Taking stock of times in crisis

The floods of summer 2007, as well as the foot and mouth outbreak, demonstrated the need for effective crisis management.

The waters have receded. You’re able to see your land again and you’re assessing the damage. The Government has made noises about additional funding for those affected by the floods. It’s not enough, but it’s a start. DEFRA did an okay job in preparation but there are still outstanding questions about future flood protection. The NFU has been a good spokesman on behalf of the farmers, so that’s helped. The insurance companies are talking about the billions of pounds lost as a result of the floods so, even though your crops aren’t covered, there’s a chance you’ll have some financial relief in the near future.

Then it happens — the double whammy. The forecasters predict more rain and there’s an outbreak of foot and mouth disease. Not only can you not trust nature to come through for you, but now even the Government and insurance companies are going to be distracted away from your crisis.

And it is a crisis. Sure, as a grower you live so close to nature that you know these things can happen — climate change or not. Even better, you’re British so you’ll react with all the classic British phlegm and stoicism that is so admired around the world. Whatever needs to be done, you’ll do it.

None of that makes it any better. What it does do, though, is give you a head start on managing the crisis so that you come out better than you would have otherwise expected. In many cases, managed correctly, you’ll even come out better than before.

Facts, not emotions

The first thing you must do to take control of a crisis situation is remove the emotion from it. The facts are the facts. The question is: to what extent do you know the facts?

Both during and after a crisis there is far too much information flying around. And that’s what it’s doing — flying — with little logic, reason or pattern. Rumours abound. Experts pontificate. Trade organisations address. Ministers promise.

Some of it is actual but most of it is useless — at least for the moment. All of it is information — but that doesn’t mean it’s valuable. It just means that it’s what’s being said or written at that moment. In fact, it’s probably going to change at a convenient time — which you may or may not hear about — to suit whoever is doing the conveying. Sometimes it’s to clarify. Often it’s to quietly cover a mistake.

The problem is, you can’t operate or make best-informed decisions based on the information you’ve got — let alone with all the information that’s out there. There’s too much of it and little rhyme or reason.

So, to start, take stock of what you actually know. How much of your land was under water? What crops were affected? How much, if any, of those crops are salvageable in some form? What are your options for soil repair to make next year’s crops viable? What do you need to do now and next?

What does your insurance cover? What doesn’t it? What is your deductible? Is there more than one deductible for different aspects of your coverage? Is there more than one policy involved — and, as a result, more than one deductible?

Of your affected equipment, what can be repaired? What must be replaced? How have the prices of some equipment changed since your original purchase such that you can replace (in other words, upgrade) rather than repair? Does that have to be approved by your insurer before you do so? If so, how do you make the most compelling argument? (If you give them a strong financial case — as in, it will cost them less money — you’ll win easily.)

Have you spoken with your banker? Do you know the extent of access to credit you have? Do you know what your bank is doing in concert with the Government to create or underwrite low-interest loans? Do you know what your banker’s signature authority is on loans so that he or she can simply sign off on what you need?

What other and different resources are being made available to you? What has the NFU or any other professional organisation done to create new support mechanisms? Must you be a member to access those resources or are these special circumstances that allow non-members to benefit?

Real information — things you know, understand and can touch — takes much of the emotion out of the crisis. You’re no longer dealing from a position of weakness due to lack of knowledge. You know what you need to know — an objective perspective on the situation you’re addressing — and who and what your resources are.

Now you can move more comfortably and powerfully to what’s next.

Who are your friends?

As you move forward, you’ll soon find out there’s a bit more bad news. Any number of people and institutions that you thought you could count on will not be there for you — at least, not to the extent you want.

Be ready to fight with your insurance company. Remember those days when your insurance agent kept in touch and was so happy to talk with you about what you needed and how his or her company could help? Those days are gone.

Insurance companies live on float — and float is made up in part of the money you and others are paying in as premiums that they don’t have to pay out in claims. Insurance companies hate claims, because that gives them less money in the float, which means they have less to invest, which means that their shareholders won’t make as much money, which means that the executive team’s jobs are on the line.

Not only is your insurance company dealing with all the claims resulting from the floods, it is also dealing with foot andmouth disease. That’s a double whammy its shareholders won’t like at all at dividend time.

The given is that your insurance agent and the claims department are going to be more than expert in finding every if, and and but written into your policy to keep them from having to pay out. The solution, initially, is that you have to bejust as conversant with your policy language and be ready to fight. And, if necessary, bring in your solicitor (who is definitely your friend). Chances are, what the insurers are doing to you they’re doing to others so there’s even a possibility of a class-action suit taken by groups of growers in the same situation.

That will get them to change their minds pretty quickly. Because reputation is important to the executives and shareholders. Just remember you’ve got leverage.

The Government isn’t your friend either — and it doesn’t matter which party is in power at the time. Honest politicians will tell you they make pie-crust promises: easily made, easily broken. To get your votes before the crisis — and to calm you down while the crisis is ongoing — they’ll say almost anything. That’s their job. What you want to see is the extent to which they put immediate and long-term action behind their words.

Your professional and trade organisations may or may not be your friends. They’ll help out as much as they can, but you have to remember that they have a longer-term agenda that requires them to stay on good terms with some of the people with whom you’re at odds. Get what you can from them, but don’t over-expect.

Your banker is your friend if you’ve made sure of that all along. Bankers love information. They want to know how you’re doing and how they can help — loans are good things for bankers.

If you don’t have a strong personal relationship with your banker, start building it now. Make an appointment to meet in person. Take the time to bring them up to date on how you’re doing, what the impact of the floods were and what they can expect. They’ll really want to know that last part so that they can assess their own risk.

Then, when the crisis is over, keep building that relationship. The given is that you’ll need it again in the future, so you can treat it as an investment.

But the best friends you have now are the others who are going through exactly what you’re going through. Crises leave individuals feeling isolated. You’re not. You’re surrounded by others who are dealing with exactly the same circumstances you’re facing. Share information. Help each other. Extend your network and ask for access to others’ networks of resources.

Eventually, when the good times come again (and they will), you’ll go back to being competitors. Right now, though, the power is in numbers — so be one of them.

Next stage strategy

Oddly enough, this is one of the best possible times to review — and possibly change — your business strategy.
You’ve been growing what you’re growing because you’ve always done it, you’ve got buyer relationships for your products, you know those crops — any number of comforting reasons. Those reasons no longer apply.

The land is not in the same condition it was in before the floods — and to get it back into condition for that specific crop may be cost prohibitive. Your customers will be making new arrangements with other suppliers from other countries to fill in the blanks of the product you can’t supply. Changes in the landscape — literally and figuratively — change the market for the crops you’ve historically produced. That makes this the best time to look at what the next big thing is. It’s time to look at the crisis not as a problem but an opportunity.

Strategy at its best is predatory. It takes advantage of dynamics — usually unexpected — that arise and create new opportunities. This is that opportunity. It’s time to start asking yourself what’s new on the radar.

A new competitive landscape has opened as a result of the floods. Many may decide to get out of the market altogether — which may make land available that you’ve wanted but which was either overpriced or unavailable. It may be time to change crops — both because of the land and because of other crop opportunities that have grown in the market to which you’ve not previously been able to take advantage.

This may be the best time to start forming co-operatives so that your supply chain is both more efficient and less expensive — and you’ll have greater leverage with the buyers when you’re all up and running again. In fact, you may decide to change customers because other markets — domestic and international — are offering better deals.

The main thing is to remember that there is a what’s next and it’s absolutely up to you to define it — whether it’s legislation, who’s running your trade organisations or which providers you use (based on how they treated you when things were bad). And those are all beyond your decisions about your particular farm.
Contrary to popular belief, in a crisis the game is still in your hands. You just have to grab it and keep it.

Creating one side

Last — but absolutely not least — is to remember that you have employees who are counting on you not just to protect your business but to protect their livelihoods. Get them involved. Let them know what’s going on. Ask them for their support in all the various ways they can provide it.

You’ll be surprised at the type and extent of help you’ll receive. After all, it’s in their best interests too.

So, put on your game face that shows, no matter how large the crisis, you’ve got things in hand (which you do), go forward and win — because you will.

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