Planning for Failure: The Business Lessons of the Chilean Earthquake

by Frank on February 27, 2010

UPDATE: If you’d like to contribute to Chile’s relief efforts, here are some ways you can help.

Planning for FailureEarly Saturday morning, there was a pretty massive (8.8 according to the London Times) earthquake off the coast of Chile, and tsunami waves were expected to hit Hawaii and most of the Pacific Rim later today.  At this writing, there have also been 27 aftershocks, some measuring over 5.0.

While much smaller than the devastating 1960 earthquake, this is significantly more powerful than the earthquake that leveled most of Port-au-Prince Haiti and caused so much suffering – suffering that is still ongoing, by the way.  There were, of course, various factors that make them different, and I don’t mean to minimize the earthquake in Haiti.  But one difference is significant: Chile expected the quake, where Haiti was completely unprepared.

Most of the world is coming out of a pretty nasty recession, and coming out so slowly that most people still don’t feel it.  But – like death and taxes (and earthquakes on fault lines) – the boom and bust cycle is normal.  So – as things begin to slowly improve, your customers begin to open their wallets, and you start planning for growth instead of just survival – are you also planning for the next crash?

Chile knew a massive earthquake was coming because earthquakes happen all the time, and one hadn’t happened in a while.  They were due.  So they planned for it, likely minimizing the damage such a massive earthquake and tsunami would almost certainly cause.  As a result, this will be a momentary setback in their nation’s growth.  Again, I don’t mean to minimize it – so far, at least 100 people have died and countless others have lost their homes.  But their nation won’t be devastated in the way that Haiti was because they planned for failure.  This is the difference between pessimism and realism.  Chile didn’t stop building or growing – they just did it with an inevitable crash in mind.  Are you growing your business the same way?

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