Crisis management – when the going gets tough

Recently, the German automotive supplier SAM filed for insolvency (here). In addition to the usual suspects, a “classic” reason for a corporate crisis showed up: a fire in the production (here). Without production there is no turnover and without turnover there is no profit. A company hit by a fire can thus run through the crisis curve at a rapid pace. However, what can an entrepreneur do in such cases of WTSHT?

First of all: Hopefully you have the right insurance policies in place! In other words: it is not enough to have insurance to repair the property damage; insurance against business interruption is also necessary (see here). But even this does not pay for ever and every thing. This is not the only reason, though, why the entrepreneur should get the production up and running again quickly. Customers will also (inevitably) have to look for another supplier, at least for the time until production has restarted. And, who knows, maybe they will stay loyal to this new supplier?

Secondly, anyone who is interested in a quick resumption of business operations should also be prepared for the unforeseeable. Sounds absurd? It is not. This is the field of the so-called “Business Continuity Management” (BCM, cf. for further details here), which is dedicated to the realisation of my firm’s motto (“It is not important to predict the future, but to be prepared for it”, Pericles, 495-429 B.C.). To foresee the exact “type” and “course” of a catastrophe, such as a fire in production, and to plan the corresponding reactions, will never succeed. What can succeed, however, is to prepare oneself in general for critical situations with the use of “scenario techniques” mentally and with (small) exercises also practically. This starts with the so-called “telephone cascade” (i.e. the systematic information of all employees by means of prepared telephone lists) and does not end with playing through the necessary reactions in a simple fire alarm. Like compliance, BCM is an ongoing task. And it starts with the first step. Usually with the question, what would I do in a situation like SAM is now?

The article “Blessing catastrophe” in tbe German journal “Brand Eins” (here) shows that a fire may even have a cleansing effect on a company’s culture. The article not only traces the reconstruction of the Schonlau Werke after a major fire, but also highlights the motivation and willingness to change that the fire catastrophe caused among entrepreneur and employees – and how they together created a better business. According to the motto: “Crisis is a productive state – you only have to take away the taste of the catastrophe” (Max Frisch).

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