Some businesses come out ahead when disaster strikes. Here's how they planned for changes in the event of success-threatening happenings.
There’s a disastrous drought in California. Lawn watering has been severely restricted, if not outright prohibited, so you might think a lot of landscapers are looking at making career changes.
Not Rob Moore. His California Native Landscape Design is doubling revenues and is well on track to hit six figures year. Because instead of watering and mowing lawns, Moore is ripping lawns up and replacing them with stone, mulch and drought-tolerant plants that provide a more natural California landscape.
Some throw their hands up in the face of adversity. Others head into the eye of the storm to respond to new opportunities.
For instance, Nalco manufactures an oil dispersant that used to be only a minor part of its chemical product portfolio. Following the 2010 BP Oil spill in the Gulf Coast, Nalco geared up to supply as much as the solvent as needed.
According to Ratelines, the company’s stock rose 18 percent with up to $80 million in sales from a product that still represented only two percent of total sales, even with increased demand from the oil spill disaster. Being ready to ramp up quickly in the face of disaster was a profitable decision for the company.
We’re not saying anyone should welcome a disaster or seek to capitalize on bad situations. We are saying that change is a constant, and you’ve got to be able to pivot when that change is unexpected and undesirable.
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Do Good With Good Decisions
Crisis is a term derived from the Greek work for “decision.” When a business crisis occurs, you have to decide how to respond in ways that are best for you, your company and your customers.
Perhaps the classic case of disaster recovery is Apple Computer. It wasn’t operating during a disaster, it was a disaster. In 1997, Apple lost $6.5 million, its CEO and co-founder and 11 percent of its 15 percent market share. So, the company brought back Steve Jobs. That was good decision number one.
Good decision number two was focusing on a core of key products that addressed not only consumer needs, but consumer self-image. We don’t have to tell you how that worked out.
What did Apple do when an actual natural disaster hit its Tokyo stores? Mashable reports the company set up a special link to its iTunes store to deliver donations to the Red Cross for earthquake relief. One hundred percent of all donations went to help the victims.
Apple wasn’t itself donating money, it was providing an efficient conduit to get the money directly in the right hands.
Cynics might say that Apple hoped this would show how easy iTunes was to use, but let’s give them a benefit of the doubt. It still cost Apple money to act as a conduit for all these transactions. The fact is, Apple saw a catastrophe that affected its customers and saw an opportunity to help. And it did the right thing.
Contrast that with arch-rival Microsoft, which tweeted an offer to donate up to $100,000. Microsoft, too, was trying to do the right thing. But it made the mistake of conflating good corporate citizenship with more overt promotion.
The catch to Microsoft’s donation was that the money would be raised by adding one dollar for each retweet of the original message. Instead of responding positively to disaster and, by the way, burnishing its brand, Microsoft instead tarnished its image by asking people to do something to promote the company.
The backlash was large and strong enough that Microsoft ended the campaign and just donated the $100,000 outright. But not without a considerable loss of face, even with the best of intentions.
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The Inevitability of Disaster
One industry that depends on the inevitability of disaster is the home remodeling industry. As Qualified Remodeler notes, “Fire, floods, storms and other misfortunes are inevitable regardless of the economy.”
Unfortunately, this has led “storm chasers,” fly-by-night outfits that rush in following hurricanes and other natural disasters to underbid jobs and perform shoddy work. This is a problem because such a widespread problem results in more work than local companies can handle.
The balancing act for reputable contractors is to be as responsive as possible with the resources they have at hand, and not to overextend or subcontract work that they cannot effectively manage.
Indeed, the ability to manage a disaster, whether it affects the internal workings of a business or the external marketplace, is essential. Events may have been unforeseeable, but doesn’t mean they are uncontrollable. As Business Matters says:
“When things go wrong in business, they can either happen quickly or slowly. Events that develop slowly are those which should more easily be managed. Provided the procedural processes are in place, progressive changes in the business and market environment should be expected, observed and effectively managed. However, it is the rapid and unexpected development, either externally or internally, which usually compromise business and marketing plans and potentially form a serious crisis for the company. Being able to deal with the unexpected change of circumstance as they arise, is therefore an important attribute…”