This week’s contractual failure of the London Olympic security provider G4S provides some beautiful examples of business failure, crisis management and the value of having a “Plan B” in your back pocket. While the inability of G4S to deliver the security services under it’s £250m contract represent a business failure of ‘Olympic’ proportions, the lessons for small and medium businesses (SMBs) are stark.

Planning for success by planning for failure (Free image courtesy of FreeDigitalPhotos.net)

Planning: G4S planners over-estimated their ability to deliver Olympic security personnel and had no workable plan to recover.

Variance from business plans is always expected (and should be planned for) and establishing realist business plans are critical to ensure operational success.

More advanced business plans can factor in probabilities of certain risks, failures or success occurring, but most SMBs should plan a realistic/expected outcome and supplement this with possible best case and worst case scenario plans.

A plan (for a project, business, campaign or event) should focus mainly on expected outcome and SMBs should spend some time documenting their approach to a possible best case / worst case scenario model.  This is part of basic contingency planning.  It is often overlooked and rarely done well outside of the IT space, however it is critical to ensure business has the resources, systems and processes in place to execute its mission.

Risk Management:  The quarter of a billion pound London Olympic security debacle clearly demonstrates the impact of operational and reputational risk.  Monitor the G4S stock value to assess the impact of this PR and operational disaster. Often businesses mainly consider risk in terms of information systems, privacy and legal compliance, but as G4S lawyers and insurance managers reach for their insurance policy and re-read the fine print, it’s a great example of operational risk materialising….. and then impacting reputation and ultimately eroding enterprise value.

No matter the size of a business or project, good insurance advice and coverage is basic element of good governance, as well as ensuring risk management extends to delivery of core business and contractual objectives… such as providing trained security personnel for major events.

Crisis Management: As private enterprise fails themselves and their client, the importance of a workable “Plan B” is clearly shown by how the UK Government responded to the crisis.  London Olympic and Government officials will be scolded for failing to manage the risks associated with the security contract, but they should be commended for the swift and effective solution to the crisis.

Thousands of military personnel were rapidly deployed to fill the security void.  G4S clearly did not have a workable “Plan B”, but the Government did.  This should be expected given the massive resources of State but still provides a graphic demonstration of a successful resolution to the corporate failure.

How the PR disaster is managed maybe a different story, but the Government is off to a reasonable start with its practical response and the swift bringing to account of the G4S executives in a televised public inquiry.

Leadership: The Independent yesterday reported “Army chiefs have been dispatched to the headquarters of G4S to take a more active role in controlling security for the London Olympics…”  In coming blogs we will look at lessons for SMB from leadership structures in emergency services and the military.  These structures and management systems are built to manage in times of crisis, high stress and literal life and death situations – so important leadership and execution are critical to ensure success.

© Andrew McIntosh CPA: OptimizeBusiness.org@gmail.com