Managing a Crisis Requires a Plan, Many Firms Learn

Stephen Covey, the best-selling business writer and speaker, likes to tell managers to spend their time in what he calls "Quadrant 2" activities: strategizing, learning, pondering. Don't let your time get siphoned off by sticky details.

But sometimes, as Exxon Corp. learned, and more recently TWA, sticky details demand attention. Business crises - unforeseen events ranging from an oil spill or a downed plane to a drought or a computer-network failure - by very nature place unexpected demands on executives. And such challenges are on the upswing this year, reckons the Institute of Crisis Management.

The institute predicts that total incidents in 1996 will be 7,400, up from 6,539 reported last year, which was on par with the 6,534 at the start of the decade. Crises are defined as significant business interruptions receiving extensive public scrutiny.

Taking a page from the Boy Scouts, the institute's fifth annual "new avenues" conference here in Las Vegas Aug. 8 and 9 emphasized being prepared.

At British Petroleum, this means once-a-month simulations of unanticipated events in its Alaska operations, above a required two a year. The activity follows in the wake of the legal and public-relations quagmire Exxon faced when its tanker Valdez spilled.

A pretend crisis, including "the wacky and bizarre," will reveal strengths and weaknesses in an organization, says Larry Barton, a vice president of Motorola, the Schaumburg, Ill., communications supplier.

"Focus on a mix of issues that include your organizations strategic audiences: employees, neighbors, regulators, media, competition, investors, and board members," Mr. Barton advises. And get a third-party evaluation.

Today, in addition to floods, fires, and the like, companies must respond to growing numbers of other incidents. Among such recent events: TWA's airliner explosion off Long Island, last week's temporary collapse of the America Online computer network, and an electric power outage in nine US states (Power failure, Page 3). The media push the process, says Neil Stanley, a law professor at England's Leeds University. TWA was pressured, he says, to answer questions about what is to blame - an issue still unresolved.

With several car-model recalls, autos are the most troubled industry of this year's first half, the institute says, followed by airlines, banks, and securities. Since 1990, the fastest-growing crisis category is sexual harassment, up sevenfold. The issue came to the fore this year at Mitsubishi's US operations.