Leadership: Young and/or inexperienced leadership without a desire to learn can have major repercussions.

As part of the class, Dunham has students assess their own organization’s risk of strategic decline, using a questionnaire he has developed. Students are asked to rate their organization in areas such as propensity to repeat mistakes or being late to market with new products/services. Dunham said Executive MBA students find the survey very relevant.

“The worst possible time to develop a recovery plan is when in the throes of crisis,” Dunham said. “The best organizations identify potential crisis scenarios and develop contingency plans that they are ready to implement should crisis arise.”