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Spring Journal

Volume 31, Issue 1

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Everyone agrees, upper management commitment is key to DRP/Business Continuity program success. However, no one tells you how to generate those first critical attention-getting conversations to get that support and preliminary funding. It takes resources to build a proposal, yet in these days of increasingly limited corporate funds, you have to convince someone senior that there is an exposure before you can get the resources.

This “chicken & egg” problem is particularly tough in the case of DRP & Business Continuity because impact analysis and risk assessments, while they yield exposure insight, are typically executed well after project cycle is approved and underway. So what is key to getting senior staff permission when you haven’t done all the ground work? What’s the “missing link” in Business Continuity planning and is the forgotten chapter in most “how to” courses?

First, Think Like the CEO

To start with, don’t follow your instincts! By that I mean, don’t start building an exhaustive listing of all exposures you can think of, even if they are real and potentially serious. While this is the way we’ve all been taught to do a thorough job, it’s also one of the quickest ways to get dismissed as irrelevant. You’ve probably got zero resources and no time so you need a shortcut to initiating an ongoing dialog with the key decision makers. What you need are a few well-drawn attention getters, ones that get juices flowing, and some preliminary funding.

Start first by thinking tops down, not bottoms up. Look at your company from your CEO’s point of view. What are the key business drivers? What is the most important work going on in the company, today...right this minute? Are a few, identifiable pieces of the business generating most of the income or margin? Is there something new and big brewing? Is there a new product, acquisition, merger, stock offering, plant, process coming online? What’s being discussed at the CEO’s staff meeting every week? At the Board Meeting? In the press?

Again, this isn’t about being complete or getting all possible risks covered. You’ll revisit that later and with help if you get funded. This is about making a point about the company’s key issues and their vulnerabilities. Do that and you’re on your way. So don’t let your personal peeves dominant your thinking. Recognize that, from the CEO’s point of view, most day-to-day “disasters” can be survived. Skip the small stuff.

Talk the talk!

When you are pitching a proposal, on paper or in person, match your vocabulary to the interests of your executive “buyer(s)”. Stock price, not production cost. Lost financing not operating efficiencies; bad press, not organizational inconvenience. And since all companies are unique, don’t use cookie cutter thinking out of a magazine (even this one) to decide what’s important and what’s not. You’re inside. You have information the rest of us don’t have a clue about. Just look at it with the hard eyes of an upper level executive who has little time and no initial interest.

How Bad Could it Be?

Disaster driven closures are mostly due to lack of financial reserves for the business disruption disasters bring. The ability to set aside those kind of reserves is beyond most businesses. 90 percent of small businesses hit with a major catastrophe never recover and only 43 percent of all companies in the same circumstances resume business, ever. BTW, among those that do reopen, only 26 percent are doing business two years later. If their data is lost, 50 percent file for bankruptcy immediately.

Engines of Disaster

So what are the areas that will get the attention of the CEO and/or his staff, immediately? While it depends a lot on the specifics of your business, here are three big, universal ones to consider. I know they seem obvious but that’s the whole point. The senior executives are not going to get caught in the details. They get paid the big bucks to deal with the disasters, the breakthroughs, the paradigm shifts. Odds are, if you see a real risk to one of these big deal areas, someone senior will be on it, in a heartbeat.

1) Survival of the Business

I’m speaking here about a clear and present danger to the ongoing viability of the business. Could a shut down in a key, specific operation kill the company’s ability to stay in business?

This is a big deal and pretty straight forward in many industries. Heavy process business like refineries and mills, transaction firms like banks and brokerages are all highly dependent on ‘up time’ and a major outage can be crippling.

However, most businesses are not so obvious and often disaster work-arounds can be amazingly creative. Parts shortages can be made up from demo stock, power outages can be compensated for by overtime, vendor-held supplies, safety stock, backordering, substitution, last week’s backup tapes, on and on. In a crisis we all become very resourceful.

So, would a fire in a processing plant take months to fix, crippling the company’s competitiveness or allowing a competitor a window of opportunity? If not, keep looking. Would a flood shut down production for two weeks? What would that mean? For some businesses, it might not even impact stock price, investors understand floods, just not earnings reports. On the other hand, some companies don’t have the resources to handle loss of the cash flow for two weeks (see “How Bad?” sidebar). Be specific to your own situation.

“Killer” risks will get attention and that’s where you need to look. And describe in terms that are easy to understand and intuitively obvious. They are probably the only things you should spend significant effort on in the long run. Remember, it’s got to be real, both the possible circumstances and it’s impact.

Downtime Can Be Calculated!

According to Contingency Planning Research, Inc., a down ATM system costs a bank roughly $14,000 per hour. But if you are running a retail stock brokerage, it will cost you $6 million for that same hour down. If your instincts say something is critical, do a back of the envelope estimate of downtime. Use your best guess order of magnitude estimate of outage (i.e. 3 hours, 3 days, 3 mouths) and see how big a deal it is.

2) Major new business initiatives?

Key new business initiatives (AKA “what the boss cares about”) are the future of your company and the pet projects of upper management. Critical quality improvements, opening major new markets, significant product introductions, new sources of supply, new financing, sales growth goals that stretch everyone or critical relationships with new partners.

These initiatives are always time critical and no amount of business insurance or creative recovery can make up for slipped schedules. They are high priority and the management team will take care of them above all else. Managers may be personally goaled and probably paid based on the success of these programs. These are “you bet your company” initiatives and they are very vulnerable to unplanned intervention. Any exposures that can affect them will be very high visibility and get the attention you need.

What are your company’s initiatives? What risks would impact them catastrophically? Those are the risks, if real and present, that will get folks attention. Managers think about what could hurt their key new programs and take action to protect them.

The Objections

A) “It is so big, I just can’t deal with it.” “These kinds of things are just too big for us to waste time on.”

Common reaction to more intimidating exposures (bombings, civil unrest, etc.). Mentally throwing up hands in a “it’s beyond me” supplication. Sort of an “Everyone else will be in the toilet too so why should I worry?” A reference is usually given to something like the Bhopal tragedy so all conversation stops. Don’t let them go there. Outside of a meteor destroying Earth, any risk can be mitigated if not eliminated.

B) “We’ll find a way. We always do.”

This is avoidance behavior, too. A brief description of the recovery time line (or cash flow) will help.

C) “We have business loss insurance”

Your customers won’t wait nine months as you wait for a check to rebuild a factory or data base or reputation. Loss of market share starts immediately.

E) “It’s not on my A list.”

He/she’s got you there. Go back and connect your proposal to something that is on his/her “A list”.

3) Customer / Shareholder Connection

This one’s really simple. Could something profoundly sour customer or shareholder relations?

Either general “goodwill” or a key customer account? Any CEO worth his or her salt focuses a big chunk of time on the customer, even Bill Gates. What could tarnish your reputation with customers? Loss of your ability to provide service? Externally visible (press, competition or government) issues? Corporate “goodwill” is your reputation and it has real value in the marketplace. And remember that it may not be internal actions that put your reputation in jeopardy. Something with a key business alliance, say in a joint venture partner, can still put you in a spin. So don’t assume your role is to be internally focused. It isn’t.

Summary

Upper management commitment is essential for a successful business continuity program.

Getting that commitment is not trivial. I’ve suggested you “think like the CEO” so your proposal’s point of view and vocabulary match the interests and style of your “buyer”. I further recommended three key, attention getting focus areas having to do with ongoing survival, major new business initiatives and loss of customer “goodwill”. Are there more? You bet. Do you know which count in your company? If you do, go with your knowledgeable instincts.

I’ve attached a few additional “just in case” points but really, the core business focuses are where you’ll reap your most effective selling opportunities. So don’t forget that missing link and good selling!

Other Planning “Kick-Starts”

Biz Continuity “Lite”? You don’t have to build a plan for everything. Sometimes just the thinking through what could happen (a preliminary BCP step) will highlight critical flaws that preventive action can fix. Maybe you should pitch a “Lite” version?

Communication clear? When it comes to saving a reputation, communication is critical. Simple planning for those critical early hours is worth investing in all by itself.

Thinking out of the box? Think about the non-traditional disasters, theft or sabotage of company intellectual property, sales partners failures, lost time to market, brain drain (competitor poaching) of key staff, blackmail or a major fraud.

Y2K? What did you do with all that Y2K work? Maybe you’ve got an opportunity to take that investment & make something of it. The buzz word was retained value.

Competitor with a problem? Who else has had a major problem in your industry? Is this a bell weather for your company?


Dan Derby is the founder of The Derby Consulting Group, LLC, a business operations repair & planning firm. He has thirty years of business & technology experience, designing hi-tech gear, fixing dysfunctional organizations and leading corporate wide programs, at Xerox, HP and IBM. Additionally, Dan was a visiting lecturer at Stanford University’s Engineering School for a decade.