The Power Law in Crisis Management
The real challenge lies in the few crises that change everything
In more than twenty years as a crisis management consultant, I’ve learned that not all crises carry the same weight. I remember a CEO once told me: “Francisco, it feels like my company is in crisis every week.” He wasn’t exaggerating: unhappy clients, uncomfortable media coverage, rumors on social networks—his company seemed to be walking through a minefield. But when we carefully reviewed the situation and analyzed each event, it became clear that what he was facing were minor tremors, not real earthquakes.
In his book Zero to One, Peter Thiel discusses the power law. The idea is simple but powerful: in business, most investments generate very little, and just one or two produce nearly all the value. A venture capital fund may lose money on nine startups, but the tenth—the extraordinary one—makes up for all the losses and secures success. The same logic applies to crisis management.
Not all crises are created equal
In theory, a company could face dozens of incidents each year: complaints on social media, negative press, internal mistakes, minor service failures, workplace accidents… Most are manageable incidents. They can be controlled with basic protocols, rarely escalate, fade quickly, and leave little impact. But the power law reminds us that there will be one or two crises that put the organization’s viability at risk, disrupt business continuity, or seriously damage its reputation.
For example: an airline may deal with daily claims, delayed flights, even labor strikes. But a plane crash or a hijacking becomes the crisis that defines its history.
Identifying the “real crisis”
A good crisis management system includes continuous improvement plans to address minor incidents. It relies on protocols that allow early detection and effective resolution, preventing them from escalating or making headlines.
Yet the real challenge is preparing the organization for the inevitable: a true crisis. This requires recognizing—honestly, without denial but also without fear—the main vulnerabilities that could trigger a major disruption.
We are not talking about Black Swans—unpredictable crises that no one can foresee in nature or timing—but rather about crises that stem from internal vulnerabilities or are inherent to the company’s industry. These are unavoidable risks: sooner or later, they will happen.
The challenge, then, is not overreacting to minor incidents or spreading resources evenly, but anticipating the few potential crises that could cause 80–90% of the possible damage. Examples include:
- A product defect or contamination that endangers health or safety
- A corporate fraud with legal implications
- A massive data breach
- An environmental accident
These are the scenarios that can truly define a company’s viability and reputation. They demand the highest level of preparation, simulation drills, contingency plans, and financial resources.
A smarter resource strategy
A CEO who understands the power law in crisis management doesn’t exhaust himself treating every incident as if it were “the end of the world.” He knows how to separate the critical from the anecdotal.
This also prevents the crisis committee from being trivialized and keeps the organization focused on what could actually make the difference between survival and collapse.
The power law teaches us that:
- Not all problems deserve the same level of attention
- Resources, the crisis committee’s time, and the CEO’s focus should be concentrated on the few events that can truly change the company’s trajectory
Under this logic, you cannot have 50 identical protocols for 50 minor incidents. That’s where corporate culture of continuous improvement becomes essential—taking daily actions to prevent and address minor issues effectively as part of normal operations, without panic or overreaction.
Meanwhile, prevention, training, and preparedness must always focus on the two or three catastrophic scenarios that could genuinely put the company at risk.
“Small problems” shouldn’t be ignored, but they can be solved through simple, agile procedures. “Big problems,” on the other hand, demand anticipation systems, constant training, and response protocols that the entire organization knows, trusts, and can activate immediately, without hesitation—because they are ingrained in the corporate culture.
Conclusion
The power law applied to crisis management shows us that most incidents are minor. Only a few crises change everything, and it is precisely there where companies must concentrate their attention, energy, expertise, preparation, and the bulk of their resources.
The next time you feel your company is “always in crisis,” remember: most are just small fires. Your real strength lies in how you prepare for the catastrophe that can change everything.
Learn to distinguish between what is anecdotal and what is truly important, and focus preparation on the crises that may define whether you survive or disappear.
Is your organization prepared for the next crisis?
At Ventura Comunicaciones, we help companies, institutions, and leaders design prevention, response, and recovery strategies for crises, guided by a clear vision:
Communication is not an accessory. It is the very core of leadership in challenging times.
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