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Crisis management for founders: Overreact rather than underreact

Act quickly, says Maynard Webb. Problems don’t get better with age.

Crisis management for founders: Overreact rather than underreact
[Source mages: leonardo255/iStock; Igor Haritanovich/Unsplash]
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Editor’s Note: Each week Maynard Webb, former CEO of LiveOps and the former COO of eBay, will offer candid, practical, and sometimes surprising advice to entrepreneurs and founders. To submit a question, write to Webb at dearfounder@fastcompany.com.

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Q. What is the best advice you have on how to deal with an external crisis?

—Founder of a company headquartered overseas

Dear Founder,

Great question. Crises happen and they happen often. Whether it happened unexpectedly, or it happened because you haven’t managed something well, the imperative is to deal with it now before it becomes something bigger.

My advice: Overreact instead of underreact.

You need a way to categorize the crisis. In other words, you need a way to measure the mess. At eBay, Meg Whitman and I would judge incoming issues on the Richter scale model, which gave us a quick, 1 to 10 scale to measure the seriousness of the issue. A “1” is the routine noise that happens every day, such as a user having a problem with their computer and not being able to log onto eBay. (That wasn’t the end of the world, and there wasn’t much we could do.) A “9,” for example, was when the site crashed due to a power outage and the backup didn’t come on. Ask yourself: Is this a tremor that will pass, or is this a killer earthquake you can’t recover from?

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Let’s say you have a big problem—a “6” or above on the Richter scale and a threat to the business. There’s no time to waste. If you put a frog in boiling water, it will quickly jump out. But if you put it in and heat the water slowly, it will stay there—and cook. Do not stay in hot water for long.

I often say that problems don’t get better with age. Too often, people choose to hide problems or let them sit, rather than addressing them when they’re smaller. Remember the issue with the Tylenol cap? Or Intel’s Pentium chip? Think about how differently Tesla responded to a seat belt malfunction. It recalled every car and managed the problem proactively.

A crisis is a time to get all hands on deck. The first thing to do is to sound the alarm to get immediate attention—and action. At eBay, we developed codes (Severity 1, Severity 2, etc.), which helped us immediately identify the scale of the problem and the response time. (A “Sev 1” would be dealt with immediately, while a “Sev 4” could be handled the next day.) We also incorporated terminology such as “911,” which meant that every resource in the company could be pulled off of whatever they were doing to work on the current issue.

You’ll be amazed at what people can accomplish when they come together to address a crisis. However, a word of caution: Use emergency status judiciously. It may be tempting to escalate future crises to “911” to get a faster response time, but don’t. It will burn your team out fast.