Many lessons can be learned from unfortunate failings of the world's larger corporations, and there is no shortage of lessons to be learned from the recent BP situation.

I'd like to stress the importance of the question “what could possibly go wrong?; A strategic plan should include as many of the potential scenarios as possible and a plan of action for each.

How do you and your organization respond/react to tragedies, disasters or embarrassment?

For example, the worst thing you can have in the airline industry is no plan of action for the loss of one of your airplanes.  When I was with Southwest Airlines, though we had not experienced a downed aircraft, we developed a very comprehensive plan for how we would respond to an aircraft incident or accident. The plan included everything from family contact to public and media relations, as well as the other sensitive aspects of an air crash. We reached out to our colleagues at other airlines who had previously dealt with this situation to solicit their best practices, as well as mistakes they made and things they would do differently.

In many cases, and in BP’s case, there is either is no plan of action, the plan isn’t followed, or the plan didn’t work (it was a bad plan). In fairness to BP, irrespective of their plan, working 5,000 feet under the sea is going to be a challenge.

If you are challenged by your shareholders as to what your disaster recovery plan is, would you have a good answer?  Worse yet, if the worst thing that can happen to your company happens, how are you going to handle it?  Historically, companies who handled disasters with transparency and humility, faired well in the media and the courtroom. You will recall, Tylenol did an excellent job, Toyota didn’t.

Take the CEO Challenge.  Identify which scenario your company could be faced with.  Do you have a plan of action for the worst thing that could happen?  Do you have a great plan with which you’re confident ?  Or do you have a bad plan?

How do you know your plan is good?  Has it been scrutinized?  As we’ve said before with your strategic plan, invite outsiders (attorneys, CPA’s, media specialists, your competition) to look at your plan to the extent that you can with confidentiality.                           

Just a few examples of the worst things that can happen to your company include:

- an attack on employees

- a natural or man-made catastrophic event such as a tornado, plane crash, or something happening to the building

- misinformation or a public relations scandal

- a defective product (Toyota)

- loss of a major resource (oil, steel, sugar, copper, etc.)

How will you and your organization be judged if the worst thing happens?