Can Your Company Survive A Black Swan Event?
The Titanic sinking.
The fall of the Soviet Union.
Did anyone see any of these events coming?
Doubtful. That’s why these and others like them are referred to as “Black Swan” events.
A Black Swan has three characteristics:
It is unprecedented in human history
It is a totally unexpected event
Its impact on society is major
Only well after the event occurs that in hindsight we hear people around us say, “Well, it was probably bound to happen.” That may or may not be true, but we do know this much: These types of occurrences are incredibly challenging to predict.
Many businesses aren’t prepared for their own “unthinkable” Black Swans or the leadership pretends this “what if” event is such a remote possibility that it won’t even occur.
No wonder they’re so ill-equipped for what comes next when it does happen.
So here’s a question:
What would happen if one day your sales went straight to zero?
It sounds so extreme and unthinkable, right?
One of the C-level executives I interviewed for a forthcoming book of mine thought so too.
He was the Chief Marketing Officer of a company that operated 27 parking lots near major airports. About 14 years ago, business was great for him. After all, how many of us travelers need to park our cars near the airport for business or personal trips? Thousands upon thousands of us. With such coveted real estate, his business had a steady pipeline of endless customer need.
That is, until an event called September 11th happened.
It was a Black Swan event for his company. In the immediate moments after that devastating event, nobody in the entire country was flying. That meant nobody in the country using any of his company’s parking lots. Not. One. Soul.
Obviously in time, people returned to flying again and they began using his parking facilities once more. But here’s what you need to ask yourself: After a Black Swan event, business can come back. But when it does, do we know it can come back all the way?
Black Swans don’t have to be catastrophic to be totally unpredictable and unprecedented. The ones with positive outcomes can still have a major impact on how you go forward.
Imagine an organization that is dedicated to curing a major disease. What happens when modern medicine actually finds a cure for that disease? Do they just close up the company or find another disease to solve?
Leaders don’t think about this. And yet, what’s to say that you won’t click open your computer tomorrow to discover that cancer or AIDS has been cured?
Of course we’d love to see that happen. Nonetheless, what will a company that has that disease at the core of its mission do next? What will the transition look like to the next chapter of the company’s existence if there is one? If they haven’t thought about this possibility or planned for it, they’ll have the next part of the story written for them.
The Black Swan Closer To Home
For example, you have a key employee we’ll call Bob. Bob is a major piece of your firm’s success. Bob’s a rainmaker of new business and his input to the direction of the company is invaluable. A-list clients have been wowed by Bob and he’s a pleasure for your team to be around. There are countless examples of meetings in which client relationships were saved and built singlehandedly because of Bob. He’s personable, he’s quick, he’s caring and he’s smart.
You can’t think of a world doing business without a person like Bob. Except now you do. Because you just got the call that Bob passed away from sudden cardiac arrest.
Now for the next part of the tragedy: You have no plan for the post-Bob business.
You didn’t train the proper people below or next to Bob because you didn’t trust them. You thought if others got anywhere near as smart as Bob, they’d take your clients with them to a new firm. Besides, you reasoned that no matter what happened, clients have been with your firm for years, so why would they leave now?
Nobody can step up in Bob’s place who knows what Bob knew, causing clients to lose confidence in a hurry. And don’t think that just hiring someone from the outside is an easy fix either – you’re still throwing that person into a chaotic transition where they’re essentially starting a relationship with your clients from scratch. And all of the clients know this person doesn’t know them like Bob did.
Here’s the funny thing: This scenario is even more predictable than a “real” Black Swan event and leaders don’t plan for this either.
Of course you had to know that Bob was someday not going to be a part of the picture, if not through an unfortunate event like this one, then via retirement. Bob was a great guy, but even he wasn’t going to work (or live) forever, right?
Pretending that wasn’t going to happen and doing nothing about it is dangerous to the company’s continuity to say the least.
While we can’t predict when the next Black Swan event is going to occur, we see no less than 3 tremendous steps that leaders can take to plan for the unthinkable. We’ll touch on them in our next post.
After that, we can point you toward two great avenues from Value Drivers to ensure your plans are executed upon: For internal transitions at the top of your organization, check out our Setting Leaders Up For Success program. For gauging client sentiment and adjusting accordingly to strengthen or save relationships, view our Client Loyalty Assessments. Both can help you align your business in a way that minimizes surprises later on. To learn more, call Value Drivers today at 312.827.2643, email firstname.lastname@example.org, or click here to schedule a 30-minute consultation.