Jul 15, 2023 | Articles

Lightning Strikes

How to Recover from a Strategic Disaster

It’s the morning of Saturday, October 11th, 2008, and like many others, I have a hangover without the wild party last night. In one week, the Dow Jones Industrial Average lost 1874 points—a staggering 18.15%–marking the largest one week loss ever both in absolute point value and in percentage points.

Several records were broken that week—and not in a good way. In addition to the Dow’s largest plunge, on the Friday closing that week, the one day trading range was 1,018 points, the largest swing ever. The volatility index (VIX), also known as the “fear index,” saw an unprecedented intra-day high of 76.94. This was, in no uncertain terms, an economic disaster.

In risk management, I classify a disaster as a risk event that hasn’t been previously identified (otherwise known as an “unknown unknown”), that carries an extremely high impact. In other words, really bad stuff just shows up sometimes. Back then, we were dealing with an unprecedented tumble in economic health. Tomorrow, you may be dealing with an unprecedented strategic disaster such as an unforeseen government regulation that cripples one of your cash cows. What should you do?

If a strategic disaster strikes your company, the first thing you should do is – PANIC!

That’s right – scream, yell, grieve, curse out loud, shake your fist at the sky – anything that makes you feel better about the situation, just don’t take any action to fix the problem. Not at first. When disaster strikes, you will be “tilted,” like a pinball machine that’s been roughed up too much. If you try to take any action at this point, you will do more harm than good.

It might take you some time to get everything out of your system, but once you do, take swift action with your team to construct a brand new plan of action. Make absolutely sure everything is out of your system. You know you’re ready when you’ve truly accepted the situation for what it is, and you don’t really feel terrified anymore. You’re still concerned, and there’s a sense of urgency, but no real panic or disbelief. Do not try to salvage old plans because they were based on old assumptions. Everything’s different now, just start over. Everything will be okay pretty soon.

In your new strategic plans, make sure you allow for some quick successes early. Once your team starts experiencing success, your confidence will start building, good things will start happening, and you’ll start experiencing more successes. Once this cycle is set in motion, it will logarithmically pull you out of doom and gloom.

Remarkably unfortunate things can and do happen to companies. To be fair, remarkably good things happen too. Perspective is the key to getting through everything. Just like the Great Depression, the S&L fallout, the Dot Com bust, and the September 11th attack, life continues beyond disaster.

Store this progression in your memory banks, just in case one of these unfortunate events shows its ugly face. If it happens to you, flash back to this framework, and take appropriate actions at the appropriate times. Knowing and understanding is half the battle.



John Weathington is a veteran management consultant who helps leaders manage difficult organizational change. In a recent effort he helped the Chief Digital Officer of a large, multi-national oil & gas company operationalize a radical digital transformation


Submit a Comment

Your email address will not be published. Required fields are marked *

About XMS

Since 1994, Excellent Management Systems, Inc. has helped leaders navigate difficult organizational changes and achieve strategic results. In a recent effort, we helped a precocious High-Tech firm develop and launch a hyper-growth strategy to accelerate revenue from $1B to $5B in four years. Contact us today if you are facing a difficult organizational challenge or desire next-level performance.