Lessons in crisis management (from those who’ve lived it)

After many years at Experian, Gavin Snell was promoted to managing director of its UK credit bureau in July 2007 – six weeks before the global financial crisis. As a credit bureau with a business model reliant on consumer confidence, Experian was hit hard.

“Within a period of no more than four weeks, broadly speaking, 30 to 40% of the market disappeared,” Snell explains. “The level of visibility and the effects that had on the business model was profound.”

Gavin Snell: do what it takes to unleash talent

Over a period of three years, Snell – now CEO of employment law and HR support firm Ellis Whittam – steered the organisation through the crisis, in which his team dramatically overhauled its cost base and the proposition it took to market. A lot of that came down to cultural change, moving away from a top-down, traditional leadership style to a more open, talent-enabling and empowering one.

“The propositions that we put together in the course of that period from the beginning of the recession account for more than 50% of Experian’s total revenues in the UK today,” explains Snell. “Out of adversity came real innovative thinking.”

To make this happen, once the shock passed, Snell reviewed every aspect of the business, starting from the top down. “It was very apparent that there was talent within the organisation that had been suppressed. So we had to surface that talent and bring them into roles that were highly present, but also empowered.”

Honesty was also key in getting through the crisis – Snell and his leadership team spent a lot of time talking to staff about the magnitude of the challenge facing the business. This opened up a new ‘engaged phase’ for Snell’s team, in which employees were given the space to participate in the future of the company, bringing forward ideas that could be taken to clients.

“For example, it was quite obvious to us that in a recessionary climate, fraud levels would increase for our clients. So we came up with fraud propositions that could really help our clients address that. Separately, we had to think of some collections and debt management services that would help our clients manage debt much more effectively,” says Snell.

There were tough decisions to be made. Snell announced the necessary redundancies in one round, as part of the drive for honesty. He handled those redundancies as sensitively and empathetically as possible, taking an interest in people’s future success, and doing everything possible to ensure they found more work. “We played out great news stories of people who had been made redundant and then found other employment,” Snell says. “We did everything we possibly could to demonstrate to the rest of the business that we were choosing those people as respectfully and as supportively as possible.”

The end result, however, was a new dynamic and proactive ‘incubator culture’, in which the organisation learned to fail fast, try new things, and push for new ideas. “We created software licence models that gave us licence income as opposed to per-click income. That was important – we wanted to take away that sensitivity to consumer confidence,” Snell says.

All of these lessons have been carried through Snell’s career – particularly the need to seek and nurture talent within the organisation, taking a respectful and sensitive approach to people management, and honesty when the chips are down. Here are the lessons that other leaders have learned from financial crises:

Richard Blanford: don’t wait for things to get better

Richard Blanford is founder and CEO of IT-as-a-service provider Fordway, whose customers include local authorities, professional services companies and BFK, one of the engineering consortium that built Crossrail.

Fordway’s traditional business model was based on revenue from implementing IT infrastructure transformation projects, which worked well until the recession caused by the financial crisis in 2008/9 when the supply of potential projects dried up.

“If the rest of the business is sound, sometimes all a company needs to transform itself is a really good idea. The trick to doing this effectively is to really understand what you are good at and then work out how you can apply it differently to build a more sustainable, profitable business,” Blanford explains. “We decided to reinvent Fordway as a cloud service provider, using our existing skills in a different way to generate recurring – rather than project – revenue. It was a major commercial decision and required significant investment in infrastructure and staff training, plus a complete rethink of our core processes, but was a logical development of our existing business while offering potential for higher margins, and has led to our continued growth and success.

“The key piece of advice I would offer is that if the business isn’t working, don’t wait for things to get better. Understand how you can apply what you are good at differently, change your game and do it fast even if this means cannibalising your existing business.”

Ben Gregory: give yourself personal space to be strategic

Ben Gregory steered digital print and web design business Digiprint Netti through the last recession. As a smaller business, it had its own unique challenges.

“Try to remain calm and organised,” he advises. “This will allow you to be more strategic when having to make certain decisions. For example, many companies weather out a financial crash by hunkering down and cutting costs. One of the first victims is their marketing budget which can have disastrous effects that many never recover from. The companies who succeed after a recession are the one shouting the loudest and actually growing their brand to rapidly scoop up work when things return to normal.

“Be ready to adapt and innovate your business’ offering. I had to change my business to offer more or better services and quickly pivot to respond to downturns in certain markets.”

Earl Yardley: keep the team together

Earl Yardley is director at Industrial Vision Systems, which supplies machine vision systems to the automotive, pharmaceuticals, food & drink and medical sectors. His advice: ““Keep the team together. It takes a long time to develop a stable, trustworthy team around you. The most important aspect is to retain staff wherever possible or you will have to start building the team back up once you get to the other side of the recession. Your personnel are the most important asset you have.”

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Next time, we’ll look at the importance of counter-cyclical thinking in a crisis.