The Perfect Storm

Captain Linda Greenlaw:       I saw your guys loading bait. You doing a turnaround?

Captain Billy Tyne:                  No rest for the weary.

Linda Greenlaw:                      There you go. Flaunting your work ethic.

Billy Tyne:                                 I don’t have a work ethic. I just have work… if I’m going to catch up to you.

The Perfect Storm, Warner Brothers (2000)

An innovative company I knew cruised right along—until hit with what management called “The Perfect Storm.” With the loss of a major account, revenue dropped 10%. Costs also spiked. They went from respectable profits to deep losses.

“The Perfect Storm” referred to the movie and Sebastian Junger’s best-selling book. The swordfishing boat Andrea Gail went to sea from Gloucester, Massachusetts in the fall of 1991. Heading home into a converging tropical storm and a nor’easter, the boat couldn’t handle the 60’ waves and high winds. She went down with all hands.

Had he known what was coming, Tyne would obviously have chosen another course. As in any business, though, one can’t always avoid bad conditions. And other boats in that storm survived. While no one is certain exactly how the Andrea Gail went under, a Coast Guard report noted controllable factors that reduced the boat’s margin of safety:

?  Heavily loaded

?  Untested ship modifications that could affect seaworthiness in extreme conditions

?  Troublesome communications equipment

“Margin of safety” is a timely concept for companies right now. Few of us can confidently predict what lies ahead for the economy and our businesses. With the news full of worrisome developments, executives and entrepreneurs might well assess if their margin of safety is sufficient to ride out the conditions that may be lie ahead.

Click here to discover the two things you can do in the next three to six months that will put you in a better position to weather whatever may come your way.