Excerpt: Anatomy of a Disruption (Chapter 10, Pages 137-138)

Although there are different types of disruptions, ranging from short and minor to huge and devastating, their composition is basically the same. A disruption has these stages:

1. Event: This is the cause of the disruption, which is likely to be a disaster, an accident, an intentional act (like a strike), a materials shortage or a sudden, unpredicted spike in demand.

2. Impact: This is the adverse effect that the event has on business, such as loss of materials, damaged facilities, reduced staff, halted production or perishing goods.

3. Initial reaction: This includes the actions taken to immediately mitigate or stop the adverse effects of the event, such as first response, stopping machinery or servers, opening negotiations or sourcing needed materials from somewhere else.

4. Delayed reaction: This includes the actions taken when the business is impacted adversely over time, usually in ways not originally foreseen when the event occurred. Consider examples such as finding workarounds for closed airports and borders after a terrorist attack, no transportation networks after a disaster, re-locating to a temporary facility or loss of productivity over time because workers are striking.

5. Recovery: These are the actions taken after the full impact is realized and usually include restarting production, making repairs, overtime, opening temporary facilities, or, in the case of a spike in demand, ramping up production.

Often, recovery is not simple or quick. We have seen this in the effects of Hurricane Katrina on the Gulf Coast. As I write this, it is almost the one year anniversary of Hurricane Katrina, and the world is still feeling the effects of shifted inventories, driver shortages, closed roads and badly damaged communication systems.

These stages are all related to one another. How a company handles the stages after the first stage can determine the time required to recover.

A stage that is often not given enough attention is the delayed reaction stage. This is because often a business is so busy trying to react to immediate trauma or distress that no thought is given to what the long-term effects might be. A good example is a severe headache. When you have a severe headache, you see immediate relief with a pain reliever. That takes care of the pain then and there and gets you back to work. But what if that severe headache means something else? What if it's an indication that you're getting the flu, or worse, that you might be having a stroke? Pain relievers are an instant reaction to your headache, but they might not be the long-term solution.

Another important thing to remember is that recovery may not mean a return to normal. The business disruption might have been severe or unexpected enough that the company was greatly damaged or has lost its role in key supply chains. On the other hand, in some cases, the recovery stage reaps great rewards for a company, and its business increases or goes off in a better, more profitable direction. As I stated earlier in the chapter, a company does not have to be ruined by any or all of these stages. Many companies bounce back in less time than you might think after a business disruption or unusually high demand for a product. It is their level of business resilience that allows them to do this, and that is why business resilience is critical to success in today's marketplace.

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