J. Miller and Company Blog

March 29, 2003

On Prioritizing to Deal with Disaster

HARVARD BUSINESS REVIEW     

  • “Predictable Surprises: The Disasters you Should Have Seen Coming” by Michael Watkins and Max Bazerman of Harvard Business School discusses standardizing a 3 point program to deal with vulnerabilities:
    • Recognition
    • Prioritization and
    • Mobilization
  • The article uses examples of surprises with huge impact on major companies, such as GE and Monsanto. Although remodeling companies tend not to have the same resources or global concerns as either of these companies, putting company focus on potential problems before they arise and developing a game plan for dealing with them makes managerial sense.
  • Predicting what might occur is ‘simple’: “ask yourself and your colleagues, “What predictable surprises are currently brewing in our organization?”” The authors go on to state that although the question may seem obvious “people at various levels … are often aware of approaching storms but choose to keep silent.”
  • Typical predictable surprises for a remodeling company can include the following:
    • Client failure to pay the last bill
    • Employee embezzlement or theft
    • Jobs in bid not being converted to contract
    • Senior project management leaving the company unexpectedly
  • Prioritizing each would depend, of course, on the degree of pain associated with each, for example:
    • If the final billing is large, the company cash flow could be greatly impacted
    • Embezzlement and/or theft creates a negative company culture and can also affect the company financially, potentially even causing bankruptcy
    • Not converting sufficient leads or jobs in bid to contract status leads to erratic production, potential scheduling and employee retention issues
    • Unexpected departures of any employee, especially at the senior level signals a disconnect between the employee and the company and should be taken seriously.
  • Mobilization consists of focusing on defending against the most likely and most costly event first, then addressing the remainder.
    • Using the theoretical examples above, if prioritization shows that erratic conversion of bids to contract produces the greatest risk to successful company management, then increased marketing and sales focus, combined with greater estimating rigor, would go far in protecting the company against this threat.
    • If the unexpected departure of key personnel would most seriously limit company health, then employee satisfaction and morale surveys, combined with 360 degree reviews of all levels of management might stem a perceived problem at the outset.
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