High Alert Institute



Business Triage

by | Dec 15, 2006

What do Tylenol, New Coke, Jack-in-the-Box, Bag Leaf Spinach, Katrina and the World Trade Center have in common?  They were all disasters.  More specifically, they were all business disasters, and the outcomes of each of these disasters was completely dependent on managing needs and resources.


But what does triage have to do with business?

If a business is doing well, absolutely nothing.  

However, in a global economy where labor is cheaper for “the big boys” overseas and markets are flooded with less expensive goods, where disgruntled employees or other malcontents take out their frustration on a business directly or its customers there are few businesses that do not regularly suffer a disaster.  The problem is, they don’t know how to recognize one when it comes.


The first lesson from the disaster field office are the definitions: a disaster is when your needs exceed your resources.  It’s a simple mathematic equation:

Disaster = Needs > Resources


A catastrophe is when your needs exceed all ability to respond.  Again, it’s a simple mathematical equation:

Catastrophe = Needs > Ability to Respond.


Resiliency is defined in many ways. One definition is even of a book on the subject, Mastery Against Adversity (Disaster Life Support Publishing, 2007).  But the simplest definition is that resiliency is the opposite of disaster.  It is when your resources exceed your needs, or mathematically:

Resilience = Resources > Needs.


The second lesson from the disaster field office is every business must have resilience to survive its disaster.


The third lesson from the disaster field office is that there are acceptable losses.  Several years ago when New York City suffered its most recent blackout Arnie, who owned a small convenience store and ice creamery faced a business triage decision.  With the power out he had ten flavors of ice cream in the cabinet that would soon melt.  At 5 gallons per flavor there was slightly less than 50 gallons of ice cream up front.  This was a small loss, but it would be compounded by the fact that he had over 100 gallons of ice cream in the back.  


Arnie knew that he had a disaster on his hands.  His needs (refrigerator) exceeded his resources (electricity).  Arnie needed to make a simple triage decision.  He had to decide where he could focus his efforts and his remaining resources so that his business would in fact reopen when the power came back on.  He also needed to plan for as short a recover as possible.  It takes a lot of effort to get rid of over 100 gallons of ice cream and a lot of dumpster space.  The clean-up would be horrendous and if the disaster lingered too long his store would be filled with stench of sour milk and rotting ice cream.


Arnie ran a neighborhood store and his customers had already been in to purchase what he had on hand.  With an old cigar box he had given up his computerized register and was going business “the old fashioned way”.  But what to do with the ice cream?


Arnie doesn’t know if he was the first store owner to think of it, but in the sweltering heat Arnie struck upon an idea, give it away.  After all, what would he be losing?  The product would be ruined before refrigeration could be returned. So he simply gave away the ice cream.  A small handmade sign in the window soon drew people in off the street.  “Free Ice Cream.  


In no time he had a line.  He was giving away the ice cream, but what to hold it in?  Ice cream cones!  The cones were actually cheaper than Styrofoam cups, and Styrofoam have an unlimited shelf life.  Would the ice cream cones go bad during the blackout?  No, but you can’t give people ice cream in their hand, and the small loss in the cost of ice cream cones was less than the larger loss than the cost of Styrofoam cups.  


To Arnie’s amazement, many people tried to pay him for the ice cream.  Wanting to get rid of it as quickly as possible, before it all went bad and he had to carry it out back where it would create a horrendous stench, he simply refused.  To his greater amazement people began to buy other items in the store, items that in all likelihood he would not have been able to sell at that moment in time simply because before the free ice cream sign he didn’t have many customers.  Before he had given away all the ice cream, Arnie found that his store shelves were bare and his cigar box overflowing.  His acceptable loss, the ice cream, had gained him an unexpected profit.


But that’s not the end of Arnie’s story.  The power came back on and Arnie was resupplied with both ice cream and merchandise.  He also saw a tremendous increase in business.  People didn’t just come because he had given away ice cream.  They came because they felt that Arnie cared about them.  He had taken a tough decision and turned it into a benefit for those around him.


Triage has come to to be sorely misunderstood.  Triage is not simply sorting the most important project or business goal, or even critically ill patient to the front of the line.  Triage is determining what resources are available and how those resources can serve the largest number of goals or the largest number of people at any given moment in time.Triage is a continuous process, and it is a repeating process.  In business that means constantly reassessing the resources available at hand both as they are expended and as they are resupplied.  Business triage involves reassessing the needs and goals of the company on a minute by minute, hour by hour basis. 


Arnie is just one example of businesses surviving and flourishing because of efficient business triage.  Johnson & Johnson (cyanide in Tylenol) and Pepsi-Cola (needles in bottles) are two “big business” examples of the same principle.  


In the business world triage missteps, failure to define an acceptable loss has resulted in product failures and brand damage (Coca-Cola with New Coke and Jack-in-the-Box with tainted hamburgers).  The news examples disaster was taken to catastrophe because needs were not prioritized and goals not adjusted to the realities of available resources.


The lesson of business triage is that when a business faces a disaster it must accept that not all of its goals can be met until more resources are brought to bear.  If those resources are not available then acceptable losses must be identified and sustained.  This must be done dispassionately and with the same logical approach as business uses when choosing a vendor or a new project in which to invest.

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