Disaster-Blog

Business Triage - Making the Tough Decisions that Save Businesses

What do Tylenol, New Coke, Jack-in-the-Box, Bag Leaf Spinach, Katrina and the World Trade Center have in common?  They were all disasters.  More specifically, they were all business disasters, and the outcomes of each of these disasters was completely dependent on managing needs and resources.

But what does triage have to do with business?
If a business is doing well, absolutely nothing. 
However, in a global economy where labor is cheaper for “the big boys” overseas and markets are flooded with less expensive goods, where disgruntled employees or other malcontents take out their frustration on a business directly or its customers there are few businesses that do not regularly suffer a disaster.  The problem is, they don’t know how to recognize one when it comes.

The first lesson from the disaster field office are the definitions: a disaster is when your needs exceed your resources.  It’s a simple mathematic equation:
Disaster = Needs > Resources

A catastrophe is when your needs exceed all ability to respond.  Again, it’s a simple mathematical equation:
Catastrophe = Needs > Ability to Respond.

Resiliency is defined in many ways. One definition is even of a book on the subject, Mastery Against Adversity (Disaster Life Support Publishing, 2007).  But the simplest definition is that resiliency is the opposite of disaster.  It is when your resources exceed your needs, or mathematically:
Resilience = Resources > Needs.

The second lesson from the disaster field office is every business must have resilience to survive its disaster.

The third lesson from the disaster field office is that there are acceptable losses.  Several years ago when New York City suffered its most recent blackout Arnie, who owned a small convenience store and ice creamery faced a business triage decision.  With the power out he had ten flavors of ice cream in the cabinet that would soon melt.  At 5 gallons per flavor there was slightly less than 50 gallons of ice cream up front.  This was a small loss, but it would be compounded by the fact that he had over 100 gallons of ice cream in the back. 

Arnie knew that he had a disaster on his hands.  His needs (refrigerator) exceeded his resources (electricity).  Arnie needed to make a simple triage decision.  He had to decide where he could focus his efforts and his remaining resources so that his business would in fact reopen when the power came back on.  He also needed to plan for as short a recover as possible.  It takes a lot of effort to get rid of over 100 gallons of ice cream and a lot of dumpster space.  The clean-up would be horrendous and if the disaster lingered too long his store would be filled with stench of sour milk and rotting ice cream.

Arnie ran a neighborhood store and his customers had already been in to purchase what he had on hand.  With an old cigar box he had given up his computerized register and was going business “the old fashioned way”.  But what to do with the ice cream?

Arnie doesn’t know if he was the first store owner to think of it, but in the sweltering heat Arnie struck upon an idea, give it away.  After all, what would he be losing?  The product would be ruined before refrigeration could be returned. So he simply gave away the ice cream.  A small handmade sign in the window soon drew people in off the street.  “Free Ice Cream. 

In no time he had a line.  He was giving away the ice cream, but what to hold it in?  Ice cream cones!  The cones were actually cheaper than Styrofoam cups, and Styrofoam have an unlimited shelf life.  Would the ice cream cones go bad during the blackout?  No, but you can’t give people ice cream in their hand, and the small loss in the cost of ice cream cones was less than the larger loss than the cost of Styrofoam cups. 

To Arnie’s amazement, many people tried to pay him for the ice cream.  Wanting to get rid of it as quickly as possible, before it all went bad and he had to carry it out back where it would create a horrendous stench, he simply refused.  To his greater amazement people began to buy other items in the store, items that in all likelihood he would not have been able to sell at that moment in time simply because before the free ice cream sign he didn’t have many customers.  Before he had given away all the ice cream, Arnie found that his store shelves were bare and his cigar box overflowing.  His acceptable loss, the ice cream, had gained him an unexpected profit.

But that’s not the end of Arnie’s story.  The power came back on and Arnie was re-supplied with both ice cream and merchandise.  He also saw a tremendous increase in business.  People didn’t just come because he had given away ice cream.  They came because they felt that Arnie cared about them.  He had taken a tough decision and turned it into a benefit for those around him.

Triage has come to to be sorely misunderstood.  Triage is not simply sorting the most important project or business goal, or even critically ill patient to the front of the line.  Triage is determining what resources are available and how those resources can serve the largest number of goals or the largest number of people at any given moment in time.Triage is a continuous process, and it is a repeating process.  In business that means constantly reassessing the resources available at hand both as they are expended and as they are re-supplied.  Business triage involves reassessing the needs and goals of the company on a minute by minute, hour by hour basis.

Arnie is just one example of businesses surviving and flourishing because of efficient business triage.  Johnson & Johnson (cyanide in Tylenol) and Pepsi-Cola (needles in bottles) are two “big business” examples of the same principle. 

In the business world triage missteps, failure to define an acceptable loss has resulted in product failures and brand damage (Coca-Cola with New Coke and Jack-in-the-Box with tainted hamburgers).  The news examples disaster was taken to catastrophe because needs were not prioritized and goals not adjusted to the realities of available resources.

The lesson of business triage is that when a business faces a disaster it must accept that not all of its goals can be met until more resources are brought to bear.  If those resources are not available then acceptable losses must be identified and sustained.  This must be done dispassionately and with the same logical approach as business uses when choosing a vendor or a new project in which to invest.

(Excerpted from my lecture series and book, Avoiding Business Disasters: Lessons from the Disaster Field Office)

Managing Expectations at The Edge of Disaster

Steven Flynn’s recent book The Edge of Disaster has garnered the expected “inside the beltway” Washington response.  Finally today a senior official at the Department of Homeland Security (no doubt in the Public Information Office) began to spout the company line and tie it to Mr. Flynn’s book.

Point by point the Department of Homeland Security and the Federal Emergency Management Agency (FEMA) again remind the American public that a federal response is always more than 24 hours away, in fact, usually 48 to 72 hours.  The familiar theme of self-responsibility and self-preparedness are trotted out again for review of a distracted American public.

Unfortunately, both the Department of Homeland Security and Mr. Flynn are right.  In America, as soon as the catastrophe or a disaster has past we busy ourselves with the activities of every day life and forget the lessons that we learned when the most recent adversity struck us.  In short, we never develop resilience.

It is gratifying to me, having declared 2007 unofficially the year of resilience, that speakers and pundits around the country are now reframing their message not in terms of disaster preparedness or response, but in terms of resilience, the ability of a community or an individual to thrive in the face of adversity.  Dory Riceman characterized resilience as mastery against adversity and nothing could be more true.

The Federal Government, as is its habit, has turned disaster preparation into yet another unfunded mandate.  The cost for training and preparation often exceed $100,000.00 per facility falls completely on these private agencies and the individual practitioners within them.  Full scale disaster drills that are coordinated within the community can cost hundreds of thousands of dollars and are now a yearly requirement on all hospitals and healthcare facilities. 

The Institutes of Medicine have soundly criticized hospitals for not including communities, EMS, law enforcement and other responders in both their disaster plans and exercises.  The Federal Government has even gone to the point of setting the stage for several and even criminal prosecution of hospitals and healthcare facilities that continue to bill Medicare, Medicaid, Tri-Care, but are not in compliance with National Incident Management Systems and the National Response Plan.  These penalties were promulgated within the Federal Government, but by so doing became incumbent upon those who build a Federal Government under the Medicare, Medicaid and Tri-Care systems due to a little known clause which requires an attestation of compliance with “all regulations” promulgated by or upon CMS.

The problems do not exist just within healthcare, however.  Disaster preparedness and response are closely linked in the public mind, but separated in time by the event.  As the Department of Homeland Security regularly points out there is not sufficient resources within a one hour response time of every community in the United States. Communities cannot rely on federal assets or even state assets in the event of adversity. 

If resilience is mastery over adversity then that mastery is achieved through ensuring that resources never exceed needs.  Disaster is when you need to exceed your resources.  If you can prevent that single failure you can prevent disaster.

There is an unfortunate tendency to believe that disaster is unpredictable in its timing, scope and nature.  The Department of Homeland Security itself echoes this myth as does Steven Flynn and many other authors and “experts.”  The predictability of disaster is in fact absolute.  If your needs exceed your resources regardless of the nature of the adversity that you face, you have a disaster. Similarly, if your needs exceed all ability to respond, you will face a catastrophe. 

On the other hand, the same pundit’s government officials and experts state that resilience is severely lacking in America.  The 9/11 attacks proved quite the opposite.  Resilience comes to us in four areas of life: 

• Our physical resilience; that is the resources internal and external that we hold in reserve for moments of adversity.
• Our emotional resilience; that internal ability to draw on our experiences and our emotional strength garnered from our relationships that allow us to cope with the stress and impact of adversity.
• Our relationship resilience; those community, professional and family connections that we have nurtured such that we may tap into them to garner additional resources whether physical or emotional to assist in mitigating disaster.
• Our spiritual resilience; that strength that is gained from believing.  It is in fact not important what we believe, but that we believe because it is in the mere act of believing that we gain strength and resilience.

Government by its nature is reactive, not proactive.  It responds to the needs of voters, it responds to the needs of constituents, it responds to the needs of society and it responds to the needs of the law.  It is only natural that in their world, the narrow world of reactivity, disaster is unpredictable. 

Fortunately, the rest of us live in a world where we are proactive.  In a proactive world we use our personal and societal experiences to predict the likelihood of future events, even adversity.  By knowing the types of adversities we have faith in the past, we can prepare for those adversities in the future.  If our preparation is strong, if our preparation is strong, if it is comprehensive, if it is now, we will prevent adversity from becoming disaster in the future…  We will achieve mastery against adversity.

The Edge of Disaster and Modern Healthcare

Stephen Flynn's recent book The Edge of Disaster, featured on national public radio this week, describes a number of large scale vulnerabilities across the United States.  His thoughts on pandemic flu, while certainly concerning, pale in comparison to the real numbers. 

Mr. Flynn describes 80 million infected with as many as 800,000 dying of the disease.  However, a review of Avian flu pandemic over the last 300 years shows that one-third of the U.S. population or 100 million people will be infected.  If this is not enough one half of these individuals or 50 million will require some level of hospitalization or institutional care from bone health all the way up to intensive care unit services.  As Mr. Flynn correctly pointed out there are fewer than 970,000 hospital beds in the United States far less than the 50 million that will be required. 

Of greater concern is the fact that half of those requiring hospitalization will develop a life threatening lung condition know as Acute Respiratory Distress Syndrome (ARDS).  Twenty-five million people requiring advanced lung care will quickly overwhelm not only the capacity of our hospitals but of our respiratory therapists and our nurses.  Of those with ARDS half will require ventilator support, unfortunately there are only 105,000 ventilators in the United States and only 16,800 are available at any given moment to treat these 12.5 million ARDS patients.  Of those that require ventilators, approximately 6.25 people.  This last number is eight times that predicted by Mr. Flynn and has been substantiated in multiple scientific reviews of the major pandemic of the past 300 years.

Mr. Flynn also spends a significant amount of time discussing surge capacity and when asked by his NPR host about the economics of increasing surge capacity beyond the pitiful 12 percent currently available nationwide Mr. Flynn simply said it was an investment in the future, an "insurance policy."  Those knowledgeable in healthcare surge capacity and healthcare vulnerability analysis differ with Mr. Flynn's otherwise star analysis of the other vulnerabilities of the United States.

Immersion Simulation based disaster training for hospitals and healthcare facilities results in a new protocol in the minds of those who are trained.  They learn to deal with triage on a moment to moment basis with every patient whether there is an ongoing disaster or not.  Those hospitals that adopt this model quickly learn that they can activate their emergency plan even when their hospital is only suffering from the daily surge of patients.  Hospitals in New York, Boston and Philadelphia have done this with increasing frequency when emergency room await times have been only two times the norm.  As a result the hospital activates its emergency operation center, calls in additional staff and increases the number of patient care areas in the hospital by re-tasking administrative and non-patient care areas to the treatment of non critical individuals.  These “green” treatment areas decrease the backlog in the emergency room lobby with surprising results.

• Fewer people leave the hospital without medical care because the wait has been reduced.
• There is an increase in hospital admissions because greater diagnoses are made by less stressed doctors, nurses.
• There is a net increase in hospital revenue despite the cost for staff and re-tasking facility.
• Patient satisfaction is improved with patient satisfaction scores on survey rising.
• The hospital saves money because a surge capacity emergency plan activation counts as one of the yearly required disaster drills.

In addition to Mr. Flynn's "insurance policy" approach to surge capacity there is a real world economic advantage for hospitals and healthcare facilities to participate in large scale disaster planning and preparation.  Every hospital in the United States has now accepted money from the federal government under HRSA grants or through various government based insurance payment programs.  As a result these facilities are now required to be compliant with the 17 elements of the National Incident Management System implementation plan for hospitals and healthcare facilities.  In addition, they are required to maintain a surge capacity equal to 20 percent of licensed hospital beds or 500 bed per million population in the geographic license area of the hospital or whichever is greater, less these facilities be guilty of fraud.

The stakes are high for healthcare not only because of the duty and responsibility they take on as part of their role in society but now as a result of the financial assistance they have accepted for the past five years as they were supposed to be preparing for all hazards and all disasters.

Mr. Flynn's book and the features on national public radio this week have brought the spotlight to bear on the vulnerabilities in America, the question is will we respond now or lament the next catastrophe?

Spiritual Resilience for Business

Of all of our sources of resilience, spiritual resilience, it is the only one that is self replenishing.  It is proven that the very act in believing adds to our resilience.  Like emotional resilience spiritual resilience grows when shared.  But unlike all other canteens of resilience it is spiritual resilience that refills itself.  Since we know that it does not matter in what we believe, but that we believe in some form of high order, high wisdom, or higher power a “God” or guiding force in life.  It makes sense that acting on our beliefs would add to our resilience.

It was spiritual resilience that sustained me during the multiple field response deployments of 2005. Hurricane Katrina was an absolute catastrophe in both humanitarian and a physical nature.  What the hurricane had not directly destroyed the levee breaches soon did.  Lawlessness and anarchy brought a few to the basis of human emotion and behavior.  But the tragedy also brought out the best in many people.  Like 9/11 before it Hurricane Katrina’s “ground zero” was dotted with signs that seem to reproduce like mushrooms each one declaring “God bless New Orleans” or we have faith, we will be saved.

These people not only publicized their beliefs (and their spiritual resilience), but they lived it.  These individuals shared not only their stories with us as we treated their physical ailments, they  told us that they would pray for us or that we were the answers to their prayers.  It is not unusual to receive perfunctory thank you’s in healthcare, but to be asked to pray with a group of survivors and then be the object of their prayerful thanks is both humbling and rejuvenating.

And for these wonderful survivors it was the act of expressing their spirituality that renewed them. Remember this is New Orleans, we are not just talking Christianity, Islam, Judaism, but Santorista and Voodoo.  Every form of religious expression both familiar and exotic and yet they all served a common end: they bound a people together and renewed them. The found the way to refill their own 40,000 gallon bathtub by pouring from their canteen of spiritual resilience.

It is this type of resilience that every business must have to handle catastrophic adversity. “Business Katrina’s” fill the news almost every week and those affected are often left bereft of emotional resilience and the financial impact literally bankrupts their physical resilience. It is at these times that an abiding faith is imperative.

But faith in what?

In the 1980’s the study of Sun Tzu and The Art of War introduced American executives to the concepts of balance and flow in battle and business. Sun Tzu wrote not only of strategy, but of the need to understand one’s place in one’s world. More importantly, Sun Tzu emphasized planning with respect and consideration of the environment and the greater forces that determine the fate of our efforts. At the deepest level, The Art of War was about victory through surrender.

In more modern times, masters of Indian philosophy have reintroduced the principles that build spiritual resilience to the American corporate community. Jeff Korhan (www.truenature.com) is the most respected of these new corporate philosophers. A protégé’ of Depak Chopra, Jeff Korhan has successfully made the jump from businessman to business guru in the truest sense of the work through the use of his spiritual resilience both for himself and his clients. How will your spiritual resilience serve you?

(Excerpted from my lecture series and book The Wounded Dog: Avoiding Business Disaster - Lessons Learned from the Disaster Field Office)

Want Business Success? Think a Little Differently

The key to making Disaster Preparedness Education a reality is to make it applicale to everyday business life. For this reason, the "From Preparedness to Profitability" category was created. The goal is to generate dialogue on the application of Disaster Preparedness principles and techiques to the everyday operation of businesses with an eye towards a better bottom line.

While many jobs for American MBA graduates are going overseas, those who have MFA’s will be in great demand. According to Gartner Inc, by 2008, 40 percent of IT jobs for MBA’s will be outsourced to workers overseas. The reason? A person can fill in a spreadsheet from India as easily as from Silicone Valley for one-tenth the cost. However, corporations cannot outsource creative jobs as easily. The ability to go quickly from problem to problem, problem to solution, or from initial idea to unique product does not cross cultures well. The employee needs to be a part of the culture he or she is marketing to. As a result, American employees with Masters of Fine Arts degrees (MFA’s) are more in demand and earning more than those with MBA’s. Why does someone who is trained in artistic abilities do well in business? It’s not the particular artistic talent, but the thought process that creates it. Fine artists have the ability to apply non-linear thought to problems, which is a valuable business skill. Companies are looking for those employees who can apply a non-linear thought process to business problems.

What’s the Difference?
Here is a simple exercise that will demonstrate the difference between a linear and non-linear thought process. Take out a sheet of paper. In the top left corner, write a letter “A.” In the center of the page, write a “B.” Halfway down the page on the right hand side, parallel to the “B,” write a “C.” In the bottom right corner, write a “D,” and in the bottom left corner write an “E.” Now draw a line from A to B to C to D to E. That is linear thought—arriving at the final answer by following a step-by-step process. Now take your right thumb and forefinger and grab the left top corner of the page next to the A. With your other thumb and forefinger, grasp the lower left corner next to the “E.” Touch the A to the E. That’s non-linear thought—finding the solution without having to go from point to point to point.

Non-Linear Thinking is an Inherent Skill
From the moment you are born, you are an input device constantly making connections. In the first five years of life, your brain grows very rapidly and sets down patterns of recognition. For example, as a survival skill, infants smile at everyone. Next they learn to recognize mommy and daddy, then they develop a fear of strangers, and then they learn to reserve affinity for family and other trusted people. Finally, they choose their own friends. Over time, people begin to lay down patterns of normal and non-normal. That’s why you can look at a situation and know something isn’t right. If you see someone in an airport who has recently had a stroke, you may not realize the individual had one, but you do know that something isn’t right. That is called non-linear thinking—moving quickly from an observation to an end-point. Depending on your experience, that endpoint might have an accuracy as low as 50-50. However, for people trained in creativity, the accuracy is about 99.7 percent. These quick, non-linear solutions, called snap judgments or instinct, are valuable in life and in business. Too often, though, these instincts are not used in the business world, but that’s about to change. 

Creative, Non-Linear People Benefit Business
Creative people get in touch with the emotion of what they’re creating in themselves and use that as a guide to produce the same emotion in another person from the same society. Businesses see the value of that skill—an employee making decisions based on the mindset of a person of the general society, not as an employee tied to a business. Your non-linear, or heuristic, thought processes are when you observe from the inside out, seeing how your own emotions mirror the ones you observe in others. Can people only achieve this non-linear thinking ability by earning an MFA? Of course not. Not everyone is willing to go back to school for another two to three years to get their MFA. Fortunately, you can encourage the same type of non-linear thinking in yourself and your employees. Here are two of the steps to an MFA mindset:

* Eliminate your framing bias.
How you ask questions determines the answers you get. For example, if you manufacture candy bars and you’re ranked second in sales behind brand A, you may ask yourself, “How can we take market share away from brand A?” The obvious linear answer: make your product taste like Brand A. You have labs, testers, and linear thought people who can make Brand B taste like Brand A, or even better. Due to framing bias, they ask the focus group, “Which one tastes like Brand A? Which one do you like better?” Brand B wins, because now it tastes just a little better than Brand A. But the problem with this scenario is that nobody ever went back and asked the basic question: Will our existing customers accept this change? The executives assume brand loyalty will drag customers along. But if they have a core group of fans who love the original taste of the product, in changing the flavor, they alienate them.

* Quantitate non-linear thought.
Learn to apply non-linear or heuristic research methods by taking a written inventory of your own feelings, prejudices, and thoughts on the subject at hand. Now you have the ability to walk into a situation and start observing how the situation itself affects you. That’s called “going with your gut.” If you are a representative of your culture, your environment, and your area of expertise, as well as in touch with your customers and what you experience and feel, then you have unframed your bias. If you are honest, you will be feeling the same reaction as your customers, and you have just gone from point A to point E without all the letters in between. A business person needs to walk through the mental door to unframe his or her biases. For example, with the chocolate bar example, a good businessperson would go to the store, or go to the factory, or call his or her best distributors. The businessperson would evaluate whether the new product was flying off the shelf. If so, that’s good. But he or she would not let that framing bias affect the next time he or she goes through the door, as the opposite may be true then. Such an instantaneous response leads you to continue doing what you’re doing or more of it, depending on how well it’s going.

Learning Non-Linear Thinking and Dual Processing
A new intern fresh out of medical school is the ultimate linear thought machine. In medical school, students are taught that symptom equals possible disease. A equals B. They then run a test to confirm if B equals C. This process, however, is not conducive to all types of medicine. As soon as these new interns walk into an emergency room, they quickly learn non-linear thinking. After a few days of training, experience, and drilling, they become parallel processing machines. They still do their linear thought processes but they also tap back into the non-linear thinking they had before they got their higher education.

Most people who are now are drifting to an MFA degree already have their MBA. They’ve learned and honed their linear thought processes into a sharp edge; now they get their MFA to hone and reactivate their non-linear thought processes. At the end of all that education, they must learn to parallel process on their own, much like the emergency room interns. In the future, people will pursue their MFA after getting their Bachelor’s in business. This way they will achieve both linear and non-linear thought processes and they’ll learn to parallel process. Five to seven years from now, we will see people start earning dual degrees, or universities may start offering a new degree that incorporates both. In the meantime, businesses will need to find ways to encourage parallel processing in their employees. They can do this in a few days of intense training in a corporate retreat setting, or spread over several weeks in a coaching environment. Getting back in touch with non-linear thinking is not hard. Being able to parallel process takes some practice, but the payoff will be more success for businesses, a steady job outlook, and higher earnings for those who master this skill.

(Excerpted from my lecture series and book, Avoiding Business Disasters: Lessons from the Disaster Field Office)

How to Instill the MFA Mentality in Your Company

The most interesting thing I have learned in my years both as an Emergency Room Physician and as a Disaster Medicine Expert is that the lessons learned in the Emergency Room and the Disaster Arena are not only applicable tot he Board Room and the Corporate Arena. To truly reach your customers, you need to understand where they’re coming from—what they want and need in your product or service. But you don’t need to shell out a bunch of money on focus groups and marketing research. You can do the research yourself for much less. How? By learning to think like your customer and teaching your employees to do the same. Once you master this, customers will flock to you.

To think like a customer you need a heuristic thought process, that is you must “be your customer”. Much like how a fine artist “knows” if a painting or musical composition “works” by going with their “gut,” your employees should “know” what a customer wants. Artists develop this ability through an MFA (Masters of Fine Arts) program. Through traditional business education (MBA), however, most employees have refined their linear thought process—point A leads to point B leads to point C. But customers don’t analyze each part of your product or service; they just know if what you offer works well and if they like it. Employees who can think creatively, as if they had an MFA, can assume the mindset of your customers and market to your customers more effectively.

Such employees go with their instinct. They truly understand the customers’ wants and needs. The next time you want to know how your customers would feel about a particular product or service, adapt a non-linear (heuristic) research approach and become a part of your study base. Your focus group of one (you) will guide your initial thought process toward reaching your customers. As you instill this new MFA mindset, consider the following:

* Beware of Your Framing Bias
Think about what happens before a manager goes into a meeting. Rarely will people walk into the situation “cold.” They are briefed on who they’re going to meet and what they’re supposed to accomplish. They draw certain preconceptions, which is called a framing bias. Framing bias is the ability to walk into a situation with a plan—a plan to make a sale, a plan to establish a relationship, etc. As long as you know what your framing bias is upfront, then you can allow the situation to develop organically. You can then take away your feelings and your impressions and use them as an analytical tool. That’s the essence of heuristics—taking your feelings and impressions and using them analytically. Before you can fully immerse yourself in your customer’s viewpoint, you need to shed your framing bias. First, identify what your preconceptions are about your product, service, or situation. Second, once you’ve identified them, clear your mind and explore the experience for the first time. What’s your first impression? Are you reacting the way you are because of your preconceived ideas or because you are looking at the situation through fresh eyes?

* Become One With Your Customers
Become part of the story, even if you aren’t part of the product story. Generally, people like and dislike the same things. If not, you’d never have to wait in line for your favorite roller coaster at an amusement park. What do you feel? Listen to your gut—chances are your customers’ gut would tell them the same thing. You may not identify with the problem, but you’ll know what you need to do to make it feel “right.”  How can you now translate what you’ve discovered into a story for your customer? If you’re developing an ad for jogging shoes, you need to think like a runner—even if you’re not one. Why do people run? What is important to runners? How does running make people feel? After you’ve collected your personal research, you’ll be able to speak in the first person as a runner. Pretend you’re one of those successful fiction authors writing under a pseudonym. Tell your story like you live it. Now your customers will be able to personally connect with you because you’ve become one of them. 

* Passing the Torch
Not only do you, as a business leader, need to know how to think non-linearly, but you also have to encourage it in your employees for your company to truly succeed. Here are some ideas for encouraging creative, non-linear, MFA-style thinking in the workplace:

* Adopt an “Open Thought” Policy 
The old concept of the “open door policy” needs to be revamped into an “open thought policy.” Creative thinking should be encouraged at every opportunity. Let your employees freely express their “good” ideas. Sure, you’ll need to wade through the terrible ones to get to the good ones, but it’s worth it. Your employees will feel valued and be encouraged to find new, creative ways of solving problems. Over time, employees will learn to evaluate ideas on their own. At first, you will hear tons of ideas, only some which are worth exploring, but hang in there. It will take some time for an employee with limited knowledge of all the factors involved in running the business to be able to fully evaluate an idea of their own. As you take the role of mentor, rather than monitor, employees will become more creative and more skilled at self-editing. They’ll be able to take their ideas to the next logical conclusion and say, “You know, that idea is not going to work.” But they’ll also feel comfortable suggesting a well thought out “wild” idea to their supervisor that may turn out to be a great one. Over time, the manager and the employee will learn how to mentor and listen more effectively, and the company may benefit from some great new ideas. An employer can’t conceive all possibilities for his or her product or services. For progress to happen, you’ll need new ideas, so encourage your employees to speak up. If one comes up with a good hook but never has the opportunity to present it, think of how many sales you could be losing.

* Bring in a Teacher
Bring in an educator for your organization that teaches and coaches creative thinking and alternate thought processes. Rather than hiring a speaker this year who gives the same old talk about ramping up sales, consider bringing in someone who teaches employees how to think creatively. See what kind of difference it makes in your sales numbers for the following year.

* Offer Tuition Reimbursement
For very large companies, consider offering tuition-reimbursement for employees to get their MFA. The object is not to get them to master painting or an instrument; it’s to teach them a non-linear thought process—a very valuable skill in today’s business world. With funding this advanced education, you will reap the rewards of your employees’ new skills, and the expense may not be as high as you’d think—you may be eligible for tuition tax credits. If you pursue this option, be sure to set some boundaries. Require employees to maintain a certain GPA and stay with your company for a set period of time after earning their degree. You don’t want to have people earn their MFA and then get lured away by your competition!

Begin to Change Today
Creating a workplace that encourages non-linear thinking won’t happen overnight. Begin with you. Come up with a non-traditional, non-linear idea and share it with your employees, then encourage them to do the same. Encourage your employees to be aware of their framing bias and step into your clients’ shoes. Have them “become” your clients and watch how much your business grows.

(Excerpted from my lecture series and book, Avoiding Business Disasters: Lessons from the Disaster Field Office)

 

Expand Your Business Horizons with Pattern Recognition

I regularly tell audiences that the practice of medicine is the practice of Pattern Recognition. The old adage, "The Eye Sees What the Mind Conceives" is all to true inthe ER and in the Disaster Arena. If you want to see new opportunities for your business and increase your decision-making speed and accuracy, begin by looking outside your own business—even outside your industry—at trends and patterns that you can apply to your own organization. Ask yourself, “How do others do what they do?” The fact is that you can learn from observing others companies’ patterns of how to change, and in turn solve problems, make decisions, and grow your business faster than ever before.

A failure to recognize an impending problematic pattern can be just as devastating to a Mom & Pop business as it is to a hospital or NASA or to a CEO’s career. Enron had a pattern of corporate corruption and failure of personal responsibility. MCI had a pattern of bad investment and then later fraud to cover those bad investments. All of these things were patterns which we can look back on in retrospect, as the books are open for everybody, and from outside industries we can say, “It was obvious this was happening.” And yet the people inside the industry, the “experts,” were looking at the same patterns and could not see them. They lacked perspective from the outside, just as we, in our own industries, can fail to have the perspective on ourselves that others may have of us. So how can you improve your pattern recognition skills to enhance your business? Consider the following:

Look beyond your own niche. You must be able to pull back your blinders to recognize those patterns that tell you something has changed or is about to change. Within your own company, you may have great pattern recognition and the ability to anticipate what’s going to come next, but if you can’t see outside your company’s bubble, you may be left in the same situation that IBM was in 1978. They only looked at their own company’s patterns and did not see the coming of the personal computer. Over at Apple, though, Steve Jobs identified patterns beyond the horizon, hired Bill Gates, and started a new company…and a revolution.

If other industries ultimately serve a similar purpose to yours, then even if they seem radically different than yours, their operating patterns may still be applicable. For example, health care has in recent years begun adopting the safety models used in the airline industry. Like doctors and nurses, pilots and air traffic controllers are among the few in their industry who have ultimate responsibility for a large number of lives. Many more support people are responsible for making certain that the pilots are able to do their jobs safely and effectively: the mechanics, the flight attendants, and the gate agents.

When the medical industry identified that it had a problem with safety (too many unfortunate situations were overlapping and people were dying as a result), they looked outside their own industry, to those where the stakes are very high and where a single error, if not caught, could result in not one death but 500. They learned that in the airline industry, everyone—from the lowliest mechanic or carpet sweeper, all the way up to the captain—has the authority to say, “Stop that plane!” if they have reason to believe a safety issue has arisen. Importing this and other patterns gleaned from the airline industry will be a long process for the medical industry but one that will ultimately lead to greater safety and efficiency.

Trust patterns, not data. If you’ve been wearing blinders for awhile, you may find it difficult to trust your instincts, even when you have identified patterns within your own business and beyond. Your natural tendency will be to look for data that will back up the pattern you’re seeing. If you do this, though, and the data doesn’t support the trend, that doesn’t mean you were wrong in your initial identification of the pattern. Data simply can’t predict the future; it can’t tell you where your business is headed, only reinforce what you already know about your business’ past. Data can tell you that profits are down or have leveled off, but only pattern recognition can give you a new perspective on your business and help you decide what to do to reverse trends and solve problems.

Use your eyes, then analyze. Albert Einstein said that the ultimate insanity is to continue to do what you’re doing and expect a different result. Perhaps you’ve identified a pattern that you want to adopt, but you don’t want to make significant changes just to make changes, nor do you want to take action with only guesswork to back you up.

First, you must have the ability to recognize what’s wrong. When you look at your business’ financial picture, for example, what do you see? If it’s not what you expect, what do you do? Supplement this analysis with the extra patterns you’ve added to your repertoire in your exploration of other businesses and industries. The perspective you gain from having these extra patterns to reference will give you a twofold gain:
1) With enough patterns, you’ll be able to see that the financial picture isn’t right, and
2) you’ll have a sense of what changes you can implement to make the situation better by borrowing patterns from other industries and adapting them to your situation.

Mimic, then make them your own. When NASA experienced the space shuttle accidents, the first thing executives did was to look back at where patterns failed. They discovered that a culture of silence had evolved at NASA. So they went outside of their industry and got experts in communications and team-building to teach them new patterns that enabled them not just to team-build, but also to teach them new patterns they could mimic. The experts enabled NASA to learn what the pattern looks like when a team is beginning to fail and to emulate new, more effective problem-solving patterns. Now they can recognize when the teams begin to fail and communication lines are crossed so the opportunity for absolute disaster is less likely to occur.

When you’re making an adopted pattern your own, don’t make a deliberate effort to change it around or adapt it to your business. You’ll find that if you fully internalize a pattern, as it becomes a part of your behavior and thought process, then your brain will automatically take any aspects of the pattern that are not particularly useful to you and set them aside, so that the pattern, though adopted from elsewhere, works for you. At that point, the pattern truly becomes yours; you have broadened your perspective and added additional facets or directions from which you can see still new vantage points.

Passing the patterns down. While your company’s culture will determine whether one leader learns this process or a group does, a group is ideal. You want any shift in paradigm for the organization to be a unified shift. Therefore, all of your core decision makers should learn new patterns simultaneously so as not to create the appearance to those below them that the senior executives are all headed off willy-nilly in some new, weird direction. So, as you develop a culture of mimicry in your organization, the rank and file will learn new patterns by simply mimicking the behaviors of those who lead.

Pattern Recognition + Positive Actions = Excellent Results
When you’ve built up your storehouse of borrowed patterns and perfected the processes of mimicry and internalization, you’ll see a myriad positive results occur. Among other things, you’ll learn that you are able to discern when something is not only different, but good-different—a positive shift that benefits your business. When that happens, resist any temptation to mess with it and instead ride it out. Likewise, should you identify a negative pattern approaching, you can take proactive steps to head it off at the pass. Either way, your business will benefit from your new pattern recognition skill, and your company’s bottom line will soar.

(Excerpted from my lecture series and book, Avoiding Business Disasters: Lessons from the Disaster Field Office)

The “Choke Point” is Management

One of the lessons learned early on in the disaster field office is referred to as “span of control”.  Span of control is a two-dimensional concept of personnel and project management.  Span of control dictates both the breadth and depth that an individual leader may effectively exert control and leadership.

Decades of experience have taught us that even the most experienced project manager, leader, CEO or company president can only effectively lead a breadth of three to seven subordinate divisions and ideally the number is five.

That same experience has also taught us that a leader becomes detached if the organization they oversee grows greater than five to seven layers deep with, again, the ideal number being five for efficacy.

But why does this occur?  Why should your organization be no more divisions wide under any one leader than the number of fingers on their hand and no more layers deep in that organization than the number of toes on one foot?

The answer in part lies in the functioning of the human brain.  Immediate memory, that portion of the brain capable of receiving information almost instantaneously, less than .037 milliseconds, and maintaining it until it can be written into permanent memory is only seven blocks wide; this is why your telephone number (excluding the area code) is seven digits long.

However, just like a telephone number, by grouping batches of numbers your brain treats each group of numbers as one block.  The area code becomes one block of information rather than three discreet numbers.  The prefix, another group of three numbers, is again considered a single block of digits.  Hence a ten-digit telephone number is now treated by the brain as only six blocks of information—the area code, the prefix and each of the last four individual digits.  Similarly your Social Security number is divided into the same sequence—three-digit prefix, a two-digit place code and the terminal four digits. 

Span of control pays attention to this same basic brain limitation.  You can most effectively pay attention to five simultaneous branches within your chain of command without becoming distracted because you have two “available” blocks of memory in which to store “distractions.” 

Depth in any one branch works the same way.  When you must pay attention to one branch with any degree of specificity, your brain turns your memory “sideways” and looks at the depth in blocks of information. Limiting depth to 5 layers leaves two “available” blocks for “distractions” or to share among the other branches of your organization.

But how does this impact actual management?

Taking these decades of experience from the disaster field office and combining them with the neurophysiologic knowledge of how the human brain works, we discovered that in any organization, the organization must be subdivided when the number of first-level subordinates exceeds five.  Therefore, if a CEO must run four divisions of a single company, he can do so with four vice-presidents, but when that number exceeds seven, the company must be in some fashion broken up, grouping each of those greater divisions under individual presidents who then report to the CEO. Thus the company becomes one layer deper, but the CEO has only 2 divisions under his span of control (each with a president).

Similarly, imagine we now have one CEO with two presidents, but the organization becomes greater than seven layers deep with the seventh layer being the customers.  The CEO is in danger of losing touch with those customers.  In this circumstance, a new division in the company reporting directly to the CEO can be established that provides for information to be disseminated directly by the CEO to customers and feedback directly from customers back to CEO.

A fine example of this is seen in Zales Corporation.  Zales Corporation operates multiple divisions under multiple jewelry sales brands.  Each of these brands is grouped according to their market.  Thus, they grouped brands with each group led by a senior vice-president.  The corporate president oversees senior vice-presidents and thus their groups and brands.  The problems for Zales Corporation came when in their corporate C suite, became embroiled in a personnel problem.  This highly publicized personnel problem impeded the ability of the higher echelon of leadership to exert their span of control and required that a lower level of leadership assume a dual role.

Dual roles are death!

Worse, the individuals in duel roles supervised the same people, creating two parallel chains of command. The company and its employees were literally shackled by conflicting instructions and expectations. In the disaster field office we know that when needs exceed resources it is a disaster, but when needs exceed all ability to respond it is a catastrophe. Zales became a wounded dog because management issues (needs) exceeded their ability to respond. Investors responded to the catastrophe and stock prices fell.

Span of control dictates that one person fills one role and that even like organizations not be combined, but that if one leader must supervise two separate divisions or organizations, that that leader do so through a subordinate to whom those organizations individually report.  In the disaster field office we call this “Unity of Command” and it ensures that each individual in the chain of command knows precisely what singular individual to whom they report and from whom they take direct instruction.  With this unity of command and span of control principles in place, management issues cease to be a choke point.

Zales ceased to be a wounded dog when they corrected their C suite personnel problems, reestablishing a unity of command and a manageable span of control. Investors rewarded them with a two-fold increase in stock price in two months.

(Excerpted from my seminar series and book, Wounded Dogs: Avoiding Business Disasters – Lessons Learned in the Disaster Field Office)

The Wounded Dog

In business, as in life, adversity is a recurrent and inescapable event.  The cliché:

“Into every life a little rain must fall”

is true no matter one’s education or level of success.  The key difference between the businesses that close never to reopen again and those that thrive through their adversity is resilience.

Everyone knows that there is nothing more dangerous than a wounded animal.  An injured animal seeks to protect itself by striking out against all who approach.  However dogs are unique in that they will invariably find one person with whom to bond.  This difference is inexplicable, but predictable.  They may not even choose their owner or master.  Nonetheless wounded dogs will drag themselves to the feet of their chosen protector, nuzzling and begging for help.  These wounded dogs know that they are no longer capable of caring for themselves and that one more adversity befalls them and they will die. 

Businesses become wounded dogs when they fail to ensure that an adversity does not evolve into a disaster.  In two decades of disaster field work and consulting to companies large and small I have seen and helped more than my share of wounded dogs.  In all cases it did not matter whether the adversity came from outside the company such as a hurricane, earthquake or terrorist attack or if the adversity came from within; poor product design, marketing mishaps, financial missteps, or employee sabotage.  The result is always the same.  Some critical business pathway collapses resulting in a business disaster. 

Observers both inside and outside the wounded business say that the disaster was “inevitable.”  In the disaster field office, we know that no disaster is “inevitable.”  Disaster is a simple equation no more different than profit and loss. 

Disaster = Needs > Resources. 

The most basic analogy is the financial disaster of “want” exceeding “wallet,” but this same equation holds true in all other critical areas of business. Conversely, resilience, the ability to cope with adversity and stave off disaster, is also represented by the simple equation: 

Resilience = Resources > Needs. 

Again the analogy is the financial resilience of “wallet” exceeding “wants.” 

Now if this were the end of the story, one short speech, one short consultation, one small article in the Wall Street Journal and I could end all business disasters.  The trick here is being able to identify what resources to have in abundance since nobody can have resources for all contingencies.  Resource identification is based not on determining every possible adversity that can face a business.  This is an incalculably high number and bounded only by the imagination not only of those that run the business but all of those who may wish it ill. 

Rather, resource determination is based on an evaluation of the processes and pathways unique to each business.  It requires the identification of “choke points,” those critical pathways that, if narrowed or destroyed, will choke off the life of the business.  It is these critical steps for which resources are amassed. The goal is to ensure that no choke point becomes so narrow as to strangle the life of the business.  This ensures resilience.

Some have adapted well through the application of the lessons I learned in the disaster field office.  Others have failed to learn these lessons resulting in business disaster. In a few cases, the businesses stumbled upon their resilience.  In others they were guided to it.  But in all cases it was the identification of choke points and the allocation of resources that ensured that a business remained in business and did not become a wounded dog.

(Excerpted from my lecture series and book, Avoiding Business Disasters: Lessons from the Disaster Field Office)

Get Out of Crisis Mode and Stay Out: Utilizing Resource-Based Decision-Making in Your Organization

Two economic sectors dominate the field when it comes to decision-making: one operates on a resource-based model and the other runs on a continuous crisis model. Many organizations choose the latter model because they place tremendous emphasis on saving money minute to minute, not on investing in future need. But resource-based decision-making offers a process that helps you make instant decisions, and more important, introduces small changes that, over time, prevent your organization from getting into future bad situations.

Once you have assessed a situation, you need to determine the best course of action. But before you can make a decision about what to do, you must have the resources to put that action into place. Giant retailers operate on the principle of building “surge capacity,” and your organization can, too. Basically, surge capacity involves investing in plenty of extra resources and having people trained and at the ready to use those resources when necessary.

Here’s how it works: a super-store like Wal-Mart may have thirty cash registers, and while they may have fifty employees trained to work in check-out, at most times only five to ten clerks staff the registers. However, the store prepares based on its assessment of when business is likely to be slow and when it will suddenly mushroom to a point that necessitates bringing on additional staff to utilize those empty registers. On the day after Thanksgiving and Christmas Eve, for example, the retailer will need to add temporary workers and all available permanent staff to get customers’ money and then get them out the door with a minimal wait.

With Resources, Timing is Everything
The idea of surge capacity originated in hospitals that brought in additional help when necessary to utilize their reserve resources in the case of pandemic outbreaks or massive accidents. Ironically, most hospital administrators have now given up using the idea of surge capacity in their emergency rooms, which is why patients must sometimes wait as long as twenty-four hours to see a doctor. Business models in every industry provide similar examples when they function without back-up resources or surge capacities. In manufacturing, does it cost more to store parts (resources) than it does to shut down the line and pay everybody if a strike means you’re unable to obtain just one necessary part? In your business, how often is a similar situation likely to happen? Knowing this will determine your risk model. What is your tolerance for risk? And what are your customers willing to accept as a failure?

In your own organization, you must look at what resources you have and make decisions about those resources on an ongoing basis. When you have resources in reserve and aren’t doing a lot of business, financial prudence may be wise, but as you approach the end of your available resources, you must reorganize priorities. When that happens, you get out of your comfort zone and front-load the system with more resources. Otherwise, you will provide worse customer service when your resources are only sufficient to meet immediate needs and face disaster when your resources exceed your needs. In extreme cases, you could end up with a full-blown catastrophe on your hands, where your needs exceed all ability to respond or recover. Fortunately, this doesn’t happen often, but when it does, it’s usually in the form of a total business failure. To keep your organization from holding too many resources—whatever you consider your equivalent of too many empty registers—you need to start as soon as possible to notice patterns. When you begin to experience back-up, should you restrict product outflow or availability? Increase business through incentives at off-peak times so you need to concern yourself less with the peak times? These are all early resource-based decisions that keep you from getting into or exceeding your surge capacity.

Resource Availability and Adaptability are Key
You have to know your resource availability. This may seem like common sense, but cost arguments will arise, so prepare for opposition to this model in the majority of corporate value systems. While super-centers operating on the surge capacity system accept the necessity of only using fifty percent of their registers the vast proportion of the year, the airlines’ practice of overselling flights is far more common. For many such industries, angry customers seem like a small price to pay until the system is maximally stressed. As you move further into your surge capacity, you need to bring in additional resources so you can utilize those physical resources you’re holding in reserve. In the retail model, this means spreading work throughout the store by pulling people off their positions and on to the registers.

With resource-based decision-making, you’ll learn that you need to adapt; sometimes it’s easier to get employees, and sometimes it’s easier to get equipment. If you’re an auto detailer, all you need to do routine business is your car and cleaning supplies until a surge period like Valentine’s Day, when you may need to hire additional office help to handle calls for service while you go out and detail cars, or you may need to hire other detailers while you stay in the office booking clients. Many of us learned to make resource-based decisions but rarely as an ongoing practice. You’re taught to plan, but as situations develop, you’re likely to go off the plan, making up new plans as you go, thinking outside the box. But you need to think outside box before the box careens off the cliff. If you’re trying to make resource-based decisions in the middle of the crisis, you’re behind, and if yours is a resource-limited situation, you’ll stay behind.

Make Your Case for Resource-Based Decision-Making
No one’s likely to listen to a lone wolf advocating a resource-based decision model, especially in the midst of a crisis. To achieve buy-in, work patiently to change the corporate culture, introducing the ideas before the organization hits crisis mode. If you’re already at the disaster point, prepare to wait until the organization moves through the emergency, and then seek out key decision makers and suggest half-day conferences to familiarize them with the system’s principles. Post-crisis, many leaders are open to new thought processes that will provide a way to avoid future calamities. In the end, resource-based decision making beats the crisis model 100 percent of the time. The key is to keep at it consistently and to always be evaluating your resources and making adjustments as necessary. By adopting this practice in your company, you’ll have an edge over the competition, happier customers, and less stress in times of challenge or change. And those are the true keys for a business that thrives.

(Excerpted from my lecture series and book, Avoiding Business Disasters: Lessons from the Disaster Field Office)