Strong organizations prepare for things that rarely happen
Thirteen was an unlucky number for NASA. The thirteenth flight of the Apollo moon landings program never reached its destination: an oxygen tank exploded onboard, rendering the craft incapable of sustaining the lives of its three-man crew or returning them safely to Earth.
Yet, somehow, the story had a happy ending. Nasa had long pondered what might happen if the spacecraft failed. Via simulations and planning exercises, its scientists tested whether the lunar module – the unit used to transport two astronauts from the orbiting mothership to the moon’s surface – could be used as an emergency backup. They concluded that it could, dubbing this the “lifeboat scenario.” Nobody ever expected it to be used. It was a remote contingency; a just-in-case strategy should calamity strike.
The rest is history. Calamity did strike. The backup brought all three astronauts safely back to Earth. Ever since, the Apollo 13 ordeal – and the contingency planning that remedied it – has served as a high-octane example of a more mundane truth: strong, resilient, successful organizations spend much time, money, energy and brain power on preparing for things that mostly never occur.
I was struck recently by the comments of Kate Grussing, managing director at Sapphire Partners, at Duke Corporate Education’s Lead with Her conference. Grussing introduced her three Cs: contingency, communication and capacity.
Clear communication is rarer than it should be in business; but at least the case for it is generally accepted. Grussing’s other two Cs – contingency and capacity – are much harder to promote. Contingency, because normalcy bias is the natural human condition – we are hardwired to doubt that the unlikely will happen. Spending vast resources preparing for a pitfall we likely never encounter can be a hard sell to the business. The challenge for capacity is greater still. Equipping for a crisis, the unknown or uncertain, means deploying people and revenue into facilities that may never be needed. Many organizations are under pressure to cut costs (see p24). The ever-present demand for efficiency – doing more for less – makes any latency look like waste. If an organization holds capacity that is rarely or never deployed, why bother with it at all?
That attitude works brilliantly, until it doesn’t. The global financial crisis (GFC) in 2008 was the curtain-raiser for a prolonged era of worldwide volatility that has persisted to this day. Normal no longer means stable; the standard position for organizations is uncertainty. Expecting the unexpected is key to business success.
Many of the banks that failed during those dark days collapsed because they failed to prepare for a crisis. At least two of Grussing’s three Cs were lacking: organizations lacked the capacity to absorb a shock, and shock soon became a contagion. Those with more financial slack – capacity – survived. In the good times, analysts might have deemed that latency wasteful. Yet in the bad times, it was the crucial buffer that helped the organization shrug off a crisis.
In his book Failure Is Not an Option, Gene Kranz, the man who directed NASA Mission Control to save the Apollo 13 crew, wrote: “Spaceflight will never tolerate carelessness, incapacity and neglect.” The same is true of more earthly pursuits: in volatile times, contingency and capacity are even more crucial to business success.
