Does my business have an AZ55 button?

There is something about disaster that we find strangely compelling. Netflix’s latest documentary series tells the story of the doomed Challenger shuttle mission in January 1986. This tragedy occurred only three months before the Chernobyl meltdown, which was the subject of last year’s hit show for HBO. Both NASA and the Soviet Ministry of Energy and Electrification, which operated the Chernobyl reactor, were shown to be incompetent. Known design flaws were either ignored or suppressed. The rocket booster o-rings duly failed and the fateful AZ55 cut-off switch ironically detonated the reactor.

But despite the tragedies, the space and nuclear programmes continued. They had Government support and were too strategically important to abandon. Some companies have also been too big to fail (so far), surviving any number of environmental (BP), accounting (Toshiba) or production (VW) scandals. That’s not always the case with private enterprise. Several companies have imploded dramatically (e.g. Enron, Lehman Brothers, Napster and Wirecard). Every smaller business lives under the constant threat of disaster, knowing that if they suffer a meltdown they won’t get a second life.

What can founders do to avert catastrophic failure?

Firstly, fix known problems. This requires a level of honesty and proactivity rarely found in mere mortals. NASA and Chernobyl senior management knew where the problems were but didn’t tackle them because they didn’t have to. Time, resources and crucially attention were focused on more immediate problems. Potential future problems could wait. I bet this is the case in most businesses.

Do you already know of a flaw in your business that you have not yet got around to addressing? You must move it to the top of your ‘to do’ list.

Secondly, set aside precious energy to find unknown flaws. If your company resembles a 1980s Lamborghini -beautiful but with an engine so hot it could spontaneously combust- there is likely to be a design problem somewhere. You need to find it. Similarly, you also need to find the most dangerous flaw, that which displays no symptoms. The danger of the AZ55 button was latent, completely unknown to operators.

How do you find your business’ AZ55 button?

Begin by writing a short Amazon-style ‘future press release’, but instead of describing the successful launch of your latest innovation tool, narrate the unexpected and untimely demise of your business.

Next, apply some root cause analysis to it to find out what killed your business. There are many RCA tools but the simplest is to ask ‘why did this happen?’ five times, to identify the most likely sequence of causal relationships. For example:

·      What killed our business: we ran out of money

·      Why? We lost our top client

·      Why? They weren’t happy with the creative work

·      Why? We didn’t have good enough talent

·      Why? We didn’t pay them enough

·      Why? We didn’t value creativity as much as other parts of our business. This is your root cause (unless there is a 6th, 7th or 8th Why).

Now you know all the causal factors that might destroy your business, you can create an action plan to avert or mitigate them, starting with the root cause. You should repeat this for all the main causes of failure you can think of.

We have created a simple tool to help you do this. Get in touch if you would like to try it.

You shouldn’t do this exercise alone. It is far more insightful to get multiple perspectives. And if you find your business does have an AZ55 button, for God’s sake don’t press it, however innocuous it looks!   

UP AND TO THE RIGHT.