The first U.S. Secretary of Energy, James R. Schlesinger, once said Americans have only two modes—complacency and panic. At the time, he was talking about the way we conserve when prices soar but consume without a care when prices go down. More than 30 years later, it seems we’ve made little progress.
Imagine the last decade as an EKG, with brief, sharp blips punctuating long waves of calm. The spikes represent intense fear in the business community in response to things like the Y2K bug, terrorism, SARS, bird flu, natural disasters, recession,
and most recently, swine flu (H1N1). Of course, we are rightfully and justifiably alarmed by terrifying situations. And fear has a legitimate purpose. Disasters—natural, man-made or economic—cause the business survival instinct to kick in. Corporate managers start thinking about risk management and develop continuity plans. They willingly add cost by loading up on safety stock or investing in better forecasting and scheduling—just in case.
Sometimes fear turns into panic, though, and that leads to rash decisions that ironically undermine the resiliency the company is trying to preserve. Consider, for example, how some organizations are reacting to the recession—with haphazard cuts and no plan for the future. They operate moment by moment and sit and wait for things to just turn around.
When you look at the past decade as a whole, you can see the big picture. Panic is intense but fleeting. As time goes by and headlines fade, so does urgency. Problems still exist, but the desire to address them fades.
That’s when complacency sets in. Corporate managers start saying, “That will never happen here,” so they continue to rely on that one big supplier or customer, never thinking that a key account could collapse someday. Lean processes get leaner and leaner still, leaving no room for error. Employees lack training, incentives and development opportunities from supervisors who are content with the status quo. Businesses don’t have contingency plans to guard against the unpredictable. Complacency continues until the next crisis du jour. And the cycle continues.
An operation repeats the sequence until it finds the middle ground between panic and complacency called paranoia.
A little paranoia is healthy for a business. It means never being satisfied with the way things are. It’s the foundation of continuous improvement, which assumes that the absence of problems is a problem.
In a downturn, slightly paranoid organizations continue to invest, with caution, in new technologies, processes and equipment that will lead to competitive advantage when better times return. They enhance customer service by accurately and completely delivering on promises. When cutting labor costs is unavoidable, they find other ways to motivate their best employees to maintain productivity today and avoid disruptive turnover tomorrow. They devote time and energy to mission-critical resources and get rid of wasteful practices that don’t support overall objectives. Their constructive fear drives them to calculate every decision. And they always have a carefully prepared and tested Plan B—just in case.
This surgical skill, combined with a bit of paranoia, will help any operation overcome the crisis du jour and many more to come.
Mary Aichlmayr, Editor in Chief