Chris Brady: How to know if you're having a crisis or not

From a talk given at the City University Business School in London by the deputy MBA programme director

What are the characteristics of a crisis? I believe we know a crisis when we see it, or when we experience it. I suggest that we can intuitively recognise the traits common to those events. I would suggest that, until "the dress", Clinton did not perceive a crisis. The moment he heard about the dress the situation changed – and it changed to fit with a generally accepted, characteristics-based definition of crisis: "a crisis is said to occur when decision-makers perceive high threat, are caught unawares and have only a short time to agree a response in order to avoid catastrophe."

Given that perception overlays the other factors, how do the characteristics of time, surprise, threat and catastrophe contribute to the crisis environment? Let me start with being caught unawares – the element of surprise. A reasonable question nowadays might be that, given the wealth of information available, how is it that decision-makers can still be taken unawares?

One problem is the sheer volume of data – information overload. Obviously, the greater the volume of data, the more difficult the task of differentiation. The simple mechanics of moving huge quantities of information around organisations can mean that the decision-maker may not have even seen vital information at all – it can be filtered out somewhere en route to him.

Yet although surprise can be the result of such structural failures, it is still most likely to stem from psychological factors. Surprise can be created by the inability of decision-makers to step outside their own mindsets, their own realities.

The second characteristic of the crisis definition is high threat. To be considered a high threat, something highly valued has to be targeted – survival, identity, status. In addition to these specifics, it is also true that organisations and individuals perceive an existential level of threat – not paranoia, just a wariness of the environment – "its a jungle out there".

It might be said that crises are generated when this general level of threat is heightened by events that confirm the threat mindset. In the Middle East, for example, the underlying tension between the Palestinians and Israelis will be elevated to crisis each time a bombing or shooting occurs – prejudices and misperceptions will be reinforced. Thus a high level of threat might exist on a relatively continual basis, but it is the escalation and immediacy of the threat that constitutes crisis.

The third characteristic is a lack of time to respond. Lack of time can be the result of any of several factors: uncertainty – a lack of pre-planning or scenario planning; the importance of the decision; and the individual(s) involved – some people just need more time.

The final characteristic is the likelihood of catastrophe – the possibility that things might go out of control. The fear of being sucked into a military confrontation, for example, heightens the perception of crisis. Look at the current, and recent, problems in the Balkans. Until such time as ground troops are involved, then the crisis is contained.

But suppose that you agree with me that, in this simple way, it is possible to define a crisis, does that make it possible, or even desirable, to manage crises? Is a successful crisis, for example, one in which you win, or one in which you avoid conflict? Are there some crises that are inherently unmanageable?

So where does all this leave us? Well, it leaves me with a definition of crisis that includes a mixture of the elements of surprise, lack of time, high level of threat, and potential catastrophe. Knowledge of those elements and the role played by perception in creating and exacerbating them should enable us to develop certain prescriptions for avoiding or handling crises – but I doubt it.