Clever Geek Handbook
4 November 2025

E-Business Intelligence

Recommendation

Despite the stereotype of the great company run by a mercurial, charismatic dictator in the Steve Jobs mode, a number of cutting edge business thinkers argue that if you want your company to grow, you should introduce democracy into the management mix. One of those thinkers is author Bernard Liautaud, who, unlike most folks who theorize about business, actually owns a company, and a fairly significant one at that. His European software company, Business Objects, has annual revenues of more than $240 million. In his book, he explains why democracy is good for business. Companies that adopt his ideas, he says, will realize numerous advantages, including better communication between the company and the customer, more intelligent data about who buys products and why, and the discovery that you can sell data back to your customer. BooksInShort welcomes this fascinating report from the horse’s mouth about the growth and evolution of the democratic, intelligent, e-organization.

Take-Aways

  • E-business intelligence is mandatory in today’s increasingly competitive economy.
  • Hoarding information lessens its value and makes organizations less effective.
  • A company that isn’t open with its information will find it very difficult to meet the future demands of customers.
  • Intelligence democracy makes a company faster and more profitable.
  • A company can learn to sell its information back to its customers.
  • Effective data mining provides better information about your customers.
  • Intelligent embassies allow customers to access your data all of the time.
  • If a company raises its intelligence, and subsequently its service, customers won’t find leaving to be cost-effective.
  • E-business is an expensive proposition and top management must support it.
  • Bernard Liautaud, who conceived these theories, leads Business Objects, one of Europe’s premier software firms, with revenues of more than $240 million dollars.

Summary

An Information Dilemma

Reaching for a way to symbolize the information dilemma facing today’s companies, BT Research Chief Technologist Peter Cochrane posits, "Imagine a school with children who can read and write, but with teachers who cannot, and you have a metaphor for the Information Age in which we live." This is not a happy prospect, but it is not an inevitable one, either. The solution is a democratic, open approach to business information and intelligence.

“Companies are evolving from information dictatorships to information democracies. This change in data philosophy is driven by the realization that each piece of information in a given corporation’s information system has value.”

Companies in the new era need to rethink their basic philosophy of organizational intelligence. A company has to become more intelligent to be more effective. The intelligent enterprise makes decisions faster and can outmaneuver its competitors. To thrive, each aspect of your company needs better intelligence. Customer relations needs intelligence to better serve and retain customers. Sales needs information intelligence to determine which products are selling to which customers and why. Marketing needs intelligence to determine why certain products are being bought so it can use that precedent to shape future marketing strategies.

“Increasingly, being an intelligent business is a prerequisite not just to win, but to compete in the first place. Amid the hyperkinetic competition of the Internet economy, intelligence is fast emerging as a cross-departmental mandate for companies in virtually all industries.”

Companies that lag in this new world of e-business intelligence will find themselves left in the dust. Customers, stockholders, employees and business partners pay a painful price when a company lacks freely shared information.

Four Models of Information Governance

In recent years, four models of information governance emerged at larger enterprises:

  1. Information Dictatorship - Only a few can access data.
  2. Information Anarchy - Everybody builds his or her own information system, resulting in data chaos.
  3. Information Democracy - Information spreads freely, but in a managed way.
  4. Information Embassies - This newly emerging model is pushing the democratization of information outside the organization. These embassies function like beachheads of data outside the company’s four walls and are comprised of the company’s customers, partners and suppliers.

The Great Information Democracy

Information democracy has two great benefits - increased value and better problem solving. As an organization’s level of democratization and empowerment increase, so does its value. In other words, the more information you make available to your enterprise’s general employees, the more effective your organization will be in handling and solving problems, and the higher its value will be.

“As we enter the 21st century, we will see that a new model is emerging, one that is pushing democratization of information beyond the confines of a single organization.”

The more democratic your culture is, the more likely your workers are to be able to work around organizational boundaries to problem solving. For example, Renault, the car manufacturer, deployed business intelligence technology at one of its companies and the plant became much more efficient at project management and funding allocations.

Building an Intelligent Organization

Begin by asking if your organization can cope with this increasing amount of information? Then, ask how. Many companies not only cope with today’s onslaught of data, but also excel in using it equitably and profitably. Here’s how to begin:

  • Start with the business - First, define your business’ information requirements. Determine the costs and benefits of fulfilling those requirements. Be sure that your business managers drive your e-business intelligence. Don’t ever let technology overwhelm your goal. Don’t let engineers determine your business strategy. To be sure that your information innovations are implemented, ensure that you have the sponsorship of the most senior managers you can recruit. This kind of investment is impossible without the support of higher-ups.
  • Define the data architecture - Intelligent information requires a synergy between information technology and the company’s business managers.
  • Develop a business intelligence strategy with the user in mind - Your online site should have an inviting graphical user interface or GUI that makes it easy to use. Be sure that your site provides flexibility for the users and insulates them from the complexity of backend systems.
  • Build it to grow - Build your system with the anticipation and understanding that it will grow. Once users outside and inside the company work with it and see its advantages, use will increase. Plan for rapid growth from the outset.
  • Think beyond your borders - Make sure that you open your data stores to the public. That is the future of consumer service.

Making Business Enterprise Intelligence Work

The only way to employ the rising tide of data within a company effectively is to implement an enterprise-wide business intelligence strategy. With such a strategy, business users at all levels of your enterprise can contribute to creating a system with many internal benefits, such as: cost reduction, revenue increases, improved customer satisfaction and improved cross-company dialogue. While there are certainly quantifiable benefits to enterprise intelligence, the most important advantages may be intangible. One such intangible reward is improved job satisfaction; another is enhanced customer intelligence and retention. Information about your customer has proven commercial value. As Patricia Seybold, CEO of the Patricia Seybold Group and author of the best-selling book, Customers.com, rightfully pointed out, the AOL-Time Warner merger positioned the value of each AOL customer at about twice the value of each Time Warner customer. The difference? Because of its frequent customer interaction, AOL has vast amounts of knowledge about its customers, whereas Time Warner knows very little about its customer base.

“The most advanced companies are establishing information embassies, which function like beachheads of data outside of their four walls and are built to better communicate with their partners, suppliers, and customers.”

If you can increase your enterprise’s overall intelligence about customers, then your company can do a better job of retaining customers. Business intelligence creates three very important customer service advantages:

  1. It allows you to know your customers better than your competition knows them.
  2. It exploits that knowledge to create the best possible customer interaction.
  3. It allows you to build switching costs into the customer relationship.
“The companies pioneering e-business intelligence extranets, which number in the hundreds today, have started to take e-business intelligence beyond the corporate walls - to their customers, suppliers and partners.”

The e-commerce part of your operation also will realize several specific benefits from sound business intelligence. These benefits include:

  • Enhanced personalization - You will be able to provide precise content to your customers.
  • Intelligent decision-making - You can quickly analyze trends and make better choices in the future.
  • Cultivation of customer value - You can target your most profitable customers with more effective ads and one-to-one marketing campaigns.
  • Improved customer service - A coordinated view of the customer - which means knowing the customer’s past problems and concerns - enables your sales, customer support and call center representatives to speak intelligently and efficiently with the customer.
  • Fine tune the Web site - By simply counting hits and figuring out where your visitors are staying, your company can determine which areas of your Web sites are working and which are not performing up to expectations.
“Today there is no such thing as an ubiquitous and instantaneous network. These ideas become a lot more feasible tomorrow when network connections not only exist, but go faster over the air than they go over the physical lines many of us use today.”

When you use information to create an effective customer care extranet, you will garner new customers. This happens because the extranet allows you to share more information with your customers and creates a better relationship between your firm and your customers. Extranets increase customer loyalty, because extranet benefits are so great that it costs the customer extra time and money to switch to a competitor that lacks the same services. The business should also reduce its support costs and raise its competitive advantages, especially if it’s a first mover in a market. The extranet customer benefits from receiving fast access to information. This includes the ability to monitor service level agreements and the tools to benchmark company performance. Your customer can watch you more closely, but you can also create a higher level of informed customer satisfaction.

“As radical transformations occur in the way data is stored and distributed throughout the organization, information and therefore intelligence will become ubiquitous. It will not be the privilege of the few, but the standard expectation of all.”

Your company can make more money by becoming an information warehouse or broker. To accomplish this revenue enhancement, figure out a way to sell the information your company already owns. First, make individual data transactions secure and private. Then, make data selling easy and scalable. MasterCard International is already following this path. It uses its data to tell merchants what kinds of consumers are driving sales, what TV shows they’re watching and what sort of consumer buys from its competitors.

Business Intelligence Misconceptions

If you find resistance in the ranks, you may have to deflate some incorrect, preconceived ideas about business intelligence. For example:

  1. Sharing information means losing control - Many people and organizations think that hoarding information is the key to power. On the contrary, the company culture that encourages information sharing allows the entire organization to thrive. Companies need to open up their communications and flatten their hierarchies, or else.
  2. Self service is a waste of time - Managers dislike shifting costs from IT users to end users, but self service means that users get exactly what they want and they get it when they want it.
  3. IT can’t understand the business - At most businesses, IT and business leaders are often at odds. In the future, effective companies will have cross-pollinated the resources of business and IT so they can answer competitive pressures. CIOs are now looked at as business leaders. At Schwab, for example, CIO Dawn Lepore led the company’s online efforts to sell stock. Schwab is now the leader of online trading and Lepore has been promoted to vice chairman.
  4. We don’t need all that data anyway - Some companies fear that their managers will face a report and information deluge. But this can be nipped in the bud by building an efficient system of intelligence tools in the first place. Ideally, the stack of reports won’t grow and only the most important information will be published.
“Would anyone want to work in that company, where all decisions were made by just a few and where the brains and talents of the staff were not utilized?”

The creation of business intelligence will introduce positive cultural changes in your company. Information will create more autonomous users and information democracy will lead to decentralization, more entrepreneurial culture and flatter hierarchies. Ultimately, if an organization wishes to be successful, it must not simply make decisions quickly, it must make the right decisions quickly. Winning organizations will be those that invest in a combination of information systems infrastructure and their own human resources.

About the Authors

Bernard Liautaud is president, co-founder and CEO of Business Objects, a provider of e-business intelligence solutions. Liautaud was named one of the "Hottest Entrepreneurs of the Year" by BusinessWeek in 1996. In fewer than 10 years, he built Business Objects into a global corporation with more than 10,000 customers and more than $240 million in annual revenue. Business Objects was the first European software company to go public on NASDAQ. It is also included in Intelligent Enterprise ’s January 2000 list of "12 Most Influential Companies in the Information Technology Industry." Mark Hammond is a freelance writer based in San Francisco. A lifelong journalist, Hammond covered the business intelligence, data warehousing and database industries for PC Week magazine after a dozen years as an award-winning reporter for daily newspapers in New York.

Read summary...
E-Business Intelligence

Book E-Business Intelligence

Turning Information into Knowledge into Profit

McGraw-Hill,
 


4 November 2025

Effective Training Strategies

Recommendation

James R. Davis and Adelaide B. Davis present a comprehensive guide to seven major training strategies, along with underlying learning theories, and examples of how different companies have used these approaches. The book draws on conversations with trainers and the results of research on learning from diverse fields - including psychology, sociology, philosophy, and communications. Its easy organization allows you to quickly extract its major principles, which are highlighted in bold-faced summaries, bullet-pointed lists, numbered rules, and final chapter summaries outlining major conclusions. If you want more depth, you can read the capsule descriptions of companies that have used the approach featured in a chapter. BooksInShort recommends this excellent guide to academicians, training professionals, and any managers charged with training new or existing employees.

Take-Aways

  • Everyone in your company should devote themselves to learning.
  • Apply different training strategies based on the type of knowledge you wish to convey.
  • The seven major training strategies are: behavioral, cognitive, inquiry, mental models, group, virtual, and holistic strategies.
  • Use the behavioral training strategy to teach motor or cognitive skills.
  • Use the cognitive training strategy to share important information.
  • Use the inquiry strategy to promote dialogue and to build critical or creative thinking.
  • Use the mental models strategy to teach problem-solving and decision-making skills.
  • Use the group dynamics strategy to improve human relations and teamwork.
  • The virtual reality strategy involves role playing, dramatic scenarios and simulations.
  • The holistic strategy involves mentoring and counseling.

Summary

The Importance of Learning

Because of the explosion of knowledge and the globalization of competition today, learning is more important than ever. To continue improving and to compete successfully, your entire organization needs to dedicate itself to learning. All of the individuals in your organization need to be learning all of the time.

“One of the most important tasks in organizations today is knowledge management. Learning in organizations takes on a new importance as workers are forced to learn new ways to apply knowledge to knowledge.”

Whether you are conducting training yourself or hiring trainers, you need to know the best strategies. When you understand these standard methods, which use well-established theories and research, you can increase learning in your organization. Such theories and research come from several fields - notably psychology, sociology, philosophy and communications.

“A true learning organization is made up of individuals throughout the system who are continually learning new things and learning to improve old things.”

Apply different learning-based training strategies, depending on what kind of learning you want to convey. You will encourage learning if you know more about how to learn.

To choose and apply training strategies, you need to understand some basic learning principles. Training is a process in which skills are developed, information is provided, and attitudes are nurtured, to help individuals become more effective and efficient in their work. You must commit your whole organization to learning, because:

  1. The learning edge gives companies an advantage.
  2. All the people in an organization need to commit themselves to learning, since the organization learns as the individuals within it learn.
  3. New technologies usually require major training so the whole system can adapt. The more change occurs and redefines work, the more training you will need to make that learning actually happen. Because change happens so quickly now, every organization must be a learning organization. No organization can survive without perpetual learning.
“It is the learning edge that gives companies the advantage today.”

However, many trainers don’t understand learning principles. They have an atheoretical approach to learning, which makes learning less effective. If you understand these principles, you can provide guidance and increase the amount of learning in your organization.

Often, learning goes on informally. People learn things on their own, and in their own way. Thus, prepare yourself to work - or to have trainers work - outside of formal training settings. This will help your employees learn more about learning for themselves.

Choosing the Best Training Strategies

In choosing a training strategy, consider the characteristics and needs of your organization. Have a philosophy of learning. The first step is to understand your organization. Consider its purpose, type, size, structure and culture in making arrangements for learning.

“Training strategies are based on the solid, well-researched theories about learning that serve as the foundation for effective training.”

For example, the learning needs of business, government and non-profit organizations are all different. Organizations with a rational, human relations-based, technological, or holistic approach have different learning needs. Your firm’s learning needs also will depend upon whether your organization is decentralized, distributed, nonhierarchical, fluid, transitory, or information-rich.

“You will be better at facilitating learning if you learn more about learning and then practice what you know.”

Delineate these factors in a characteristics matrix, to help you understand your organization better. This will help you establish your philosophy of learning, which will guide your selection of the training strategies you want to use.

With your learning philosophy as a basic framework, plan for learning. Establish organizational goals. Start by assessing your learners’ needs. Define your objectives according to these needs, and identify training that will meet those objectives. Next, organize those learning experiences. Finally, evaluate how well the program has met your objectives. If you do this, you will establish a results-driven planning program based on objective curriculum planning guidelines - such as scope, breadth, depth and sequence.

“The organization learns as the individuals within it learn.”

Why plan? Because if you can identify the learning results you want, then you can select the appropriate training strategy to magnify that kind of learning. Seven training strategies, based on accepted theories of learning, are available to you: 1) behavioral, 2) cognitive, 3) inquiry, 4) mental models, 5) group, 6) virtual, and 7) holistic. Each approach has a repertoire of activities, materials, and media you can use as training tactics. Choose among these, and adapt them to the needs and capabilities of the participants. For full effectiveness, use them with sufficient intensity, frequency, and duration.

The Behavioral Training Strategy

Use the behavioral training strategy to teach motor or cognitive skills to employees. This strategy requires employees to move to better skill levels - until they reach your stated performance goals.

“A learning organization is one where all of the individuals in it, in their own place and throughout the system, are learning.”

The process came into being through research most associated with the psychologist B.F. Skinner. However, Skinner drew on the work of John B. Watson and E. L. Thorndike, who first looked at the relationship between a response and the consequences of that response. This approach relates to operant conditioning, in which learning occurs through a shaping process. The learner experiences rewards for increasingly moving toward a goal. While much of the early research involved animals, the process works with human learning, too.

“New technologies often involve the revision of whole systems. New technologies usually have high order-of-magnitude implications for learning.”

In using this model, start with task analysis. Break the learning into its component parts, to identify its steps and sequence. Then, establish rewards for achieving the tasks your trainees should master. Learners want to avoid negative reinforcement for not learning the tasks. They also must experience feedback to move toward their goal. Use this approach through personal training, or through a computerized instructional program.

The Cognitive Training Strategy

Use the cognitive training strategy when you are sharing important information or explaining how things work. The cognitive learning theory describes how we pay attention to, process, or remember information. Verbal learning theorists, linguists, and systems analysts first conducted this research in the 1950s. It gave rise to the field of cognitive psychology.

“The greater the organizational change and the greater the redefinition of the work, the more training is required to make it actually happen.”

The key to making this approach work is having participants who pay attention to, process, and remember information. This way, they absorb the information in short-term memory and then move it effectively into long-term memory. Although our ability to pay attention has its limits, we learn best when we do so.

“Very few people in the business of training, whatever organization they serve, have had much opportunity to learn about learning.”

Start by doing what is necessary to get the learners’ attention. Let participants know what needs to be their focus. Don’t try to teach them too much. Slow down as necessary to keep their attention. Don’t try to compete with distractions. Help participants recognize the overall patterns. Present information in context, since people learn better that way. Build bridges to their prior knowledge and actively involve them.

The Inquiry Training Strategy

Use the inquiry training strategy to promote critical, creative thinking skills. Its underlying philosophy comes from theories about different thinking processes and about creativity. Some of these philosophies stem from classical ideas about learning, including the work of Aristotle.

Help learners better analyze evidence or build arguments. Critical thinking requires justifying an argument or seeking reasons to support a conclusion. Creative thinking involves seeking original ideas. It promotes exploration, requires flexibility and encourages diversity. This strategy also promotes learning through dialogue, which requires seeking empathy with others - you can better examine others’ arguments and views and compare them with your own.

The Mental Models Training Strategy

Apply the mental models training strategy to teach problem solving and decision making. Its underlying philosophy comes from classical and modern problem-solving and decision theory, deriving from Newall and Simon’s basic problem-solving model and Pascal’s expected utility-decision theory.

If you promote better problem solving, people can generate better solutions for positive change. By using mental models, people learn to go through various steps to reach solutions. Decision-makers can use mental models to predict likely outcomes more effectively.

The Group Dynamics Training Strategy

Use the Group Dynamics Training Strategy when you want to improve human relations and build teamwork. In this case, the underlying philosophy derives from group communications theory and from knowledge about group interaction and team activities.

You can use this approach to re-examine the emotional basis of how people’s opinions, attitudes and beliefs help them collaborate. Motivation for this kind of learning comes from the desire for personal growth, for inclusion in groups of people, and for recognition from others.

The Virtual Reality Training Strategy

The virtual reality learning strategy requires role playing and staging dramatic scenarios and simulations. This kind of learning is good for developing participants’ confidence through the use of a simulation - rather than in a real-life situation fraught with danger. The roots for this learning spring from simulation and gaming theory. Some of the early work comes from E.L. Moreno, who developed psychodrama and sociodrama. This approach also draws upon the use of war game scenarios.

This approach is especially ideal for situations in which a live experience is too dangerous or expensive, or if you want participants to practice under controlled conditions first. It works best when participants already have some level of proficiency and when they are comfortable acting out their roles. You can use either low-tech or high-tech virtual realities in this training process.

The Holistic Training Strategy

The holistic training strategy involves mentoring and counseling. This approach works best when trainers - as skilled learners and mentors - can apply what they have already used to guide a learner. They then can both challenge and support the learner. The roots for this learning come from counseling theory, drawn from Freud’s talking cure and Roger’s client-centered therapy. It especially is good in experienced-based learning settings - such as cross-cultural situations, where mentors or counselors can guide the learners by sharing what they already know.

About the Authors

James R. Davis  is a professor of higher education at the University of Denver. His books include Better Teaching, More Learning and Interdisciplinary Courses and Team Teaching. Adelaide B. Davis  has served as a training analyst for COPASA, a public utilities company, and has taught human resource management.

Read summary...
Effective Training Strategies

Book Effective Training Strategies

A Comprehensive Guide to Maximizing Learning in Organizations

Berrett-Koehler,
 


4 November 2025

The Small Business Owner's Guide to a Good Night's Sleep

Recommendation

Debra Koontz Traverso is out to save your business. Her book lives up to its billing as the first practical guide for small business owners who want to know how to manage a crisis like the big guys, or even better. Traverso tells you how to prepare for a crisis, prevent a crisis and manage a crisis if one happens. She’s written a thorough manual imbued with her understanding of the mindset and circumstances affecting small business owners. Traverso’s well-written book is jam-packed with insights, valuable lists, ideas and examples, and it never skims the surface of an issue. Come wind, sleet, hail or dark of night, if you are in a small business, BooksInShort.com recommends this essential book. Even if you work for a large organization, this book might be worth your time, since many big companies are strictly small-time when it comes to planning ahead.

Take-Aways

  • No matter how small your company is, you need a crisis-management strategy.
  • Crisis management mistakes can ruin your business.
  • Small businesses are particularly vulnerable to the effects of crises.
  • Crises range from natural disasters and accidents to product liability, employee problems, business setbacks and even computer crashes.
  • You can and must identify risks and plan for the unexpected.
  • A risk is anything that threatens your plans for your business.
  • Be prepared for the unexpected - You have tangible and intangible assets to protect.
  • Properly planned and handled crisis management can benefit your business and make it stronger than it was before the crisis.
  • Include your employees in the planning and execution of crisis management.
  • Learn how to deal with the media in a crisis - It could be the most important thing your do.

Summary

Risky Business

Companies of all sizes must develop on-going crisis-management strategies that protect their images and prevent, prepare for and manage a worst-case scenario. Planning for a potential crisis is time-consuming, but in the face of situations that could wreck your company, the benefits of being prepared are obvious. Think of crisis management as your company’s first-aid kit, always well stocked and ready if needed.

“The response and the reaction by the public to the crisis often becomes bigger than the crisis itself. Exxon learned this the hard way following the Valdez incident.”

Every business is potentially a risky business. A risk is anything that threatens your plans for your business, from simple, yet annoying things that merely waste your time, to major destructive calamities. Major corporations have risk-management departments that plan for the possible problems that can develop while building a company, introducing a new product, entering a new market or bringing on more employees. What kind of crises could befall companies of any size? Well, for instance:

  • A disgruntled former employee assaults a former colleague at your workplace.
  • A whistle-blower says your company is the site of drug use, theft, racial discrimination, sexual harassment, pollution or criminal misconduct - even though it isn’t.
  • Personal trouble erupts on your premises, from a domestic fight to suicide.
  • A fire destroys your inventory.
  • One of your company vehicles is involved in an accident.
  • An anonymous user starts a media inquiry by claiming your product is tainted.
  • Your computers crash in the midst of rushing to meet a very lucrative client’s deadline.
“Many small businesses have folded - especially family-owned businesses - because no one was trained to take over in case of unexpected leave or death.”

Don’t be overwhelmed. Follow the example of professional risk managers: Take large complicated risks and break them down into smaller, more manageable pieces. This approach actually works for any kind of risk, from the smallest to the largest and most complex. When dealing with any risk that threatens your company, you must eliminate it, accept it or manage it. Though you can’t eliminate all risk, you can shift the responsibility for a lot of risk by carrying as much insurance as you can afford. However, insured losses are usually accompanied by the costs of uninsured losses, including lost profits and opportunities.

“Sadly, if you want negative information to get out quickly, tell it to an employee during a crisis.”

You can identify risks and plan for the unexpected in a practical way, even if you don’t have a legal department or a public relations agency. You will have to handle unexpected situations yourself, but that is easier than you might expect if you have planned ahead. Since your survival is at stake, planning is a must. Your margin of error is smaller than that of a large corporation. One crisis literally could put you out of business, while larger corporations can generally weather their storms and outlast their critics and crises.

“Unfortunately, a common reaction during a crisis or negative situation is to try to avoid reporters or evade their questions, which always is a risky media relations tactic.”

Prepare yourself for the unexpected, because you have plenty of assets to protect. Your firm’s assets include far more than equipment and inventory. Assets are broadly defined as anything of value that is owned by or that is a part of your company. Your tangible assets include accounts receivable, cash, cash flow, certifications and licenses, computer data/records, copyrights, customer databases, customers, equipment, facilities, inventory, leasehold interests, mailing lists, patents, personnel, raw materials, suppliers (your relationships and contracts with them), trademarks, and other things your particular company can add to this list. Your intangible assets include brain trust, claims ratings, credibility, employee pride, experience, integrity, liabilities, market share, product leadership, reputation, stockholder confidence and other valued aspects of doing business.

“The best survival technique for many businesses could well be maintaining a positive cash flow. Without it, your business will not be able to weather the finicky sales environment.”

Consider the security or precautionary measures you have in place to protect each of your tangible and intangible assets. Include them all in your plans.

Making Bad Situations Worse: Crisis Management Mistakes

Business owners’ most common mistakes before, during and after a crisis fall into these categories:

  • Failing to plan.
  • Ignoring warning signs.
  • Failing to prepare advance material to use when a crisis hits.
  • Being overly optimistic about weathering a storm.
  • Making decisions too slowly.
  • Making decisions based on fear, not facts.
  • Failing to communicate with those who need information, including employees.
  • Failing to return media phone calls (or using guilty phrases like "no comment").
  • Being unwilling to make changes or adjustments
“The idea is to identify your vulnerabilities and your areas of risk, then prevent them from turning into crises.”

As a result of these mistakes, a business owner can experience:

  • A damaged reputation that eventually leads to shutdown.
  • Loss of employee morale and loyalty, or even complete employee turnover.
  • Decreased production because the focus shifts from business as usual to survival mode.
  • Fewer sales and reduced profits.
  • Expensive name changes in an attempt to create a new identity.
  • Crippling attorney fees, fines or other expenses.
“Employees sometimes are in a much better position to spot problems and to be objective about those problems than the owner of the company is.”

Business owners who embraced crisis management planning could transform the crisis into a beneficial turning point, and achieve:

  • Extended visibility.
  • Heightened customer awareness and understanding of the business.
  • Increased name recognition.
  • Stronger bonds with people and groups important to the business’ success.
  • Improved reputation and credibility.
  • Validated management plans.
  • Enhanced confidence.

Crisis Planning 101

Start by listing potential crisis situations that could affect your business. Include technological accidents, natural disasters, internal concerns, external threats and other hazards, and even threats due to your location (hurricanes, etc.) Include even common events that can be anticipated, such as executive departure or resignation, executive scandal, discovery of fraud, key customer loss, key supplier loss or failure, poor earnings, senior executive entering rehab, serious product problems and severe weather. Create a plan of action by asking:

  • Who will respond?
  • How can responders be reached?
  • Where will responders meet?
  • How will responders know what to do?
  • Will responders understand the magnitude of the situation?
  • Will we be able to continue operating?
  • How will we handle the news media?
  • Can we keep the crisis and the response isolated?
“No matter how strong the company’s management techniques are, a crisis can still occur.”

Your action plan should include information on staff assistance, communications, supplier issues, data protection, security and relocation. Determine areas where your company may be vulnerable and list the possible negative outcomes of these potential problems. To be sure you include all vulnerabilities, also ask:

  • What would you do if your facility were damaged and had to close for several days?
  • What if it was totally destroyed?
  • How would you quickly contact each other to activate back-up plans?
  • Could you operate elsewhere? Where? Can you secure that location now?
  • How will you quickly move your computers, inventory and equipment?
  • If you have back-up supplies and equipment, are they stored somewhere that isn’t vulnerable to the same disaster as your main facility?
  • What is absolutely critical to your survival?
  • What can you do to make sure you never have to live without these critical items?
  • What would you do during a prolonged power outage or loss of phone service?
  • What if your most important suppliers or shippers had a crisis even if you did not?
  • What if your vital records were destroyed?
  • Can you set up a way to inform customers quickly about your company’s ability or inability to fill orders and supply services?
  • Is your insurance enough to get you back into operation?

The Personnel Touch

Employees of small businesses often work more closely with their employers than those in larger companies. This closeness can allow you to prevent problems that routinely plague larger businesses and to address employee problems and grievances quickly. Your personal touch is vitally important in risk and crisis management. Plan for both expected and unexpected problems that can arise regarding your employees, including safety, accidents, illness, resignation, training, discrimination or sexual harassment complaints, succession and continuity, employees’ personal and family situations, indiscreet employees, rumors, and the possibility of employees taking confidential information or clients with them if they leave you to start their own businesses. To protect yourself, identify trustworthy staffers. Train employees to handle crises and emergencies, and don’t hire in haste. Understand your legal obligations to your employees, and make a plan for what you will do when someone leaves your employ (or when you have to dismiss someone).

Handling the Media

When your crisis goes public, you must already have a plan in place. Even with a good plan, this is a difficult situation. Brace yourself for negative publicity and scrutiny. As you create your prevention and response plans, remember:

  • You must learn and understand how the media work.
  • Practice making a smooth transition between the questions reporters might ask to the points that you want to make.
  • Practice your media interviewing technique in advance in a simulated crisis setting with colleagues or consultants.
  • Know how you will react to being caught off guard when you first learn of a crisis and the media is pursuing you for interviews or showing up at your door with cameras.
  • When the unexpected happens, remember that it’s OK to tell a reporter that you don’t know the answers, but that you’ll get them.
  • Don’t sweep the crisis under the rug. The news media will find out anyway, and then you’ll look like you’re hiding something.
“If your supplier experiences a crisis, then chances are you might too.”

Not all crises merit attention. According to the Institute of Crisis Management in Louisville, Kentucky, the media pays more attention to some types of crises than to others. The top attention-getter cited is the degree of controversy involved in the story. To turn this crisis into a benefit, use media attention to educate the public about your company.

About the Author

Debra Koontz Traverso teaches crisis management and prevention as an adjunct professor at Harvard University. She is a small business consultant who serves as the small-business expert for WorkingWoman.com. She is also the author of Outsmarting Goliath , and co-president of WriteDirections.com, which offers consulting and tele-classes in business and personal writing. She lives in the Washington, D.C. area.

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The Small Business Owner's Guide to a Good Night's Sleep

Book The Small Business Owner's Guide to a Good Night's Sleep

Preventing and Solving Chronic and Costly Problems

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