Crisis acts as a tonic for success

In today’s competitive world, crisis is the new normal. There is hardly any CEO who doesn’t confront a full-blown business crisis at least once in his tenure, if not more. In fact, leadership and crisis are two sides of the same coin. What distinguishes the industry leader from others in such troubled times is the ability to admit what went wrong, learn lessons with humility, take immediate corrective measures and bounce back much stronger.

The most critical thing a leader can do in a crisis is to communicate clearly and honestly, because a business passing through a crisis is first tried in the court of public opinion. Instead of digging in one’s heels, saying nothing and hoping that the storm will blow over, effective leaders don’t shy away from admitting with full humility the mistakes made and reassuring everyone that they are taking measures to not allow these to recur again.

Tell the truth

There is a saying: To solve a problem, you have to first admit there is a problem. You cannot overcome a crisis if you don’t acknowledge its existence! The display of honesty and sincerity in a crisis boosts a business’ reputation and renews the consumers’ trust and goodwill in the brand. I believe the business leader needs to tell the truth, nothing but the truth, and tell it fast to all stakeholders, including employees.

Take the case of Toyota. The global automaker in 2010 apologised to the US Congress and American Toyota owners for safety problems in its vehicles and reassured everyone that it will do everything in its power to ensure such problems never happen again. No doubt, the brand took a beating, but the company worked hard and, earlier this year, Toyota regained its slot as the world's biggest vehicle maker.

To successfully steer a company through a crisis is not just a business need. A company is a living entity, embodying the collective energies of its employees and various stakeholders. The corporate leadership owes it to them to fulfil their aspirations, protect and grow their investments, provide genuine value to customers and make people’s lives better, thus contributing to the progress of human race.

A crisis can hit a business when the leadership least expects it, threatening the reputation and health of a brand and creating turmoil among stakeholders. And if you are the flag bearer of the industry and an acclaimed global player, the challenges and pressures are multi-fold. I believe the trick is not to panic but to seize the moment, stand firm and act quickly. A business built on a bed-rock of strong values, professionalism and integrity can weather any storm and will sooner or later find the world rallying behind it. A good leader must have this conviction. Steve Jobs certainly had it. Apple, in its history, made many sharp U-turns from the edge and revived its sagging fortunes after every crisis through its founder’s vision and a slew of trail-blazing, smart products. It is a case study of how every crisis can be an opportunity to reinvent the business from the ground up and take it to a higher trajectory through innovation and a finger on the pulse of consumers.

I believe that difficult times teach a business leader much more than what corporate success can. A crisis may demand a drastic change in the way a business operates or a reassessment of the fundamental presumptions that underlie it, but the churning it triggers offers the opportunity for an evolutionary leap.

Weathering the storm

This is something we experienced first-hand at Ranbaxy. We used learnings from our recent crisis to make way for a New Ranbaxy. In all humility, we acknowledged our shortcomings of the past, communicated with all stakeholders in a transparent manner and are making sincere, all-out efforts to ensure the issues that led to the situation never occur again in the company. Industry leaders not only have to set new benchmarks in terms of business performance, but also show the world how good ethical conduct and a character, based on higher values, make companies stronger to tide over difficult periods.

Good leaders are transparent, honest and inclusive, and know how to take people along. These principles are at the core of New Ranbaxy and we follow them in letter and spirit.

John F. Kennedy once noted that the Chinese use two brush strokes to write the word ‘crisis’. One stroke stands for danger; the other for opportunity.

“In a crisis, be aware of the danger — but recognise the opportunity,” he said. That I think is the best advice for a business leader trying to weather a storm. A crisis is an opportunity for course-correction and must be used as fertiliser for success. We need to have faith in ourselves and remember that a business can bear any crisis except the crisis of confidence.

(The author is the CEO & MD of Ranbaxy.)

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