Five Business Lessons From a Summer of Storms
There will be storms ahead. Make sure you learn resiliency from the ones that came beforehand.
For millions of people in the U.S. and the Caribbean, the summer of 2017 is synonymous with tremendous suffering and loss, as one of the most active hurricane seasons in history hit their communities. As tactical response to the storms scales down and recovery begins, strategic focus will shift to making critical systems more resilient - such things as the water levies in Houston, and the power grid in Puerto Rico.
Although there is a world of difference between how governments and organizations respond to the challenges of large-scale disasters like storms and how a management team runs a business, I think there are some valuable resiliency lessons that can be drawn for startups.
When I’m not working as a consultant, I serve as a Civil Air Patrol liaison officer to FEMA’s Region II. In this capacity, I’ve worked six major hurricanes in the past several years, including Sandy in 2012 and this year’s Irma & Maria. Aside from master-of-the-obvious missives like “failure to plan is planning to fail,” here’s my top five list of lessons from disaster response every CEO can incorporate into their business strategy.
- Resources always govern results. There is never a shortage of demands on an organization’s resources, and the natural tendency is to pay the most attention to the fire burning brightest at the moment. However, an organization’s effectiveness is metered by the resources it can strategically bring to bear, not devote to this or that tactical fix. Avoid the trap of allocating resources (in a company, usually capital or talent) to things that are not bringing your organization closer to your broader goal. Also, avoid the cardinal mistake of not allocating enough resources to do the job at hand properly. Another landmine is the order in which you deploy your resources, which can matter as much as getting them in the first place. To use a FEMA parallel, there’s no use surging hundreds of trucks to help distribute food and water in Puerto Rico unless there are drivers on the ground to operate them. It sounds obvious, but in high-stress environments, it's the simple and obvious things like this that will make or break the impact of scarce resources.
- Know what has to come first. Prioritization and precedence are critical to resource management, so knowing (or carefully planning for) what should receive support first is paramount if you are to avoid going back and doing something over again, or worse, detracting from your ability to deal with more important things down the road. Resources are almost always limited, while demands invariably outstrip supply. Management must prioritize, but it should do so more adroitly than merely forecasting an ROI on capital invested; look at your resources holistically, with your strategic goal in mind, and parse out in which order they should be expended. Bear in mind that it’s not always immediately apparent what should come first, and your decisions regarding prioritization will be based on incomplete information.
- Consequence management. This is one of the most common mistakes I see leadership teams make. While they may be very adept at allocating resources and prioritizing, CEOs often fail to extrapolate the broader impacts of their decisions, and how their choices may affect subsequent requirements. The more ambitious the goal and the tighter the timeline, the less likely is that you have really worked through how everything fits together, and how what you decide today may govern what has to be done tomorrow. I recommend mapping out how your decisions will move your startup towards its ultimate goal in order to see where the consequences lie.
- Avoid the soda straw. Every executive, commander and leader is at risk of viewing their world through the proverbial soda straw, focusing on the immediate requirements or mission they are tasked with at the moment to the virtual exclusion of everything else. This is a natural tendency: concentrate on the immediate task for survival. However, maintaining situational awareness of the entire enterprise - and its priorities - is key, no matter how exciting or promising a certain project might look today. In the disaster world, this means remembering that almost every decision comes with a long logistical and economic tail that must be managed – for instance, the person who orders thousands of first responders and military personnel to a hurricane zone must also think of the lodging, provisioning, and sanitary requirements they will place on an area that is likely to be already highly deficient in all three.
- Rapidly iterate based on new information. Private sector companies typically exist in rapidly-changing environments, and as the old saying goes, no plan ever survived the first hour of combat. Don’t be afraid to abandon prior conceptions about your market or customers in favor of new, real-life information you receive from the field. In this sense, treat your decisions as MVPs (Minimum Viable Products) that are just starting points from which to depart. Real-time adjustments are more valuable than anything you put up on a white board six months ago. And make decisions quickly – one of the few unassailable advantages a startup has over its larger competitors is an inherent ability to move very quickly, so use it often. Case in point: Google’s plan to use high altitude balloons to temporarily take the place of cell towers may restore mobile phone service in Puerto Rico weeks or even months ahead of any other solution available from local telecoms or the government.
In many cases, your CFO can help you not only properly define your company's strategic goals, but also help you execute the day-to-day demands in order to reach them in a focused and efficient manner. Like with disaster response, there is no one thing that makes all the difference, but rather countless small elements that make up the overall effort. To sum up, remember another old saying: Manage the little things right, and the bigger things will take care of themselves.