Google has launched an Emergency Planning / Crisis Response project known as Google Public Alerts.  According to Google, the platform is designed to bring you relevant emergency alerts when and where you’re searching for them. Providing public alerts in a mass format allows affected individuals and companies to respond as necessary to protect life and property.

Google Public Alerts is a project of the Google Crisis Response team, supported by Google.org, which uses Google’s strengths in information and technology to build products and advocate for policies that address global challenges.

Although still in its infancy, tools such as the Google Public Alert, allow individuals to identify hazards in their particular area and react accordingly.  Currently, the public alerts mainly cover those in the US, however, plans are in place to add international content as reputable agencies agree to participate. To bolster the numbers and details of localized alerts, Google hopes that local emergency management agencies will align with the search engine and allow them to post updates. Google outlines steps for agencies to that would like to be included to disseminate local emergency data in the right format.

Google states that “We want to make it easy for people to find critical emergency information during a crisis through the online tools they use every day. By incorporating public alert data from authoritative sources into Google Maps, we aim to simplify the process of searching for emergency information.”

Be sure to add Google Public Alert to your list of bookmarked sites:  http://www.google.org/publicalerts

IBM’s Sam Palmisano: ‘Always Put the Enterprise Ahead of the Individual’

As far as a legacy goes, says IBM chairman Sam Palmisano, “I just want to leave the company better than I found it.” Judging by IBM’s successes over the past decade, Palmisano, who was CEO of IBM until he stepped down earlier this month, did just that. During an interview with Wharton management professor Michael Useem, Palmisano discussed the sale of the company’s personal computer business, the PricewaterhouseCoopers acquisition, how a big company can encourage innovation, and what he learned from his mentors, among other observations drawn from almost 40 years at IBM.

Below is an edited transcript of the conversation which was published: January 18, 2012 in Knowledge@Wharton:

Michael Useem:  I am at the headquarters of IBM here in Armonk, N.Y., with Sam Palmisano, who joined IBM in 1973, became chief executive in 2002 and today — having stepped down as chief executive — continues as chairman of the company. Sam, it’s my privilege to have a chance to talk with you. I’m going to pick up on that moment when you did become chief executive of the company in 2002. Reflecting on those early days, what did you see as the biggest challenges for your leadership?

Sam Palmisano: When you first take over, it’s hard to separate your leadership from the company itself….  I was president for a period of time, about 18 months, and I had run all the businesses along the way. I’ve been here 40 years now. So it isn’t like I didn’t have experience with the operations of the IBM company. But as Lou [Gerstner, CEO of IBM from 1993 to 2002] said to me, and as I said to Ginni [Rometty, newly appointed CEO of IBM]: “Until you’re in it, you can’t describe it.” You start out just trying to manage the company, which is a big complicated thing, even though you grew up in it. So your first reaction is, I have to keep the performance going.

We had a wonderful financial performance; we had righted the course financially [when I took over]. I didn’t believe at that time we had done the business transformation. Remember, we had gotten ourselves in trouble. We missed the shift because of the PC, we missed that client/server shift and got ourselves financially in trouble because of that shift, with margin pressures, restructuring the company, etc. So we had been through a lot of financial transformation or change, but not business-model transformation. I really believed in the beginning that I had to keep the business going, [and] at the same time start the transformation of the business model. I didn’t think the business model as it was at that point in time was going to sustain itself over the next 10 or 15 years.

Useem: Why not?

Palmisano: Well, primarily because of technical trends and the macro-economic environment. By that I mean, besides the technology trends, the dotcom bubble had just collapsed. So all of the valuations in tech had been reset because of the bubble. Also, there was excess inventory because of the bubble. Everyone in the industry was telling themselves that it was going to return. The PC would return. It just was a cycle, an economic cycle. We believed at IBM, and I really strongly believed myself, that it was a systemic shift, that this platform that had propelled the industry for 15 to 20 years — which these platforms do; that’s their course normally if you look at the history of our industry — had run its course, and it wasn’t going to be the future. And so if it wasn’t going to be the future, we needed to shift to the future because we had learned a lesson. We didn’t shift because we missed the PC shift, even though we invented it. We didn’t exploit it. So I thought that was important.

And then the other [point] that was pretty obvious [then] but now is extremely obvious is the fact that the world was going to economically begin to integrate. These emerging countries were going to become, as they are in 2012, the lion’s share of economic growth. We needed to get the company positioned to take advantage of that, both participate in the markets as well as access the skills and resources, build the relationships — all the things [necessary] to really take advantage of those kind of opportunities.

Useem: I’m going to pick up on something and ask a question about how you saw the future five or 10 years out better than many other people in the technology industry. To transform the company to become what it should be looking that far out, you need an appreciation for what’s out there that is better than a lot of your competitors. Many want to become more savvy about where the industry and the markets are going. Here at IBM, you probably have done that better than most out there. How did you come to know what that future entailed?

Palmisano: I think on the technology side, we have a wonderful research organization. I know that a lot of people under business-model pressure really curtail research investments. We obviously have not. We still spend $6 billion a year on research and development. But it’s a huge brain trust. So we do this thing called The Global Technology Outlook. It’s a 10-year view. We argue about these trends. There are real debates at the top of the business. It’s almost like a faculty environment. You know, it’s a peer review in a sense. The research scientists come in and they say, “These are the technology trends.” The business guys will argue that they don’t see it that way, or what’s the business model impact of that trend — the usual debates that you would have. And it goes on.

I think that probably a lot of companies had those debates. I don’t think it was anything in the technology that we were seeing that others weren’t seeing. We just decided to act upon it. Others chose not to act upon it. I understand that, because when the PC thing came along, when we almost failed, we saw the trend. We invented it with Microsoft and Intel. But we didn’t exploit it because we were wedded to the past, the business model called the mainframe. There were people, phenomenally successful in the PC era, who were wedded to a business model. And I said, “Well, what is Act Two?” In IBM’s case, this is like Act Five because we’re 100 years old. But a lot of companies have a hard time seeing what I’ll call Act Two because they get so wedded to the product, so wedded to the financial rewards of their business model if they’ve been successful, and they just don’t see. Or if they see, they have a conservative view upon acting. They’re slow to act.

They think, well, maybe it’s wrong, maybe it’s really not going to happen. I’m making so much money in this business, do I really want to take the risk of transformation? Can I get the people there? These are all questions that you’re going to ask yourself before you take this on.

Useem: Let me ask if you were haunted, as you did take charge back in 2002, by the near death experience that IBM went through in the early 1990s, when Lou Gerstner came in and got the ship back on course. But that was pretty tense there in 1993 and 1994. You were there at the time. To what extent did that near death affect your thinking as you took charge in 2002?

Palmisano: You learn the impact of missing the shift. We all knew it because you could put it in stark terms. We went from a peak of about 412,000 people down to a bottom of 217,000. So 200,000 of our friends were no longer here. Most people at companies that didn’t have the balance sheet or the cash flows of IBM would never have made it. They wouldn’t have gotten through it. But because of the strength of our balance sheet and our cash assets and things, we could get through that and deal with all the restructuring charges that we had to take. So you learned [from] it.

If you look at the history of IBM — and since this is our centennial year, I have been studying this anyway, just getting prepared for the centennial — if you go back to the Watsons, what they were really good at is they didn’t miss the shifts. They always moved to the future. Even though it was a father and a son, they moved from scales and meat weighing and all that, cheese slicing machines to tabulators to office products, typewriters, selectric typewriters to modern computing, that’s what the son did to the 360, huge bet on the product with the 360. Bet the company at the time like an entrepreneur would. Different than you’d see I think in a large company today, but it was the father/son. They rolled the dice. And so that became the modern computing era. But that’s what it was.

The impact of missing the shift — you see it all the time, especially in technology industries because most of the companies are so young. So if you look at a lot of the people who have a great start, they could run for 10, 15, maybe 20 years, but then there’s no Act Two. The founder, the entrepreneur retires, what have you….  And then there isn’t this Act Two. So if they don’t come back, management comes in, but they really struggle with moving to the future. That’s the challenge. I just think technology’s more ruthless as an industry because it’s not forgiving, versus other industries where it’s not as abrupt and as harsh in its correction.

Useem: You know, among the ways that you transformed the company, 2002 through today, were some of these landmark decisions — for example, to acquire PWC [PricewaterhouseCoopers], to sell the PC line back there in 2004/2005, to get into the Cloud before some other people did. Talk a bit about how you reached those critical transformative decisions.

Palmisano: I think they’re all different in a way….  Pricewaterhouse was really about the fact that we felt the technology was going to become embedded in the business process.So it was going to be buy a computer and apply a computer. There was no separation…. We saw that occurring. So we needed more knowledge of the business process. When we did the PWC acquisition, we had a good valuation for it, but besides that … people asked me, “Well, what was this all about?” I said, “Well, we’re already the largest IT-services company, so it’s not about being bigger when you’re the largest; it’s about having assets and skills we didn’t have.”

PWC had really deep insight in health care and financial systems and the like whereas we understood technology, we understood how to apply technology to a banking system or to the health care system. But we didn’t know the process of a payment system or trading derivatives or what have you, the deep process knowledge. The colleagues who came from PWC gave us that knowledge. We married it to the technology guys. We married it to the research, and it led to a lot of the things that have become Smarter Planet. But that’s what we were missing. So we were trying to add to a technology gap or a skill gap in that sense.

To me, PC was culturally hard, but simple economically. I mean it was the easiest business decision I’ve ever made. Now how you do it and who do we partner with, that was complicated. But when you looked at the PC and where it was headed — and again this is 2002/2003, we did the transaction I believe in 2005 — when we ran the model you could see it was going to become consumer. We were positioned in the enterprise. Dell was also enterprise. HP was more consumer because of their printer business. Then you had the Toshibas of the world, the Acers of the world. You had a lot of guys who were very consumer oriented. But Dell and IBM were primarily the enterprise guys, and so was the old Compaq, but Compaq then moved to HP which became more consumer.

When you saw this thing moving to consumer, you could see that the economics of the business were not going to be as attractive as they were, and they already weren’t great. I mean they really weren’t. You were looking at operating margin of four-percent business, a three-percent business without subsidies from Microsoft and Intel. And people say, “Well, what do you mean by subsidies?” So it’s in all the Justice Department suits, so it’s not like it’s not public information when I say this. I mean it was “What do you mean subsidies?” “Well, just read this filings. You know, it’s all there. We’re not making it up at IBM.” We happen to be part of it so we understood it, but it’s not a great business. And it was going to be under pressure because of moving to the consumer space, more consumer electronics-like than enterprise-like. So the things that we could do, robust engineering, the great mobile think pad weren’t going to be as valued in that space. And so that was a simple economic decision. The complexity of the decision was whom to partner with, who should we sell the asset to, could you get it approved? That was phenomenally complex.

Useem: Let’s dwell on that for just a second in that arguably a vital feature of anybody’s leadership is the ability to think strategically, to appreciate all the pieces and all the players out there. I know you had talked with TPG [a large private equity firm, formerly Texas Pacific Group] about acquiring the PC line.

Palmisano: Yes.

Useem: You thought about Dell. Ultimately, you sold to China’s Lenovo, which had been a purely Chinese company up until that point. Why did you pick Lenovo?

Palmisano: .… If you look at it tactically, the easiest transaction for us would have been a private-equity transaction. These guys know what they’re doing. TPG’s a very professional firm. We know the guys. There are others as well [such as] General Atlantic. They’re guys who are really good at this stuff, they know exactly how to conclude a transaction to get it right, very little issue with government approval, straightforward financial transaction.

However, when we looked at it, we came to the conclusion that China was in a huge space. We were small there, even with the PC business in the company, IBM China. If you looked at the economic model of China with the goals of the government, they were trying to expand beyond just being a domestic manufacturer, the largest manufacturing company in the world, the big outsourcer for manufacturing. That was the government’s ambition, Premier and President, Wen [Jiabao] and Hu [Jintao], that was their goal.

We do believe that part of the role as a company is [getting] permission of society to operate. Well, you need to partner with the societies where you operate. You just can’t be anti the society and expect a partnership. And so we felt that strategically, and I felt very strongly about this, this was a better strategic transaction for IBM, even if the economics maybe weren’t as attractive. But long term, this would be a better deal if we could align with one of their champions, i.e. Lenovo.

Now that added a whole other level of complexity. There were a lot of people who advised me that it would be really hard to get this done. Their advice was right. It was hard to get this done. They were not misguided. But they also believed we could get it done, but it was just going to be hard. And so we took a shot and it worked out.

So we were fortunate enough to be able to have a partner, Lenovo, close the transaction from a deal perspective. We worked with both the U.S. and the Chinese government, both sides, to get the thing through. It was complex but both governments ran a fair process…. It should have been approved and it was approved. As long as it doesn’t become politicized — that’s a whole different discussion. We didn’t think it would become politicized. It was a PC after all. I mean it wasn’t some big national secret we were selling. All this stuff was manufactured in China anyway. So it wasn’t like we were giving something away they didn’t already have. But we were fortunate that the process didn’t get politicized, because if it had become politicized, it might have become a different outcome.

Useem: These decisions to acquire PWC and to sell off the PC line really helped define your leadership of the company. Another defining element, I believe, is bringing to IBM a commitment to develop leadership throughout the ranks. And if Lou Gerstner’s signature or stamp on the company was to transform the culture, I think one of yours has been to think about, to focus on, building leadership among the some 50,000 managers you have. Why had you early-on chosen to give it that focus, and how does that work?

Palmisano: Well, it goes back to the business model. I believe, and I believed then, that you can’t run IBM from here. We happen to be sitting in our corporate headquarters at Armonk today for the audience. You can’t do it. And it’s 170 countries today, 426,000 people, different cultures, different religions, different local priorities. You need talent to do that, and you need people who can deal in a complex global world.

We had this thing called Globally Integrate the IBM Company, Lower the Center of Gravity, which meant we’ll delegate more decision making down. It wasn’t just an efficiency statement. A lot of people say, “Well, you’re doing that because you want to get rid of overhead.” Of course we need to get rid of overhead. We need to be competitive. That’s obvious…. Some people don’t connect that without the talent on the ground to actually operate the company and then have the business systems that can do the analysis without having thousands of people do the analysis for them, the analytics. And of course we should be good at computer models, given the business that we’re in. But nonetheless, you have to connect the two.

So we felt it was really, really important that we develop that skill base. So we invested in numerous programs, but many of the programs were beyond just traditional management development, and a lot of it was to give people global perspective, because if you’re going to globally integrate the company and you’re going to expand in all of these markets, they need to be able to operate in a multicultural environment. One of the things we actually came up with was called the Corporate Citizen’s Core. We took younger people in their careers and said, “Go off and work in Ghana or Tanzania or these emerging places, Nigeria, what have you, Philippines, and work with NGOs or the government. Through the foundation, do worthwhile projects. But establish relationships. Work in a multicultural team” — because the team was formed from young talent all over the world — “and spend six to nine months doing that, and then come back and teach your colleagues what you’ve learned and we’ll have more teams established.”

That was at the early manager level. At the executive level we created these things called Get Teams to go out and decide how we should enter Egypt, or what we should do to transform lowering the center of gravity. We sent those guys around the world. The goal was to give them an IBM project, but then put them in a multicultural environment.

I worked overseas before. I was in the old model. Go off. I was in Japan. I mostly worked at IBM Japan at the tail end. I was in our Asian operation. So I learned what it was like to work in a non U.S. country at IBM Japan with, those days, 23,000 Japanese and two gaijin [foreigners], the CFO and myself. I was the operating guy. I learned a tremendous amount about how you have to work in a different culture, which was much harder than just the business problems we were trying to solve. So I was very sensitive to the importance of that — that just because people are uncomfortable with English as their native language, that doesn’t mean they don’t have a lot to say. How do you communicate all those subtleties of language and culture? And so it was really, really important.

If you believed like we believed — and it’s obvious today that most of the economic growth was not going to come out of the G7 — that was a demographic statement. People say, “Well, what do you mean by that?” I said, “Well, it’s obvious, because if you say once these governments decided they were going to engage in the global economy and the middle class was going to emerge, it had to be.” If you have 400 or 500 million people entering the middle class, they’re going to have to have health care systems. They’re going to demand clean water. They’re going to want a banking system. They’ll have debits and credits. They’ll buy homes. That’s what happens. And so that’s what we do. We do all the IT associated with all those things. So that was obvious, right, that this was going to occur, and people argued the stability of the governments and all that. But if you take a long return view, which we did, we felt that we might as well get ahead of the curve.

You needed people. That was the economics of it. The business model was to globally integrate IBM and operate as one, not 100, companies. And then you needed the people who had the management acumen and the cultural sensitivity to do that. We spent a lot of time, and we do spend a lot of time and money on that. I think the best example of it is this most recent succession we just went through. Ginni [Rometty] was great. She earned the job. She’s been here for 30 years. She’s been all over the company just like I had been all over the company. There were lots of other candidates for the job, but she won, to her credit.

Useem: Let’s dwell on that for a second, around the issue of mentoring and coaching. I know that an axial principle of your leadership here is to provide lots of coaching and lots of mentoring. Looking back on your own career prior to 2002, who would you single out as the most important mentor you had along the way?

Palmisano: Well, it’s interesting, because so many people helped me. The key … is you have to be a good mentee. Because you have to listen. And what happens as you become successful is you forget the ingredient of being a good mentee, which is listening to the people who are mentoring you. But I’ve had obviously lots of previous managers, previous CEOs John Akers, Lou Gerstner, other guys on the outside who are always willing to help. If you ask and listen, people are always willing to help you.

I find that people aren’t always willing to listen…. You have to be able to want to be mentored. It starts with that. I see it so often. That is the key. But you have lots of role models along the way. People who were always a good role model for me [were those who] never put themselves first. They always put their institution or society or their enterprise first. And usually they get better results. If you say, “Well, why does it work?” [It's] because you get people more excited because they can contribute versus an individual trying to take all the bows for the team. And so you could say I’m comfortable in that style. But if you put that aside for a second, I actually think it’s a more successful product at the end of the day.

Useem: Let’s go back to John Akers, who was chief executive through 1993. If you can single out one thing that you picked up from John, I’d like to hear about that. Then separately for Lou Gerstner, who served before you from 1993 through 2002. And then just to complete the question, as you’ve worked with your successor now, what did you pass on to her that, in your view, was among the most critical coaching elements you provided?

Palmisano: You’d probably be best asking her…. She’s the recipient of my tutelage. I’ve learned a lot from everybody, and one of the things that John did that was most impactful to me, anyway, is he’s the one who sent me to Japan. I was in his office because we had this program at the time. He had been the executive assistant to [CEO Frank] Cary as [John] Opel [had been to CEO] Thomas J. Watson, Jr., so it was one of these things where they groomed young people. It was part of management development. So you worked for the chairman or the CEO as his flunky, basically. You did learn a lot, but you were his flunky. I mean you weren’t chief of staff or something. I’m not trying to glorify the position….

I was being offered all kinds of very significant promotions in the U.S., and John [Akers] said, “No, you should do this. And there’s a guy over there [who is] “a great executive and he’ll teach you a lot and I want you to go work in IBM Japan.” And I said, “Japan? There’s no structure to the job. I mean is there a position?” “Nope, you’re working for him. He’ll figure something out.” “When do I go?” “You’ll go first of the year.” And I had kids and family, you know, all this sort of stuff.

What he was teaching me is that if you’re going to be successful, you’re going to have to learn to operate in all these different kinds of environments. Going back and doing something comfortable, even if it’s a big position in the United States, is not going to prepare you for the future. So to get prepared for the future, you need to really put yourself in an uncomfortable space. Not all advice is always communicated, but you could see it. “No, you should just go do this.” And that was exactly what it was.

Useem: So that was from John. And then his successor, Lou Gerstner, what would you single out there?

Palmisano: The thing I learned about Lou is that other than his phenomenal analytical capability, which is almost unmatched, Lou always had the ability to put the market or the client first. So the analysis always started from the outside in. You could say that goes back to connecting with the marketplace or the customer, but the point of it was to get the company and the analysis focused on outside in, not inside out. I think when you miss these shifts, you’re inside out. If you’re outside in, you don’t miss the shifts. They’re going to hit you. Now acting on them is a different characteristic. But you can’t miss the shift if you’re outside in. If you’re inside out, it’s easy to delude yourself. So he taught me the importance of always taking the view of outside in.

The other thing Lou does extremely well is always take the opposite position, even if you believe the position that’s being represented to you was the correct position. He used to do that, and it drove a high level of discussion really, or debate, and you got to a better conclusion. He was really good at it. I don’t know if it was the McKinsey training or whatever. …; Even when it seemed obvious to all of us, he would take the opposite position. So therefore you had to go through the analysis to make sure that your conclusions were correct, that your convictions were supported with data and those sorts of things. So outside in, John was more personal development. So completely different things.

I think the key with Ginni, which I’ve tried to coach her through — and it’s the most important measure — is leave the enterprise better than you find it. That should be your measure of success. Don’t get absorbed in the external metrics of success. I mean, yes, our stock has done extremely well. Terrific. I mean we like that, obviously. Everyone’s been rewarded because of that. But the company is much better positioned today. We have better talent. The brand is stronger. We’re much more innovative. We have deeper client relationships than we did. That’s why large investors have come in because they see what we have is more sticky, to use their terminology. So the company is in better shape. So think about the next 10 years, not the next 10 quarters here. What can you do to leave your company in better shape than you found it? And it’s not about you, the CEO, it’s about the enterprise.

She’ll do that. I think she’s that kind of personality. She’s not absorbed in herself. She’s absorbed in how do I take this thing to the next level. A lot of the stuff — analytics, Smarter Planet — we’ve just begun. So there’s so much ahead of us. Going into Africa. We just started. People say, “Well, what more can be done?” We’ve just entered Africa. It’s going to be the next China in 10, 15 years. Those kinds of things. Smarter Planet, we have thousands, we started with 100 references; we have thousands. We should have tens of thousands before this thing is all said and done. It really is about that. I think it’s the most important thing.

I understand that the whole time I was in the job, the external measure is very short-term oriented. It’s earnings and stock performance. They’re distorting compensation today tied to that. It’s a huge distortion, my personal opinion, which will only destroy value in the long term. And that’s driven by people who don’t understand value creation, either third parties or government organizations that are looking for something simplistic to measure and then reward something complex. It won’t work. We were blessed in a way because we came up with this long-term model, the 2010 roadmap, and now the 2015 roadmap. We were lucky that we could convince the investor that it was good and it made sense. If we hadn’t been able to persuade them, then of course we would have had to change. But the investor and I agreed on the 2010 roadmap. They had all said we could never do it. We did a year in advance in a terrible economy and said, “Well, incredible.”

Now they look at the 2015 roadmap and they say, “Well, they’re going to beat that. They’re well ahead of that already.” That’s their conclusions. But my only point is we came up with a methodology that fit where you could take that longer-term view. You could focus on the company. Stock is up 100%, so it did create shareholder value. We’ve outperformed everything.

Useem: We want to pick up on that and make the statement that your leadership of the company, the forward looking, the outward looking in, is really a product of many events over your lifetime and your career. So I’m going to ask here with a couple more personal questions on that. You came out of college, you joined in sales back in 1973, IBM your first job out. You did have an opportunity to try out for the Oakland Raiders.

Palmisano: Yes.

Useem: On a very personal frontier here, have you ever had a regret that you didn’t actually give that a try at the time?

Palmisano: No. I tell you it’s a quick, funny story. We were playing Division 3 football, which is below the Ivies even. Nonetheless, you know, we’d play Fordham and Columbia. We’d have a really hard time…. Friends of mine actually did try out for professional football, but they were receivers and punters and things…. I asked my friend, “So what was it like? What do you think?” And he said, “The position you’re playing, like a center or a defensive end, we made it two weeks as receivers, you’ll be dead. They’re going to kill you.” And so I said, “Well, maybe I just don’t want to do that… So I never had any regrets about that at all. I just don’t think I had the physical characteristics to have been successful….

Useem: Let’s turn that around. With a great interest in football in your college days, not to mention music and history, how has sports, music and history informed how you have led in the years since then?

Palmisano: If you go through all those characteristics, history does give you a sense of perspective. You see things in a continuum of time….  I grew up with the Watsons, but then I studied the Watsons, not just because of the centennial. Then we got back into the values. I had read the book, [Watson’s A Business and Its Beliefs], when I first took over [at our] first annual meeting, even though I had to read it as a new employee. So I went back through all that stuff again. You have this inclination to understand and study what worked in the past, understanding that it repeats itself. I’ll give you a good example.

Post World War II, the Watsons expanded into a lot of the European markets at that point in time, expanded IBM’s global footprint well ahead of its time. Opened up facilities in Berlin and places like that. But then of course as NATO and Europe reconstructed itself, we had the huge benefit of those decisions that the Watsons had made, later, but certainly a huge benefit associated with that. Today, the correlation is that Ginni’s creating the growth market units, the Chinas, the Brazils, the Indias, the Russias, the eastern Europes, the Africas. It’s the same thing: Expand the footprint beyond just where you’ve been concentrated historically. So you can see how that repeats itself.

In sports, and even in music, you learn the importance of orchestrational teamwork, because if you don’t work together, it doesn’t work, right? Especially in sports, you learn competitiveness. You realize that you have to work together, you have to in many ways — I was in selfless positions. I mean literally center defensive end is a selfless position. I was in the orchestra; I wasn’t the star performer. I was in a pit with a miner’s helmet and a light reading music, playing. My role was not exactly a big role. I was just in literally the pit with a light on my head trying to read the music with 20 other people, whatever it happened to be. So you accept it for what it was. I was never the star performer. So you were always in a role, and you were always trying to be a part of this entity or team that made things successful. So I think that has an effect.

You need to be competitive. There’s no doubt that to survive the job of CEO for 10 years or even for any period of time, you have to have stamina, resilience and you have to be competitive and have some self awareness, because [otherwise] you can’t get through the ups and the downs. There are a lot of ups and downs.

Useem: Let’s take that forward with this question. In almost 40 years at the company, a decade as chief executive, you’ve made hundreds of major decisions. Looking back on your bigger decisions, what was the toughest single decision, and why was that hard to make at the time?

Palmisano: The hardest decision for me was not the PC. Everybody [says]: “It had to be the PC.” It really wasn’t because it was so economically straightforward. The hardest decision for me was dealing with the pension problem [in the mid-2000s] because you were touching the fabric of the business…. Our pension liability was bigger than our revenue. We had to make a change. It’s obvious to us, the senior management of the company. It should be obvious today to state and local governments and federal governments and the like. It takes a lot of courage to be able to make the decision because you’re touching so many people. So you have to [act] with fairness.

I won’t take you through all the details of how we did it, but we made sure that certain populations that could have been more severely impacted than others, we gave them a more attractive transition because it was fair. It didn’t make it easy for anybody. We eliminated all the executive plans as well, so everybody was affected, top to bottom. But again … our liability was bigger than our revenue. People said, “Of course you had to make the change.” But at the time, it was controversial. There were going to be special bills in the legislature called the IBM amendment that were being sponsored by people in the legislature. We almost ended up in the Supreme Court. Now you look at the states and you look at the federal government problems today with pensions and you say, “Well, it’s obvious. They’re bankrupt. It’s obvious.” Well, nobody’s making the change.

It was a really hard, gut wrenching decision because you’re touching so many people’s lives. You know you have to do it or you’re not going to survive. You could be an airline or a car company. You have a role model out there that says, “If you don’t, this is what you are.” I got it. Okay? You don’t want to do that. But you still have to do it. And it could be that you could push it off to your successor. You could. I just didn’t think it was the right thing to do. And politically, the political timing was not so great…. Today I think it would be easier because everybody sees what the [problems] are. You’ve got to look at the problems. But then this was well ahead of when they became obvious to society.

Useem: Sam, you were not shy about making the big decisions, facing up to them, getting them done, executing around them. As you have coached others, mentored people who have come up through the ranks in the company, is there a line of advice that you can offer to help them face up to, and make, tough decisions? How would you phrase that if you were with a mentee?

Palmisano: If you don’t put yourself first, they are easy decisions to make. It’s not about you, and I mean this in all sincerity. Because if you’re worrying about your reputation or your legacy or whatever — you put something first beyond the institution — then it’s hard because your reasoning is clouded, because you’ve got these dimensions of thought that aren’t based on reality because it’s your own personality. But if you just look at it and say, “No, it’s not about me; it’s about the future of the IBM company. How does IBM stay sustainable for the next 100 years?”…. For me, it was always easy.

But you can see people who dwell with that all the time. You can watch them make this trade off between themselves and the institution. And whenever they make that trade off, when you bias it to yourself versus the institution, then it gets really hard and you make the wrong decisions. You’ve got to be able to almost put yourself in this third party state … as if you’re just a temporary steward in time. And that’s what you are. You’re not the charismatic leader. You’re not going to be the messiah. You’re a business guy. You’re a temporary steward of a wonderful institution, and your role is to preserve the institution. It’s not about yourself. And if they pan you, they pan you. If they’re going to pan you, okay, fine, so be it. Don’t read your press clips. I learned that in sports. Never read your press clips.

Useem: Among your biggest decisions along the way, made every year actually, is to continue to invest in research and development. Your R&D budget is one of the biggest out there in our universe. In making that decision, it’s pretty obvious that you’ve committed to the future of the company through technology and innovation. Stepping back from that, do you want to share with us some of the secrets of remaining innovative here at IBM?

Palmisano: The key is, if you want to be rewarded with higher margins, you have to do unique things. You can’t do what everybody else does, right? So that’s why in technology, it’s research. I think it’s true for any business, by the way. If you don’t do anything, my question is why would they give you their money? Why would they invest in you? Why would they work for you? Why would society let you operate? Why would they give you their money as a client? You have to do unique things, which means you have to innovate and you have to invent, right? So that’s the key. You have to start with funding it, and you have to have the smart people.

Beyond that, you need a process that encourages it. So you need to let these guys come up with these ideas and give them some runway because not everything is going to be perfect. For example, there’s a great story around Watson, the Jeopardy machine, which is now a commercial. I’ve seen it. But the wonderful story was, because I go to research once a year and I tell these guys: “Show me what you’re thinking about. What’s going to change society? What’s going to change business? What’s going to be the impact to IBM?” So they had all these technologies. You can barely understand them, and I’m around this stuff every day. So I said to the guys, “You know, we need a game. We need something people can understand. How about a video game? They can play it and then we’ll give scholarships to the kids who win, to their schools if they get into a top schools. Wouldn’t that be great?”

So then these guys are off, and they’re at a bar and they’re watching Jeopardy. And this guy [David] Ferrucci…looks up and he goes, “You know, we could do that. We could do that.” So he goes into the head of research, it was Paul Horn in those days, and said, “Hey, we could do this. We could win that game. We could play Jeopardy and we could win.” And Paul goes, “Come on, nobody can do this.” ….[David said], “Just give me $10 million to get started.” It’s not a lot of money, I mean there’s $6 billion, right? So Paul goes, “Here, take the $10 million and go hire some people and see what you can do.” And then he came back in three, whatever it was, two, three years later and they invented this thing.

So you have to have a management system that encourages these people, and gives them a little bit of funding, not get carried away. Don’t give him $100 million to fool around. But give him some money to get him started and see where it goes. I think innovation also applies to the business model, like globally integrating IBM. Run it as one company and scale it. I mean you can do the same thing on business process too, by the way, as far as how we operate the company, applying analytics and all those sorts of things. But you need to give people the flexibility.

The problem is that if you trade it off, and … I feel strongly about this, but $6 billion a year, just think how many quarters we could have made cutting out the $6 billion. You know, we didn’t. We still had record performance. We had record, record and record. Record cash, record earnings, record this, record that, right? But we didn’t because we kept investing. You could respond to the pressures that are put on you multiple different ways. Easy thing for us to then do, just keep cutting that thing down. Other companies in tech have done it, and then you see what happens over time.

So I really go back to this creating the environment or culture of innovation. Put the enterprise ahead of the individual. You’re a temporary mentor; you’re a temporary steward of time. Look at yourself in the context — I guess that’s my history major — look in the context of history, which you are, not in the context of yourself at the moment, and you’ll reach a different set of conclusions.

Useem: You’ve presided for a decade over a company that has a more than 100-year history. I think you’ve had nine chief executives going back over 100 years. This is a company that indeed was built to last. As people look back on your reign here as chief executive of IBM, what do you hope they will see as your legacy?

Palmisano: I just hope, like I said, that I left it better than [when] I got there. If people would say that, adios. I’d be happy as can be. And then the other thing is that the ability to take IBM to more of these global markets, globalize the back office of the company. But most importantly, that’s how we got it better than where we were when I started, but that’s it. It’s too simple, I understand. As I say, it’s so boring and so old fashioned. It’s like our earnings. They’re so predictable and boring — there’s no surprise. I mean it’s so dull. It’s like 30 years old. Nobody thinks that way anymore, but I really do believe that. If you’re a company that’s 100 years old, be consistent in what you do. That’s a financial statement. Be consistent. No surprises. You’re 100 years old; act like you’re 100 years old. Don’t act like you’re 100 months old.

And then the other side of it is, just define it as, is the institution better off because of the time you spent there? And it’s like I said, it’s so boring nobody’s going to be excited about it. None of your students are going to go jump up and down and say, “I really just want to leave it better than I found it.” That is uninspiring…. You know, I have all these kids who go to those schools like yours now, so I understand what motivates them, what they’re taught. But for me it has worked. The only time that I think we ever got in trouble at IBM is when we missed the shift and/or people put themselves ahead of the company.

Useem: Let me close by thanking you, Sam, for your 40 years at the company, your decade as leader of the company, for helping us appreciate what it took to do what you’ve done. Arguably you took a company that was good under Lou Gerstner’s turnaround and made it great. I want to wish you will. You continue as chairman of the board here, and I wish you well for whatever lies ahead. So thank you very much.

So how would Santa Claus handle his wide array of risk management challenges? In honor of the season and with apologies to author Clement C. Moore, the elves at Lockton have produced a risk management white paper, titled “The Night Before Riskmas”.

With acknowledgement to Clement Clarke Moore’s poem, “A Visit From St. Nicholas” (1823)

The Night Before Riskmas: A Holiday Risk Management Tale
December 2011
By LOCKTON COMPANIES, LLC

“Twas the night before Riskmas,
and throughout Santa’s shop, not an exposure was covered,
from bottom to top.

Though elves worked hard to make toys with great care,
the risk for injury was still always there.

Santa should have been nestled all snug in his bed,
but visions of big losses danced in his head.

He poured himself four fingers of eggnog as his nightcap,
and hoped he could solve his problems after a quick nap.

As he drifted off into a deep slumber,
the potential for claims multiplied in number.

Santa dreamt of the holiday preparations and his beloved sleigh,
and realized that unless coverage was bound, he would have to pay.

Possible equipment breakdown could result in a clatter;
he would need risk management to help solve the matter.

If the naughty and nice list was erased in a computer crash,
the work his elves had done all year would be gone in a flash.

He dreamt about his eight tiny reindeer that were ready to go,
but he knew they were uninsured motorists—a potentially crushing blow.

Santa remembered tall Sam, an elf who was very bright,
but could not get hired to Santa’s staff, due to his height.

Another catastrophe could be a visit from the Grinch,
who had proven the theft of Christmas could be done in a cinch.

He thought of the stockpile of coal,
as a contaminant would surely take its toll.

Father Christmas without facial hair would be quite weird;
he must go to Lloyd’s for coverage of his beard.

Numerous policies might not cover it all;
he would need an umbrella policy to cushion a fall.

When Santa awoke, he was sitting in his chair,
Only to discover the exposures really were there.

The Yuletide lesson to learn as we draw to a close,
Is that risks—ever present—will leave you exposed.

So Santa gave his risk manager permission to bind,
Leaving him fully covered, with great peace of mind.

Then, as he loudly exclaimed, and breathed a sigh of delight,
“Merry Riskmas to all, and to all a good night.”

Lockton, the world’s largest privately held insurance broker, outlines the key issues facing Santa and his firm, K. Kringle Manufacturing, Inc. See how Lockton would help Santa and his risk management team structure a program to provide more than $1 billion in coverage to his mission critical operations:  http://www.lockton.com/Resource_/PageResource/MKT/Riskmas%20Poem_post12-11.pdf

Happy Holidays to everyone!

Just last August the federal officials who track weather disasters said 2011 would go down as a record year with 9 events topping $1 billion in damages. On Wednesday, those same authorities upped the number to 12 events — totaling $52 billion in damages –and said there’s still a chance for one or two more to be added to the list.

“In my weather career spanning four decades, I’ve never seen a year quite like 2011 … record-breaking extremes of nearly every conceivable type of weather,” National Weather Service Director Jack Hayes said in a statement accompanying the new figures.

The National Climatic Data Center said more detailed accounting led to these newcomers:

Texas, New Mexico, Arizona wildfires (Spring-summer-fall). These had been incorporated into a broader disaster category in the August report (See below under Southern Plains/Southwest drought), but were pulled out when damages exceeded $1 billion, with five deaths.

Midwest / Southeast tornadoes (June 18-22). New numbers now put damages at $1.3 billion, with three deaths from an estimated 81 twisters.

And two other events are nearing that mark:

Northeast pre-Halloween storm (Fall). This “has a 50/50 chance of exceeding $1 billion,” center forecaster Adam Smith tells msnbc.com. “It may be a stretch to indicate that this winter storm is ‘likely’ to surpass the mark. But we will have an update on this in next month’s update.”

East Coast Tropical Storm Lee (Fall). “At this point, the data suggest that the damage from Tropical Storm Lee has an unlikely (less than 50/50) chance to reach the $1 billion mark,” Smith added.

The events followed a report last August that listed 9 events topping $1 billion for the year. A few days later, Hurricane Irene hit the East Coast, causing $7.3 billion in damages, claiming 45 lives, and bringing the total to 10 events.

The old record was 9 events, set in 2008.

Moreover, the annual average has gone way up. In the 1980s, the U.S. averaged just over one weather disaster a year, the center stated. In the 1990s, the average was 3.8 a year — and that jumped to 4.6 in the 2000s and 7.5 in the past two years.

When the August report was released, Hayes called the rising frequency and cost of extreme weather a “new reality.”

The higher costs are due partly to a rising population, with more people and more buildings in environmentally vulnerable areas, such as coastal regions, Hayes told reporters.

Asked if global warming was to blame for the rising frequency of wild weather, Hayes called that “a research question” and that it would be difficult to link any one severe season to overall climate change.

But by Wednesday, he was ready to consider a bigger picture. “With our changing climate, the nation must be prepared for more frequent extreme weather in the future,” he said in a video statement that was part of an “Extreme Weather 2011″ website.

August report on billion-dollar disasters

Wednesday’s report also updated figures for the earlier 9 events:

Upper Midwest flooding (Summer). Losses exceeded $2 billion, with at least 5 deaths.

Mississippi River flooding (Spring-summer). $3-4 billion in damage, 2 deaths.

Southern Plains/Southwest drought, heat wave (Spring-summer). Total direct losses are near $10 billion.

Midwest/Southeast tornadoes (May 22-27). An estimated 180 tornadoes caused 177 deaths, most in Joplin, Mo., and $9.1 billion in damage.

Southeast/Ohio Valley/Midwest tornadoes (April 25-30). An estimated 305 tornadoes left 327 dead and caused $10.2 billion in damage.

Midwest/Southeast tornadoes (April 14-16). An estimated 160 tornadoes killed 38 people and caused $2.1 billion in damage.

Southeast/Midwest tornadoes (April 8-11). An estimated 59 tornadoes caused $2.2 billion in damage.

Midwest/Southeast tornadoes (April 4-5). An estimated 46 tornadoes left 9 dead and caused $2.8 billion in damage.

Central/East Groundhog Day Blizzard (Jan. 29-Feb. 3). The storm was tied to 36 deaths and caused $1.8 billion in damage.

“Who ya gonna call?” is a well-known line from a popular 80’s movie about hunting for ghosts in New York City, but if that movie were re-made today it would be more appropriate to ask the question, “HOW’re ya gonna call?”

The first inbound toll-free phone numbers were introduced in the late-1960’s and that technology dramatically changed the way that businesses focused on the importance of communications with their customers. As the technology evolved so did the businesses’ dependence upon instantaneous communications as an integral part of their need to remain in direct contact with their customers and staff.

During a time of emergency it is easy to focus on dealing with the incident and to overlook communications with the rest of the staff, the senior management, and the outside world. It is also common to presume that the normal channels for communication (land line telephones, wireless phones, and Email) will be up and running. Sadly most of the breakdowns in business continuity plans are the direct result of communications failures.

In the early days of emergency management, telephone call trees were considered to be the mainstay of communications plans. However the call tree system has several basic flaws:

• Assumption that all individuals will be contacted in a timely fashion

• Assumption that all individuals will have access to a working telephone

• Assumption that contact phone numbers are current and correct

• Assumption that all individuals will receive exactly the same message

Thanks to advances in technology, the classic call tree is now being replaced by more sophisticated and reliable auto-notification applications. These new forms of communication employ a “one-to-many” contact system which allows a single user to simultaneously broadcast the same message to all members of a pre-specified list of recipients using multiple forms of communication. A voice message can be sent to an individual’s office phone, cell phone, home phone, as well as a text message sent to their cellphone and multiple Email accounts. Many of these new systems can also register successful receipt of the message as well as a short response from the recipient.

The past several years have brought disasters of every type and size to all corners of the country including major hurricanes in the Gulf coast region, severe winter storms in the Northeast, sweltering heatwaves throughout the Deep South, tornados and flash flooding in the Midwest, massive wildfires and seismic activity on the West Coast, as well as a host of man-made disasters including cyber-attacks, power outages, structural fires, supply chain disruptions, and workplace violence. Each incident has reminded our clients to ask questions about the resiliency of their communications networks and crisis response options.

Effective disaster readiness plans need to be evaluated and tested before an actual emergency situation. One of the most important elements within that plan is a company’s ability to communicate with their disaster management team, their employees, their customers, their stakeholders, their business partners, and the media during, and immediately following, a time of crisis.

How will you run your business if your phone system is inoperable because of a power disruption or a fire within your facility? Or perhaps something on a larger scale results in ‘network busy’ signals instead of connected phone calls? Or even a major regional event knocks out the entire telecommunications infrastructure? What alternatives do you have in place, and have they been tested for effectiveness?

When considering communications alternatives, today’s businesses have numerous emergency communications options available to them with a full range of capabilities and a wide variety of price points. The following list will detail some of those choices:

Live-Operator Call Handling Service: Many businesses use a live-operator service to handle after-hours and overflow telephone calls during the normal business day. This same service could be easily adapted to handle calls during an emergency and provide a business with centralized message collection, out-calling of messages to cellphones or an alternate worksite, and a means for your employees to call in and leave information as to their whereabouts and their personal situations. Many of these services will allow text messaging to cellphones in the event that cellular traffic is disrupted, and some offer a web interface to retrieve messages and update call handling procedures.

Pre-recorded Hotlines: A seldom-used phone number (preferably toll-free) could be configured through your phone carrier to play a recorded announcement – generally made by a senior company official to give status updates on your physical facility and overall business operations. Many times, companies will have an “internal” hotline for their employees and a second “external” hotline for customers and vendors. These recorded announcements should not reside within your premise phone system, but rather be hosted through your network provider. The communications officer within your company can update the information on these announcements several times a day, as needed.

Call Redirection Services: Another popular option for voice communications is to redirect the inbound calls within your phone carrier’s network (“the cloud”) and then use a call redirection service to forward the phone calls to pre-determined locations and numbers. This technique guarantees that the inbound calls will reach a live representative from your company or be directed into a voice mailbox for later callback. These services are very effective so long as the business configures the options well-prior to the emergency situation.

Voice over Internet Protocol (VoIP): As the technology improves, more companies are moving away from traditional facilities-based PBX systems with hard-wire connections to telephone desksets. Instead they are utilizing IP-based phone systems which direct the voice call to a physical IP address which can be configured to ring to an alternate deskset, a cellphone, or even a remote call center. The entire IP phone switch can be housed off-site within a data hosting and storage facility, thus removing the vulnerability of a traditional on-site PBX phone system.

Smart Phones: The ubiquitous nature of Apple, Android, Blackberry, and other such multi-function devices offers one more alternative for making and receiving voice calls, text messaging, and accessing Email, business applications, and social media sites. Once again, this configuration is heavily dependent upon signal availability, remote server access and battery power for the portable devices.

Text Messaging Services: Most of us watch in amazement as teenagers furiously type text messages to each other on their cellphones without pausing to realize that this same technology provides a very effective means for emergency communications. Reliable text messaging notification systems have become a very popular way to send and confirm receipt of critical alerts to selected individuals, small groups, and entire organizations. The text messages are sent as short message “blasts”, and the message will reach the user even when normal cellular voice channels are congested. The popularity of the “one-to-many” text messaging service has provided a new favorite among emergency managers.

Satellite Phone Communications: By far the most reliable emergency voice communication service is portable satellite telephones, however the price point may prove impractical for most companies. The equipment is priced at several hundred dollars per handset, and the service fees can run up to $1 per minute of talk time. For larger corporations and critical emergency operations teams satellite phones are a good choice to add to your emergency communications arsenal.

Email communications: If you are able to access your Email server from a remote location, and if your employees have both power and a solid internet connection, then you can utilize Email as a way of maintaining contact with your customers and your employees. This solution will rely upon the development of pre-planning strategies for server access, remote computer facilities, and Email access. It also depends heavily upon having both power and an internet connection – whether wired or wireless. This configuration can also allow access to your users into core business applications while they work from a remote location. Larger corporations may also wish to investigate services which run a mirrored copy of your Email service on remote servers, and therefore provide guaranteed connectivity to corporate Email during a time of crisis.

Social Media: Consider the power of social media services such as Facebook, Twitter, and LinkedIn. While these channels are primarily known for their entertainment value, they do provide another means of transmitting non-secure information to a closed user-group.

SharePoint:  Microsoft’s SharePoint service allows for secure on-line storage of files, and closed user-group access to that same material. This collaboration tool has become a popular venue for building and storing in-house business continuity and disaster recovery plans – and the homepage “News” updates provides an alternative means of communication with your in-house staff.

Web Communications: One additional option is the abundance of web communications channels now available. Free Email services, web logs (blogs), and simple webpage configurations will allow for the transfer of non-secure information and files during a time of crisis.

Announcement Services through Local Broadcast Media: Should you need to reach a large number of people within a certain geographic area in a timely fashion (such as school closures or major facilities shutdowns) then you might wish to consider an announcement service through the local Radio and Television stations.

Conclusions: Advances in technology are blazing the way for newer, faster, and more secure means of communication. Obviously the “best” emergency communications solution for any company would be built around a blend of alternatives, and it would be tested and refined regularly. Use the 3-step process of Plan, Respond, and Recover to cope with business disruptions, and make sure that you pre-plan your emergency communications strategy before you need to depend upon its success.

By BILL KACZOR

Associated Press

TALLAHASSEE, Fla. — Gov. Rick Scott said Tuesday that he supports shrinking Florida’s hurricane insurance backup fund even though that would raise premiums.

Scott also said he sees no need to abolish the state’s mandatory no-fault automobile insurance system, which has been riddled with massive fraud. Scott said he’s confident lawmakers can find a way to fix the system.

The governor and Florida Cabinet took no action after listening to a proposal for downsizing the Florida Hurricane Catastrophe Fund to eliminate a potential $3.2 billion shortfall.

Later though, Scott said he supported the idea.

“It’s shrunk already,” Scott said. “We can’t borrow the money. … I want to spend more time on that proposal, but I think we do need to reduce the size of the ‘Cat Fund.’”

Cat Fund chief operating officer Jack Nicholson told Scott and the three Cabinet members that due to volatility in the world finance markets, the state would be unable to find investors willing and able to buy enough bonds to help meet its coverage goal of $18.4 billion.

Insurers including the state-backed Citizens Property Insurance Corp. can get reinsurance through the Cat Fund at lower rates than in the private market.

The fund, though, has only $7.1 billion in cash. That’s expected to increase to $8.4 billion if Florida finishes the year without getting hit by a hurricane.

To make up the difference, the fund would have to borrow the rest, but Nicholson said it no longer can expect to find buyers for the full amount, hence the estimated $3.2 billion shortfall.

Nicholson said the fund probably could sell no more than $7 billion in bonds. He recommended that the Cat Fund’s coverage goal be reduced by $5 billion, which would require legislative action.

“The state is taking a risk today that it doesn’t need to take,” Nicholson said. “You’ve got a private insurance market. It has the capacity today to
take that risk.”

Private reinsurance, though, would cost more. A preliminary analysis shows the down-sizing proposal would increase premiums for homeowners, businesses and other consumers by 10 percent over seven years, Nicholson said.

Scott said higher rates would be worth the trade-off.

“Consumers actually want real insurance,” Scott said. “They don’t want to have insurance that they know that no one can write the check. And basically right now if the Cat Fund can’t bond, then people are buying insurance believing that they’re going to get paid when they’re not.”

The Cat Fund repays its bonds through special assessments on almost all insurance policies sold in the state, including auto.

Scott and Chief Financial Officer Jeff Atwater held a news conference to urge the passage of legislation that would stop auto insurance fraud they say is costing Florida insurers and motorists $900 million a year.

They did not, however, offer specific suggestions. One option lawmakers are considering is to abolish what’s known as Personal Injury Protection, or PIP coverage, but Scott said he doesn’t think that’s necessary.

“We’ll see what comes through the Legislature,” Scott said. “Right now I believe it can be fixed.”

Motorists now must buy PIP insurance that provides $10,000 in coverage for injuries suffered in traffic accidents regardless of who is at fault.

Officials say the system is being abused through staged accidents as well as claims for nneeded health care services. They also blame lawyers who often seek fees more than the $10,000 limit even though no-fault was supposed to eliminate or reduce the need for litigation.

Author: Shari Schmidt

It was painful to watch the Penn State University Board of Trustees at last night’s press conference. From the awkward set-up to the clipped
responses, it was a case study in how not to handle a crisis. How can you avoid making the same mistakes? Here are three lessons to learn.

1. Put your most prepared person at the microphone. The entire press conference lasted about 20 minutes, yet the spokesperson continually looked at his watch. He seemed frustrated at times that “We feel this is in the best interest of the University” wasn’t blindly accepted as the answer to many questions. He did stay on message, but it was his body language and tone of voice that needed some coaching.

2. Show some compassion. Perhaps the most interesting part of the press conference was the board’s inability to appear connected. If you’re going to fire a long-time, beloved member of your institution, you need to have the information and compassion to back-up the action. Most of the answers were along the lines of “we looked at the information available at this time and thought this was in the best interest of the university.” Sometimes leaders have to make hard decisions, but it always helps to show compassion while delivering the news. There are a lot of unanswered questions. Still, there is no reason to look like you’re rushing to judgment when you don’t have all the facts and sounding like you’re not sure you’ve made the right decision.

3. Look at the big picture. This event was broadcast live, so the picture was as important as the message. What did we see? Multiple older, grey-haired white men in grey suits. Since the time of the Kennedy/Nixon debates, public relations experts have known that grey, rumpled suits don’t show well on television. It wasn’t until the camera took a long shot that we saw a person of color and a couple of females sitting with the group. Were they on the board? We didn’t know, but if they were, they shouldn’t have been seated on the fringe.

Also, make sure whoever is sitting behind the speaker has some media training. A man in the second row reacted to a few questions by contorting his face. It wasn’t often, but he was right behind the speaker so it was obvious. Several men in the back row started making comments to each other after certain questions were asked. It was clear they weren’t pleased with the questions, but they shouldn’t have shown it during the press conference. Most of the time, they all looked bored. It didn’t give the impression of a thoughtful, engaged group who just made a difficult decision.

Your crisis might not receive the same world-wide visibility of the Penn State situation, but it will be just as important to your business. Now is
the time to learn from this situation so you don’t make the same mistakes.

Each of these seemingly unrelated incidents have one major element in common — a Public Relations Nightmare in the making.

How would your organization handle these types of scandals? Who would speak on behalf of the organization? What would they say? Who would help them craft the appropriate message, and then give them guidance to field the tough questions which would inevitably follow the initial remarks?

Take the time to follow these stories in the news, and learn from their mistakes. Ask yourself what you would be doing differently, and then make the effort to put some appropriate plans in place.

At any given point in time an executive member of the staff must be prepared to speak on behalf of the organization. In that critical moment, who will take that lead role? Have they been trained?

Just some things to consider as you watch these stories being played out in the media and the court of public opinion…

Corbin states, “Today’s businesses face a rapidly changing regulatory environment, increased economic pressure, political uncertainty and a changing global marketplace, making it more important than ever to take steps to assess and address the risks faced by your organization.”

“ERM begins with an enterprise risk assessment. Formulate a series of survey questions that are designed to measure corporate culture, the organization’s appetite for risk, knowledge of risks within the organization and existing control design and effectiveness.”

“The survey should be conducted by cross-functional disciplines and should provide a detailed evaluation of the organization’s vulnerability and exposure to environmental conditions. We are in a new era of increasing governmental regulations and the increased need for internal audit and related skill sets. This will also necessitate a change in the internal auditor’s role to better understand risk exposure and mitigation.”

For more information about the enterprise risk management model, and how to apply the key elements to your organization, please click the link below to read the remainder of the article:

How to use enterprise risk management to address risks faced by your organization | Smart Business.

Earlier this year the earthquake, tsunami, and radiological leaks reeked havoc on the residents of northern Japan. These same natural disasters impacted many manufacturing facilities for automotive parts and electronics – in effect, shutting down supply chain routes for many international corporations.

About two weeks ago major flooding in Thailand ravaged thousands of factories and parts manufacturers in the suburbs north of Bangkok. Companies such as Seagate announced that their factory which produces disk drives is underwater; while Canon’s printer-related factory is also submerged. Automotive companies such as Honda, Toyota and various car makers from India get components, transmissions and engines from subcontractors in that same flooded region of Thailand. While electronics manufacturers are also heavily dependent upon production from manufacturers in that area. Nikon Corporation’s Thailand plant produces low- to mid-range single-lens reflex cameras, which accounts for 90 percent of the company’s SLR camera production. Sony Corp. manufactures all of its digital SLR cameras in the same region.

Closer to home, this past weekend saw a massive snowstorm blanket the northeastern United States, knocking out power to millions, and once again disrupting supply chain channels to thousands and thousands of companies.

Based on all of this news, have you stopped to examine your organization’s supply chain? Do you know where your company’s raw materials are manufactured, and have you considered contracting a secondary manufacturer as a backup? Have you asked your manufacturers to provide you with a copy of their business contingency plan? How will they support you if you have a disastrous incident, and equally important how will they support you if THEY have a disastrous incident?

Supply chain mapping and understanding where your goods and services are produced or are run from are an important part of the business continuity manager’s role. Take the time now to understand your supply chain and to have alternate plans in place — proactive planning will save your company from the impacts of a third-party disaster.