There is a well-known model on the stages of human grief called the Kubler-Ross model. I believe it can be the basis for a form of company grief, a grief that we are seeing in a growing number of companies during these difficult times. In this article I describe the seven stages of company grief – ignorance, shock, denial, anger, bargaining, depression and acceptance.

Ignorance: some or all of the senior decision-makers in the company have no knowledge of the disaster. One of the most famous examples is the bankruptcy of Barings Bank by Nick Leeson, a relatively low-level manager who over a three-year period lost US$1.4 billion, which resulted in the collapse of the bank. Think about it, a single manager, on his own, managed to fraudulently trade over three years and none of the senior executives knew about it.

Shock: senior executives and the board become aware of disastrous information and this leads to a violent emotional impact, which leads to an alteration of reality in the subsequent stage. The shock stage is usually minutes in length but the results are profound.

Denial: the decision-makers are in possession of the pertinent information but refuse to believe it. They have altered their internal reality so as not to face the painful information. In psychological parlance this is called cognitive dissonance, as there are two contradictory beliefs, as opposed to ideas, in one’s mind – the belief just before the shock that everything is OK and under control, and the belief just after the shock that everything is imperilled.

This is arguably the most dangerous phase as it can last years, and opportunities to remedy any negative situations slip by. An excellent example is Nokia, the mobile phone maker. In 2007 Nokia had 40 per cent of global mobile phone sales, but by 2013 it had to sell its handset business to Microsoft. During the press conference announcing the sale, Nokia chief executive Stephen Elop said: “We didn’t do anything wrong, but somehow, we lost”. That, ladies and gentlemen, is denial.

Anger: the board or the chief executive come out of their denial but refuse to take responsibility and, more importantly, leadership. At this point they lash out as any angry person would. People are yelled at and fired for no real reason, bonuses are cancelled, salaries are frozen, vendors and suppliers are not paid on time and so on. On the one hand this exasperates the denial stage problem of time wasted doing nothing by replacing it with time wasted adding to the damage. On the other hand, it is usually a much shorter phase. For a great example look up “Chainsaw” Al Dunlop, a permanently angry man who effectively destroyed several companies.

Bargaining: trying any deal to save the situation. This includes randomly changing the chief executive and other executives, introducing random business plans, over-paying to recruit and retain executives, flogging various parts of the company at fire sale prices, and last but not least, lying, disguised as marketing or branding.

Depression: shareholders, boards and executives understand the severity of the situation, understand that there is no fast fix and spend years, even decades, keeping a company on life support without any real effort to do anything, a common malaise of SOEs and GREs. Sometimes, in the corporate equivalent of suicide, boards will shut down a company simply because they do not have the willpower to keep it going.

Acceptance: understanding that massive damage has been inflicted on the company, that there is no miracle forthcoming to change this, that to salvage what is left will take tremendous amounts of energy and will entail making serious decisions under uncertainty. Very few companies have evidenced this, but Apple is a spectacular example of such a success.

In these difficult times we must learn to move our companies through these stages as fast as possible and we absolutely have to learn acceptance. Otherwise, we are going to spend US$2 trillion keeping everything on life support, and then ignominiously bury the economy.

This article was originally published in The National.