Seven lessons from the BP disaster: Part II

This is the Part II in the series. Read Part I here.

Today’s post is focused on the first part of Lesson Two. But first, let’s recap Lesson One:

You will have a catastrophic screw-up

In traditional management parlance, this is referred to as a disaster. Or maybe an insurmountable opportunity, if you’re a fan of Covey. Accept that it will happen, because it will. The catastrophic screw-up is a destructive force of nature, like volcanoes and cheesy romantic comedies. The good news is, there are ways to prevent them from happening (catastrophic screw-ups, that is; sadly, I think we’re stuck with romantic comedies), but that’s a subject for another post. But even if you’re as prepared as you can possibly be, it’ll happen: no one will see the warning signs, and you’ll be in the thick of it. Moving on…

Lesson Two: You need an “oh, shit!” plan

Do you daydream often? Spend time picturing your next vacation, your dream home, your midlife-crisis motorcycle? If you do, then you have the skills to put together your “oh, shit!” plan. Corporate types call this a Disaster Recovery Plan, but I prefer to call it the “oh, shit!” plan, because the odds are that’s what you’re going to say when you need to use it. If you aren’t into the four-letter words, you can call it an OSP. I won’t laugh at you.

Define “oh, shit!” for your business

Before you can plan for the coming doom, you have to know what it is you’re planning for, right? So the first step in putting together an “oh, shit!” plan is to figure out what your “oh, shit!” scenarios are. And yeah, you can have more than one. Now, this is not the time for rose-colored glasses or positive thinking. This is the time to be as neurotically pessimistic as you can be.

Step One: Get some company. If you have employees, ask them to help. If you’re fly solo in your business, then see if you can’t convince a few friends to help (offering food and beverages often helps grease the wheels). The people who work on this with you need to know your business pretty well, and they should be creative thinkers. If you absolutely have to do this on your own, you can; but really, it’s more effective if you have a small group (no more than seven people).

Step Two: Prep. You’ll need a place for the group to work, and a place to capture the ideas. Whiteboard, notebook, stone tablet; whatever works for you. And I suggest that you decide on one person whose job it is to A) take notes and B) keep things moving.

Step Three: Brainstorm. What’s the worst thing that you or an employee could do? What’s the worst thing that could happen in your business? I’m not talking about natural disasters, wildfires, armed gunmen, or any other disasters that you can’t control (but I will in a future post). I’m talking about things that the business could do (or could not do) that could ruin you. How about I give you a few examples:

• You’re a pharmaceutical packaging company, and you mislabel a medication’s dosage. 5 people die from an overdose.
• That accountant you hired four months ago? The one who’s doing such a great job that you trust him completely? Yeah, he’s been embezzling, and he’s skipping town next week. Oh, and you won’t have enough money in your accounts to make payroll or pay your vendors.
• You run an eBusiness, and you just finished a project for your dream customer, who is a Big Deal: well known, respected, and people listen to her. Good news, except for one detail: not only is she not happy with the work your people did, but your employee was less than helpful when Ms. Big Deal complained about it. And no one told you about this situation. But Ms. Big Deal is now all over the web, and what she’s saying about you? Not so good.

Got it? So dream up your own personal worst-case scenarios. And keep in mind that in a brainstorming session, no idea gets tossed away. Your note-taker should write down absolutely every suggestion.

Step Four: Organize. Now that you’re finished brain-storming, you have a whole lotta potential disasters. You aren’t going to write an “oh, shit!” plan for all of them, so you need to decide which one comes first. The best way to do this is to draw out a chart, and give each disaster two scores: how likely is it that this will happen, and what will it cost to fix? Here’s a sample chart; I used 1 – 100 for scoring. You can use any numbers you want so long as you give each item a score.

Sample disaster scorecard

In my example chart, notice that “Piss off Big Deal Customer” has a Likely score of 100. That’s because in my hypothetical scenario, it’s practically a guarantee that it’ll happen at some point. And “Labeling mistake kills 5″ has a Cost score of 100; this tells me that it isn’t something we can fix (unless you have powers that I don’t know about).

Step Five: Make a decision. There’s no best way to go about this. You might decide to start by tackling the most likely/least costly first; you might decide to start with the least likely/most costly first; or you might start with the highest total score. My recommendation is to sort the list in descending order, first by Cost and then by Likely. This means that I’d build my first “oh, shit!” plan for the most likely disaster that has the highest cost score.

Your homework: what three disasters could happen in your business.

Comments, please

Do you have an “oh, shit!” plan? Have you ever needed to use it?

On tap

Monday I’ll cover the second part of lesson two: writing the “oh, shit!” plan.

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