Amol Titus
Public relations campaigns about Jakarta often use the term ""mega city"" with illusionary comparisons to Singapore, Hong Kong, Shanghai or Dubai. A more realistic and accurate peer group for the metropolis is to bracket it with other teeming third world cities like Sao Paolo, Mexico City, Mumbai, Manila, Bangkok or Colombo. For like these cities, Jakarta's development issues are complex and aggravated by inadequate planning and execution. And as shown up by the recent widespread flooding, life in Jakarta entails an increasing vulnerability to recurring crises.
For corporations operating and seeking to grow here the flooding also serves as a timely warning to review and perhaps re-write their crisis management programs. Many businesses were found wanting in their preparedness and response and they need to look at crisis management as an activity core to their survival and business development rather than as a box ticking exercise undertaken at the behest of some external consultant, seminar or head office directive.
The redoubtable Jack Welch, under whose stewardship GE experienced and successfully withstood many crises, emphasized that there are five stages during every crisis. These are: 1. Benign -- a state of complacency or an ""it can't happen to us"" attitude; 2. Containment and Denial -- a state of shock, surprise and reluctant admission such as ""Oh my God! Its happened but we hope it's not as bad as it appears.""; 3. Definition and Response -- a state of recognition and awareness to act; 4. Blood on the Floor -- assessment of the extent of damage and commitment to survive; 5. New Day Cometh -- a sense of optimism and reassurance to customers and other stakeholders with a ""we're still here and intend to stay"" resolve. If your company stopped at stage 1 or 2 or is struggling with stage 3 then it is clear that your crisis management program is not robust enough.
The flood crisis can be viewed from several factors:
1. The scars of a crisis
In the aftermath of a crisis businesses can end up showing several scars. The financial scars relate to the actual loss of production or destruction of property. To accurately estimate these, the company should also assess the impact along its supply and distribution chain. The operational scars relate to the extent of damage to the operating framework/lifeline of the business, like machines, stocks, telecommunication networks and so on. Though difficult, both financial and operational scars can be eventually tallied and action steps identified to overcome these.
However, what are difficult to assess are the psychological scars -- the feeling that customers were let down, challenges to address the morale of those staff that were most severely affected, concern that competitors might have responded in a smarter manner or incidence where the overall professionalism of the enterprise was called into question.
The ability of a business to bounce back rests on not just how it copes with the financial and operational aspects but also with the psychological scars.
2. Scoping out the range of crisis
The only useful learning from the usual post-crisis blame game among officials of ""natural vs man-made factors"" is to accept the fact that Jakarta, like its peer group cities, is vulnerable to both natural and man-made disasters. A brief introspection on recent history will highlight the vulnerability to natural disasters like earthquakes, tsunamis, flooding and diseases like dengue, malaria and now the worrisome avian flu. Then there is the threat from man-made disasters that could arise from conflict related issues (e.g. terrorism) to industrial accidents (e.g. fires, chemical spills or procedural negligence) or from a breakdown in critical infrastructure (e.g. transportation, water supply, electricity, ports, etc.) The impact of all is magnified in densely populated areas like much of Java.
To adopt a resigned ""gosh, too much of a headache"" approach is unhelpful as are gloomy predilections on why Indonesia is experiencing more than its fair share of calamities. For inspiration look around and see the spirit with which so many ordinary Jakartans, some of whom have perhaps lost most of their belongings, are coping. Fortified with prayer, a sense of sharing with those facing similar tragedies and a spirit to move on much like the ""new day cometh"" positive fifth stage of crisis management.
3. The thoroughness of planning
The positive approach for corporations must, however, be grounded in thorough planning which itself needs to be clearly demarcated into pre-crisis preparation, during crisis action steps and post-crisis activities. Pre-crisis is about developing scenarios using realistic (rather than doomsday) assumptions. A key part of pre-crisis planning is to identify individuals and teams who share specified crisis response responsibilities and accountabilities. There should be clear priorities and back up support mechanisms (communication channels, technology access, a crisis management center). Critical staff resources must also have backup resources with suitable training. Similarly, planning for access to emergency financial support is also useful as during the crisis there will invariably be a strain on cash flows.
Pre-crisis planning is about reducing concentration risk -- are all your operations located in one pocket of the city? Have you considered diversifying to outside Jabodetabek (Jakarta, Bogor, Depok, Tangerang and Bekasi)? Do you have only one telecoms provider? Are you solely dependent on PLN state electricity company, or how long can your backup power last? Where do your key staff resources reside and how do you get them to work during a crisis? Have you thought of alternative delivery channels? Who are your top 20 percent clients and how will you reassure them during a contingency? In the event of a gridlock or access breakdown can some staff work from home and if so how reliable is their connectivity? Brainstorming with key teams will help flag these issues and highlight the extent of concentration risk that needs to be reduced before the next crisis.
When a crisis strikes, the company needs to adopt a 360 degree implementation approach for there will be panic all around -- from anxious customers, worried employees, affected suppliers/distributors, nervous bankers, doubtful shareholders, opportunistic competitors and unresponsive utilities. In a systematic way the crisis management program needs to work through all of these challenges. And in doing so, it should use clear and consistent communication, a demonstration of progress (within defined time periods like three hours, 12 hours, one day, three days, one week, etc.) and a visible, hands-on management that shows courage and conviction.
The post-crisis phase should be one of review and assessment of lessons learned. But there is no point in producing reports and filing these until the next calamity. It is crucial to implement suggested solutions with a sense of urgency and properly test contingency plans. This is also a good time to obtain customer feedback and note the gap between their expectations and how the company reacted. If the gap is not narrowed there is a risk of losing customers to well organized competitors. Since crises in Indonesia invariably have a humanitarian aspect it is advisable to ensure the crisis management program also has a caring corporate social responsibility component.
An endearing quality about Jakarta is the ability of the common individual to recharge spirits after each stressful crisis. Most companies are selling goods and services to these resilient individuals and in their long-term business pursuits they all bear an obligation to plan and prepare better for crises and in doing so collectively help to lessen the impact.
The writer is Nehru scholar from St. Stephen's College, Delhi, based in Jakarta and working for HSBC Indonesia. The views expressed are his own. His column Insight appears on the second Wednesday of each month.
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