The Love of the Game

January 16th, 2009
Mike Eruzione, Captain of the 1980 U.S. Olympic Hockey Team

Mike Eruzione, Captain of the 1980 U.S. Olympic Hockey Team

I recently attended a customer appreciation event hosted by Cisco at the Sports Museum of America in Lower Manhattan. The panel discussion featured a number of executives of both Cisco and financial services companies that use Cisco networking solutions discussing the evolution of social media. The eye-opener for me was research cited by Carlos Dominguez, SVP of Cisco, who reported that the Butler Group found that time spent searching for information wastes 10% of an employee’s salary. In Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses (Wiley, second edition, 2008), I reported that putting in place a version control and file naming system saved me from wasting significant time in search and retrieval exercises. In fact, I put the system in place to mitigate against everyday disasters, such as human errors, but it had an immediate payoff in terms of improved efficiency.

Cisco and Social Networking

Cisco and Social Networking

The highlight of the evening was the keynote address from Mike Eruzione, the Captain of the 1980 U.S. Olympic Hockey Team, often referred to as the “miracle on ice”.  His optimism and enthusiasm were infectious. He drew many parallels between the economic and political climate in 1980 and the one we are experiencing today. His remarks focused on the miracle of teamwork, of which social networking is a part, which surely represents our more positive future to build from our current difficulties. He noted that in sports, as in business, everyone judges you on the result, whether it is a gold medal or a profitable quarter.

Cisco Reception

Social Networking

You are not evaluated on the effort you put into achieving that result. Eruzione was an inspiring speaker and what I most appreciated about his remarks was his love of the game; he loved the intrinsic rewards of playing hockey, he did not appear to be motivated by the extrinsic rewards of gold medals or fame. So it is with entrepreneurs; it is an inner-directed game for the sheer joy of it.

Water Landing Diverts Ground Traffic

January 15th, 2009
USAirways Flight 1549 in the Hudson River as Seen from My Office

The View From My Office: USAirways Flight 1549 in the Hudson River

This is the view from my office window of USAirways Flight 1549 after all of the passengers were safely evacuated and the plane is almost completely submerged in the Hudson River. According to the Federal Aviation Administration, the flight, which had departed New York’s LaGuardia Airport on its way to Charlotte, was airborne less than three minutes. An emergency water landing was made after the pilot radioed air traffic controllers that he had experienced a bird strike.

All of the passengers were safely evacuated from the aircraft thanks in large measure to what was described as extraordinary skill and calm on the part of the pilot. As I write this blog posting, at 9:00 p.m., I can see rescue workers in police boats surrounding the location where the aircraft is submerged, as they perform ongoing work for the emergency investigation. I can also see emergency vehicles along the West Side Highway that extend from the area to as far north (at least as I can see) to 42nd Street, although the news media report that traffic has been halted from 79th Street.

While the emergency landing itself is extraordinary, the ground disruptions it caused are not, as New Yorkers are only too familiar with the need to make alternate commuting plans in the event of disruptions – irrespective of the cause. Whether it is a steam pipe explosion on 42nd Street or an emergency airplane landing in the Hudson River, commuting disruptions are everyday disasters for which our local small businesses must be prepared.

Do Nothing?

January 13th, 2009
Flood risks

Flood risks

I was recently interviewed by a newspaper journalist concerning the evacuations in the northwestern United States prompted by severe floods and avalanches. She asked me what small business owners should do to pack for such an evacuation. I answered “nothing”, which response surprised her. Actually, when an evacuation is called, you should not put yourself, your family or your employees in harm’s way by thinking of what to pack and where to go. This is true whether the evacuation order is caused by a flood, a civil emergency or some other type of disaster. Your data should be online, offsite and accessible from any remote location from which you may have to temporarily operate. Your evacuation plan should already be worked out. Your communications plan should include not only your employees and their families (and secondary, out-of-state contacts), but also customers, neighbors, vendors and other important partners. You should not delay an evacuation order to attempt in haste to determine what is critical to your business. Human safety is the most important factor. Always.

Do Not Reply to All

January 12th, 2009

You need not share everything onlineThe State Department suffered a recent embarrassment when it was disclosed that the main electronic communications system of the Department was nearly knocked out owing to what was, in effect, an internally originated denial of service attack. The root cause was traced to the practice of State Department employees selecting the “reply all” option to e-mail messages with very large distributions. This resulted in both an internal shutdown of sensitive electronic communications as well as needless abuse of the time of those who were copied on messages that they did not need to receive. We had addressed this topic, from the latter perspective, in both the earlier and current editions of Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses (Wiley, second edition, 2008). The recommendation put forward in that book was to reduce the “info-stress” caused by bombarding employees with unnecessary communications. Use some discretion in targeting your oral and written communications and watch productivity soar.

But the State Department’s mishap is useful in that it reinforces a lesson about organizing your critical communications: this “reply all” practice interrupted critical communications in normal operations. Imagine how much worse the consequences would have been if the Department had been operating in a disaster recovery mode. That is another reason why you must streamline your communications. This incident was a nuisance to the State Department; it could be devastating to a small business, with far fewer resources to waste. And taking the State Department’s lesson one step further: be careful about how you store your e-mails online with file attachments, particularly when multiple parties within the company are copied on the same message. This redundancy puts an additional burden on your human and IT resources. Consider alternatives, such as the use of a wiki, instead. This will streamline your communications and reduce the risk of further disruptions.

2008 Was the Second Worst Year for Catastrophes

January 7th, 2009

According to research soon to be published by my former employer, the Swiss Reinsurance Company, 2008 was the second worst year for catastrophes since 1970. Only 2005, the year in which Hurricane Katrina struck the Gulf Coast, was worse. Once again, the United States had the dubious distinction of being the site of four of the six costliest catastrophes in 2008.

Largest Insured Losses in 2008

Largest Insured Losses in 2008

Again, we see a divergence between the levels of insured losses and the numbers of human casualties, with countries in the developing world suffering greatly. In early May, Tropical Cyclone Nargis struck Myanmar, killing 138,400 people, setting off one of the largest humanitarian crises in recent memory. Later in May, a devastating earthquake measuring 7.9 on the moment magnitude scale shook China’s Sichuan region, killing 87,400 people and leaving over 10 million homeless. Most of the losses from these two events were not insured. Catastrophes cost insurers more than $50 billion in 2008, making it the second costliest year in insurance history. Of that sum, natural catastrophes accounted for $43 billion. However, the $50 billion in insured losses represents but a fraction of the total loss of $225 billion that catastrophes cost society in 2008, most of which was uninsured.

Class Action Status Denied

December 31st, 2008

In an earlier posting, I wrote of a lawsuit filed by Gulf Coast residents concerning their FEMA-provided housing. Today, the Court ruled that the varying nature of the claims would disqualify them for class action consideration, making it impossible for them to be consolidated. Once again, effective disaster preparedness and recovery programs provide more certain outcomes than post-disaster litigation. It appears that many of these claims will move forward on an individual basis.

Ice Storm Disables Small Businesses in the Northeastern States

December 15th, 2008
Beautiful but destructive

Beautiful but destructive

A recent ice storm left 1.25 million residents of the Northeastern United States without power this past weekend, a powerful reminder of the need to prepare for the “everyday disaster”. The affected area stretches from Maine to Pennsylvania, with the Governors of Massachusetts and New Hampshire declaring emergencies in their states and calling up the National Guardsmen. Utility crews from as far away as South Carolina are joining the effort to restore power with the expectation that some homes and businesses will be without power until next week. For small businesses facing the threat of power failure, your contingency plan should address the following needs:

Continuity of telephone communications.

Analog lines work if your area is experiencing a power outage as the lines are powered by the phone company. For small business use, it is rarely cost-effective to implement redundant phone circuits. If the telephone service fails, it is most likely due to a service outage, not to the actual hardware. But even if it is the actual hardware, since nearly everyone has a cellular telephone, it is the natural backup solution for your land-based circuits. The question is how to automatically connect land- and cell phone-based service so the cell phone service would take over if the land lines fail. The problem is that once the land lines have failed, it is not possible to forward land-line calls to the cellular phones. The second issue to consider is the likelihood of failure of cell phones in a major power outage as towers to relay signals will be depleted of reserve power.

The solution is developed by thinking in reverse. You give out the cell phone number as your general contact number. You program the phone such that any incoming call is forwarded to your land-based phone when the cellular phone is switched off. If your land-based line fails, simply switch on your cellular phone. Thus, in a localized disaster that displaces you from your office (such as the terrorist attacks of 9-11), the cell phone provides service. In a broader disaster such as a large-scale power outage, when cell phone stations are depleted of power with which to relay signals, use your analog phone to receive and make calls without interruption. (Remember that the phone must be directly connected to the analog line; a hand-held phone will be disabled by a power outage.)

Continuity of voice mail.

Sign up with a voice mail provider that delivers your messages over the Internet via e-mail. In fact, you should sign up with an integrated voice and fax service. This service often costs less than a regular phone line. Single providers of only voice mail or fax delivery via the Internet are usually not cost-effective. Since the Internet has been designed to automatically re-route traffic if one or many paths no longer work (the opposite of the “cascade effect” that disables electrical supplies across a wide grid), as long as you can connect to the Internet from somewhere (such as from a battery-powered laptop), you can receive your e-mails and hence, your voice messages and faxes. If both your land-based phone service and your cell phone service fail, your calls or faxes are forwarded to your integrated service number. You could even configure your system in such a way that it automatically sends you a short notification message with a summary of your voice or fax message to your cell phone or pager. It is a service you will enjoy during normal operations as it reduces unnecessary calls to your cellular phone.

Protection of computers and data.

Even when electrical power is available, there are quality issues, like peaks in voltage as well as micro-outages. Since IT equipment is sensitive, use an uninterruptible power supply unit (UPS), which is usually a surge protector, together with a small buffer battery that would supply energy for about 10 minutes after the electricity supply is terminated, enough to finish important work and to shut down the system. Most units support an automatic shutdown before the battery is completely depleted. Some buildings supply self-generated backup power. Please note that this power is usually much “dirtier” than power from the outlet. Under these circumstances, you must use a UPS unit, preferably one that is designed to smooth out erratic electricity supply.

Certain high-rise apartment and office building have back-up generators that provide low levels of power for up to fourteen hours after termination of the central electrical supply. Many workers and residents of these buildings mistakenly believed that a volt of electricity is a volt of electricity irrespective of whether it comes from the central utility or a back-up generator. During the recent power outage, they used their home and office computers with electricity delivered from a back-up generator, without the benefit of a UPS unit, and damaged their computers in the process. Also, remember to turn off appliances and equipment during a power outage as power supply may be erratic when it is initially restored.

Basic measures of preparation.

Of course, all of the basic measures for preparation apply (keeping battery-operated radios, extra batteries, non-perishable foods, flashlights, bottled water, etc.) for both your home and your office. It may seem obvious, but a glance at the people queued up at stores for such supplies on the evening of August 14, 2003 (when a massive outage left 50 million people in the U.S. and Canada without power) suggests that these measures were not obvious to everyone. It also bears repeating that measures recommended for small business contingency will yield immediate benefits to your business in terms of improved operating efficiencies, even if disaster never strikes. Finally, remember that each suggestion put forward for small business contingency solutions can be applicable to home and to personal needs.

Tech Frustration

November 26th, 2008

According to a recent survey by the Pew Research Center’s Internet & American Life Project, failures of communication devices are quite common. Over the past year, among more than 2,000 adults surveyed:

•    44% of home Internet users experienced at least one connection failure;
•    39% of computer users experienced at least one hardware failure;
•    29% of cell phone users experienced at least one failure of their phones;
•    26% of those who use Blackberries, Palm Pilots or other personal digital assistants reported at least one device failure; and
•    15% of those who use iPods or MP3 players experienced at least one incident in which the device did not work properly.

Individual consumers were selected for polling in this particular survey, but it is reasonable to assume that a survey of small business owners would yield similar results. Consumers who use the Internet, computers, cell phones and other devices may report frustration with periodic failures of equipment, but for small businesses, the consequences of equipment failure are more serious. Mitigate your risk as part of your overall disaster planning:

•    Make sure that you have service level guarantees and appropriate support for your equipment purchases.
•    Train your users in the proper use of equipment. The Pew Research Center’s Internet & American Life Project also reported that 48% of adults who use the Internet or a cell phone need assistance in setting up and using new devices. This calls for an investment in proper installation and use.
•    Finally, build in redundancy to cope with the device failures that will inevitably happen. In Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses (John Wiley & Sons Inc., second edition, 2008), I recommend, for example, that you keep spare hardware in your inventory to immediately replace failed equipment.

“Tim the IT Guy” had an interesting take on the reported need for assistance in setting up computers and cell phones: fire the IT support team and hire only employees who are tech-savvy.  Or you could do as I do and invest in training upfront as IT personnel are too expensive to be used for desk-side hand-holding.

New Orleans Homeowners File Lawsuit

November 16th, 2008
Notice the house markings

Notice the house markings

New Orleans homeowners filed a lawsuit against the Louisiana Recovery Authority, alleging that it discriminates against black homeowners whose houses were damaged by Hurricanes Rita and Katrina. The Road Home Program, administered by the Authority, bases grants on the pre-storm value of the house or the rebuilding cost, whichever is less.

When I read the newspaper’s account of this lawsuit, it reminded me of some news I had heard on the occasion of my last visit to New Orleans: I was told that plaintiff’s attorneys were seeking to bring suit against federal disaster relief agencies on the grounds that the post-disaster aid to small businesses in the Gulf Coast was significantly less than that that awarded to Lower Manhattan small businesses in the aftermath of 9-11. If true, this rests on a serious misunderstanding of what aid was actually made available to Lower Manhattan small businesses.

But the more troubling aspect of this approach, for the small business community if not for homeowners, is how it delays the recovery process. A study of small businesses in the immediate vicinity of the World Trade Center at the time of the 1993 bombing found that of those small businesses that could not get back online within five business days, 90% were out of business one year later. Cash flow is critical to a small business, which is why you either recover quickly or you don’t recover at all. Perhaps this explains why homeowners are more likely than small business owners to litigate claims following a disaster.

Let’s Avoid Complacency with IT Security

November 16th, 2008

Under the headline “Angry, Angry IT Guy Goes to Jail”, Silicon Valley blog Valleywag reports that “IT contractor Steven Barnes will serve a year in prison and pay $54,000 in restitution after being convicted of logging into a client’s network and deleting the Exchange database, among other things. Barnes claimed he acted after coworkers from Blue Falcon Networks, now known as Akimbo Systems, came to his home and took away his personal computers by force. Barnes reconfigured Blue Falcon’s server as an open relay for spammers, causing the company to be automatically blacklisted from delivering real mail.” Add this to the recent reminder I had posted of what to do to ensure that your IT systems are secure. Reinstating your e-mail privileges once your company is blacklisted is a major undertaking that you want to avoid at all costs.