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The Perfect Storm What Happens When Market Volatility Meets Internal Dysfunction.
Dr Elizabeth King25/11/2025 1:51:25 PM3 min read

Navigating Market Volatility and Internal Dysfunction: The Perfect Storm

Navigating Market Volatility and Internal Dysfunction: The Perfect Storm
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It was 2:00 AM in the middle of the ocean. A storm cloud, unpredicted by radar, had completely stalled our yacht, costing the crew their hard-won lead. But the real storm wasn't the weather.

Below deck, the team’s navigator - a veteran with decades of experience - was spiraling. He was swearing, overwhelmed, and psychologically fracturing under the pressure. The crew was facing what I call the "Perfect Storm": the precise moment when a spike in external pressure collides with an internal breakdown of team dynamics.

In my video observation of this elite crew, subsequently published in our academic paper, I learned that most teams can handle a crisis. And most teams can handle an internal argument. But very few can handle both at the same time.

When external threats rise and internal bonds break, cognitive capacity drops to near zero. Here is what the data tells us about surviving the perfect storm.

The Anatomy of a Collapse

In business, we often treat "market challenges" and "culture issues" as separate problems to be solved in separate meetings. The market challenge is for the Strategy Team; the culture issue is for HR.

However, my research demonstrates that these two forces are inextricably linked. In our study, we mapped the crew’s experience onto a matrix of adversity. The "Perfect Storm" quadrant represents the intersection of High External Adversity (the unpredicted weather event) and High Internal Adversity (the navigator’s breakdown).

Quadrant - sailing

What we observed in the video footage was a phenomenon I call "cognitive saturation." Because the navigator was fighting an internal battle -feeling isolated, misunderstood, and panicked - he lost the bandwidth to fight the external battle. He physically could not read the weather patterns effectively because his brain was flooded with interpersonal stress.

In the corporate world, this looks like a leadership team that freezes during a PR crisis because they are too busy blaming each other for the leak. The internal friction consumes the energy needed to solve the external problem.

The "Double Burden" of Leadership

The crew on the yacht had to cope with a "double burden." They had to physically sail a boat through a chaotic weather system while simultaneously managing a senior leader who had gone "offline."

This is the critical test of Resilience.

Resilience is not just "bouncing back" individually. It is a team relationship capability. When the navigator cracked, the team didn't crack with him. They didn't argue back or tell him to "calm down" - actions that would have only escalated the internal tension.

Instead, they absorbed his stress. They enacted a temporary containment strategy. Other crew members quietly stepped up to fill the void, checking the sails and monitoring the course, effectively bypassing the broken link in the chain until he could recover. They recognised that in a Perfect Storm, you cannot force a resolution to the conflict; you must simply survive the moment.

Assessing Your Own "Tensility"

The difference between a team that sinks and a team that survives this quadrant is Relational Tensility.

If the relationships on that boat had been rigid -based solely on hierarchy and command-and-control - the navigator’s breakdown would have caused a mutiny. Because their relationships were tensile (flexible and forgiving), the team could stretch to accommodate his failure without snapping.

As leaders, we need to ask ourselves:

  • Do we have the capital? Have we built enough relational capital during the "smooth sailing" times to afford a breakdown during a storm?
  • Can we compartmentalise? Can the team distinguish between the external enemy (the market/competitor) and the internal friction, or do they conflate the two?

The Lesson

You cannot predict every storm cloud. The market will shift, technology will fail, and competitors will surprise you. You also cannot guarantee that your people will be 100% stoic 100% of the time. Even experts break.

But you can prepare for the intersection of the two. By building a culture that values psychological safety and relational tensility, you ensure that when the Perfect Storm hits, your team doesn't turn on each other—they turn toward the problem.

Is your leadership team resilient enough to handle the double burden of market pressure and internal friction? Resilience is a measurable metric.

Follow my work for more on how to diagnose your team’s 'tensility' or explore the Metta High-Performance People Development Program.

Reference

King, E., Branicki, L., Norbury, K., & Badham, R. (2023). Navigating team resilience: A video observation of an elite yacht racing crew. Applied Psychology, 1– 27. https://doi.org/10.1111/apps.12474

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Dr Elizabeth King
Dr Liz is all about "Developing Leaders to Perform in Uncertainty". Leaders today face challenges amidst growing systemic changes and the uncertainty that follows. She holds a PhD in Leadership, a Masters in Coaching, an MBA and a Science Degree.

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