At the moment, the covid-19 crisis rages on. Almost every day there is a new directive telling us to stay at home or extending the length of time to remain at home, but the covid-19 pandemic will eventually recede and a new normal will be established.
Whatever the new normal brings now is a good time to think about how to cope with the next crisis. There’s always a next crisis as any HR professional or business owner will attest. To jumpstart your modeling of how to handle a future crisis, here’s a couple of case studies.
Hershey’s bittersweet chocolate
Many years ago, Hershey decided to upgrade their technology to link their chocolate factories to their suppliers and to the retail locations selling Hershey’s candy. Here’s how it was supposed to work. When a customer bought a bag of Hershey’s Kisses, an electronic message would be sent to the factory so that more candy could be made. Simultaneously, the factory would electronically notify the suppliers to deliver more sugar and cocoa to the factory.
Hershey decided to flip the switch on their new integrated supply chain system as stores were preparing for Valentine’s Day and Easter chocolate sales. The system crashed. Store shelves quickly emptied of Hershey’s chocolates without being replenished. Hershey had no backup plan or workarounds because no one expected such a colossal failure. Hershey’s dominance of U.S. chocolate sales has never fully recovered.
ZFS insurance fail
In the 1990’s, Zurich Financial Services (ZFS) decided to buy an insurance company based in the U.K. During the due diligence phase of the acquisition, the IT staff noted that the English and Swiss companies used very different computer technology. In plain terms, the two IT systems couldn’t “talk” to each other. For a variety of reasons, the business leaders plowed ahead anyway, apparently expecting IT to overcome the programming issues by the date of the merger.
The deal closed on time and the management team uncorked champagne to celebrate. But IT was still nowhere close to finding a technology solution. The system crashed. English customers received multiple monthly invoices or no invoices or random cancellation notices. The ZFS bottom line took a huge hit as the company endured regulatory investigations, its English subsidiary lost market share leading to staff reductions, and the company paid for a massive IT upgrade.
The moral of the (case study) story: Disaster planning depends less on the size of the company than on the willingness to imagine the worst case scenario. Effective disaster planning begins with the recognition that an epic fail is always an option.
If your company is struggling with all the changes required by the new normal, Corporate Compliance Risk Advisor can help you adapt your HR policies for telecommuting workers and to prepare for the next disaster.
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