How Worried Are You?

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Recent events in Japan have caused some businesses to worry about whether they are prepared to keep operating after a major earthquake, especially since the greater Seattle area is situated on the Cascadia fault.

Given the economic climate, disaster preparedness is often the last thing on an executive’s mind these days, but creating a plan can save your business. It cuts the number of decisions you have to make during the disaster, reduces your legal liability and can safeguard your business brand and reputation. Absence of a plan could include your business among the 25 percent of companies that fail after a disaster, usually because they had no plans.

Having worked through these issues at Washington Mutual by managing problems caused by hurricanes, earthquakes, wildfires and winter storms, I’ve devised some questions you might use to test your preparedness strategy.

1. Which of your business functions are most critical and which can be suspended during a disaster?

2. Do you have streamlined emergency response plans that can be activated?

3. Which of your critical business functions are handled for you by vendors? What types of backup plans do those vendors have to keep your business up and running? At WaMu, we made sure that our third-party courier companies had good backup plans, since we depended upon them to move our cash around the country. Our branches could not operate without cash, and we knew that dispensing cash was a critical business function.

4. Once you have such business priorities identified, which parts of your business can be run manually, without technology’s assistance, if power is not available? Can you invoice customers? Can you pay bills? Can you supplement your existing inventory? Can you deliver goods to customers? Have employees been trained to step in and do more than one job?

5. Does your business already have phone trees with employee contact information so you can pass along vital information and ascertain employees’ safety?

6. Assuming that power is available outside the affected area, do you have alternate data centers from which you can operate in case your primary data center was damaged in the earthquake? If not, have you considered storing data in an internet cloud so it is available from your home or office via a secure internet connection?

7. Have you identified and rehearsed employees on locations in your buildings where they can “duck/cover/hold” while an earthquake is taking place?

8. If you are a larger company, do you have sufficient diesel fuel to power the generators you will use to keep on working?

From this list you can see there are a number of ways to anticipate issues and not all of them are expensive. Sharing your plans with employees is vital so they know what their roles will be in an emergency. And communicating with both customers and employees becomes even more important in the midst of an earthquake. In this situation, both email and social media tools come in handy. There is no way to communicate too much in a disaster, especially to lead your people and reinforce key points for your company.

Finally, if you’re the CEO, be prepared to be vilified in the press if you don’t move quickly enough and if you don’t communicate clearly. You’re paid to do everything possible and to think outside the box so that your company does not end up with a black eye. Given the lives and resources at stake, having a plan is the least you can do now to reduce your risk after a natural disaster ... or two or three disasters, as we have just seen in Japan.

Annie Searle is founder of Annie Searle & Associates, a consulting firm that helps clients identify program gaps and manage risks. A former executive at Washington Mutual, Searle served for seven years as chair of the bank’s crisis management team.

CEO Adviser: Paving the Way to Digital

CEO Adviser: Paving the Way to Digital

How the Northwest’s leading asphalt company is embracing technology.
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“What’s the ROI on software?”

This is the question facing many leaders of traditional mid-market companies. For a well-established family-run business, there is often the temptation to invest in assets that can generate revenue faster in the short term instead of technology upgrades that don’t deliver immediate profit.

When I first met Mike Lee, president of Lakeside Industries, he asked an interesting question: “Are we doing the right things when it comes to technology?” Lee understood that his 600-person asphalt company in Seattle’s Fremont neighborhood had to make technology a strategic objective in order to ensure the future of the business.

Here are a few ways Lee showed leadership in making ones and zeroes important in an industry focused on rock and oil.

Establish crystal clarity about how digital can support the overall vision.

Lee had a compelling “why” and vision for the company in place: to make a lasting impact on our community, our relationships and our people, and to be the low-cost supplier that provides an exceptional customer experience. The core values focused on safety, environmental responsibility, quality and profitability. But there was no solid technology vision to realize it, and IT didn’t have a presence at the business table, so Lee made a point to involve the CFO/acting CIO. The beauty of setting a digital vision is in its simplicity — not looking at every solution available, but only those that can further the company’s reason for being. In Lakeside’s case, how could new technologies bring it closer to its employees, its community and its customers? How could software make it improve efficiency, visibility and environmental commitments? When Lee looked closely at his vision, it became clear that technology could help bolster it, but that it couldn’t happen without tech being elevated.

Identify the gaps that technology can fill. 

“There is more to our business than asphalt and paving,” says Lee. “We have to keep up with plant and equipment management, communications, competitors, security and environmental regulations.” Lee met with his CIO and IT directors to determine how technology was going to add value inside and outside the business. The firm developed a digital roadmap that provided clarity around the technology initiatives people were going to work on; for each, it set accountabilities, timelines and goals. They used this roadmap to manage ongoing progress and to determine whether or not the new “shiny technology objects” matched the vision and strategy. The most important initiative was to replace Lakeside’s aging enterprise resource planning system. This would require modernizing processes and technology infrastructure to support collaboration with business management across the company — a broad impact to the business. Another key initiative was improving how it estimated projects and managed customer relationships. This new system would only be successful with buy-in from the people in the field using the software.

Communicate the importance of technology to the management team.

While its employees are part of a family, Lakeside Industries is also a distributed business run by a group of autonomous regional managers who needed to believe in the vision. Lee presented the specifics of the strategy to all managers: The message was “IT can no longer be just a department.” Business and technology leaders — who rarely interfaced — had the opportunity to discuss and debate what was at stake. Their conclusion? Software isn’t a gutsy gamble or a bold bet — it’s table stakes. The result was a set of guiding principles, alignment and excitement for what’s ahead. For the first time in the company’s history, business and technology people now have harmony around a shared digital vision — working together as one to contribute to healthier profitability and improved customer relations. In the end, Lakeside Industries’ road to the future has been paved with much more than good intentions. 

TIM GOGGIN is president of Sappington, a Seattle consulting firm that advises clients on digital change. Reach him at tim.goggin@sappington.co.