A Resilience Lesson from Texas

There's a lesson in resilience here in Texas, and it's a painful one. Texas is the largest energy-producing state, but at the moment has millions of people without electricity. That's a result of ice, snow and unusually cold temperatures. The duration of this freeze has been record-setting. But it's worth noting that in much of the country the exact same weather conditions would have been unremarkable - just normal winter. Life would have gone on uninterrupted.

The problem in Texas is that these winter events are infrequent. They do happen, of course, and every time they occur preventative measures are established. But, businesses and government officials fail to implement them, because, well, these events are infrequent.

We are seeing this lack of preparation on Texas roads. Highway authorities quickly exhausted whatever minimal supply of sand and salt they had, bringing commerce to a halt throughout much of the state. Inability to use the roads has even cost precious days in Covid vaccine deliveries and injections. Both emergency services and less critical ones have been disrupted. Many other states would have had the roads operational within hours. But, Texas authorities saw little need to prepare for an event that may not happen for years.

I'm sure the Texas power companies whose coal and gas power generators failed in the freeze prioritized other spending over preparing for a rare event. Wind farms stopped making power because their owners opted for cheaper equipment than is used in freeze-prone areas like Canada. Times of extreme cold, of course, are exactly the times when demand for power is at a peak. Intentionally operating equipment that won't handle a rare event exacerbates the already serious effects of that event.

In the coming months, we'll see many millions of dollars spent to repair damage from frozen pipes and other fallout from power outages. It's unlikely the power companies or their owners will be forced to pay for this, because extreme weather is an "act of God." Lack of preparation may not matter.

Pandemic Lessons

We saw a lack of resilience with personal protective equipment when the pandemic hit. Neither the Obama nor Trump administrations rebuilt depleted PPE supplies. Pandemics are rare, right? Better to focus on current crises.

We saw a lack of resilience even with mundane things like toilet paper and sanitizer, when highly optimized logistics chains lacked surge capacity to meet demand changes.

Some disasters are unavoidable. But, we can predict that things like earthquakes, pandemics, and unusually low temperatures will occur, even if not exactly when.

Short-term thinking is the enemy of a resilient system. The more we optimize for today's conditions, the less redundancy we create, the more we risk failing when an upset condition inevitably occurs.

The cost of inadequate resilience can be devastating. California's Pacific Gas & Electric was fined billions of dollars for failing to prevent its power lines from starting wildfires. Short-term thinking led to the utility's filing for bankruptcy.

Small Scale Resilience & Customer Experience

Not all planning failures are as catastrophic as those in Texas and California. Some might go unnoticed as "business as usual." Nobody dies if a restaurant runs out of a popular item on a Friday night, but the affected customers may never return. Some companies still blame the pandemic for poor service, even as their competitors adapted to the new normal.

Whether you are a senior strategist or front-line manager, don't discount the possibility of rare events. Be sure that some mix of preventative actions and contingency planning will minimize the impact on both customers and the business itself.