In 1878, an outbreak of yellow fever occurred in the city of New Orleans. It quickly spread through the city and proved itself to be very deadly. Soon afterward, it began to spread up the Mississippi River basin toward the city of Memphis. In those days, no one knew what caused yellow fever (it was thought to be caused by miasma, or bad air), but everyone knew that it could kill you. The people in the city of Memphis heard that it was coming their way. Based on reports coming in from other cities along the Mississippi, they could predict approximately when it would arrive. Yet they did almost nothing to protect themselves.
The local merchants in Memphis, not wanting to see a loss of trade along the river or the prospect of customers leaving town, assured everyone that business would go on as usual. The business community pressured the local government to quell any possible panic, and the government obliged. Soon, the city government, in its attempts to protect business in Memphis, assured everyone that there was still plenty of time; that everything would be fine; that they shouldn’t leave town; and most of all, they should not panic. The people believed them and complied.
Business as Usual
So business went on as usual. A few people left town, but most stayed. Those that tried to leave were ridiculed and taunted as cowards. Not wanting to appear timid, many people changed their minds and stayed anyway. Everybody continued to work and conduct business as if nothing was going to happen.
Then one day, just about on schedule, a laborer dropped dead down on the wharf. The cause: yellow fever.
People immediately began to panic. They wondered aloud how such a thing could have been allowed to happen. Hadn’t the government promised to protect them? Hadn’t they been assured that there was no reason to leave town? The government and businesses wouldn’t lie to them. What would they do now?
As the fever spread through the town, some of the population hurried and got out in time. Thousands fled in unbridled panic. But in short time, as the government tried to contain the epidemic, the city was quarantined, and armed guards ringed the city. The order went out: anyone attempting to leave would be shot on site. Even so, many caring individuals who could have left before the quarantine, stayed voluntarily to help the sick. Doctors, policemen, and even nuns did their duty. But they were no match for the deadly yellow fever.
The epidemic was worse than anyone predicted. Eventually, before the killer epidemic finally subsided, the city of Memphis had ceased to exist. 5,000 people, or about fifty-five percent of the population that remained in the city died. Every doctor died. Every policeman died. Most of the nuns that cared for the sick died, earning them the title “The Martyrs of Memphis.” Ironically, most of the businesses that had been so worried earlier about losing money failed and eventually disappeared.
Finally, the city itself went bankrupt, and with so few citizens left inhabiting it, Memphis lost its charter as a city. It wouldn’t regain its status as a city for another fourteen years. Until then, it would remain nothing more than a tax district.
So what does this story show us?
- The business leaders and the government all saw what was happening, and they knew it was headed their way, yet they did nothing. How many times in your business have you seen economic conditions, competitive forces, or changes in technology happening, but did little to protect your business?
- People were told not to worry and that everything would be fine. How many times have you been in denial about something that had a direct impact on your business, yet took no steps to deal with it or develop a strategy that limited its impact?
- Many people stayed, and subsequently died, because they didn’t want to look like cowards to their peers. They felt pressured to remain in Memphis, even though their common sense told them to run for the hills. How many times have you kept an unprofitable operation going, or continued to dump money into a losing venture because you didn’t want to look like you made a bad decision?
- The government assured everyone that there was no reason to panic, and that things were under control. How many times have you gotten assurances from the government that things were fine and that there was no need to be concerned, only to find out they really weren’t protecting you after all?
What can we learn from this disaster?
Well, there are several lessons, and all of them relate directly to how we run our companies.
- Never ignore a trend or looming issue that can be detrimental to your company.
- Trust your instincts…If something looks like it will hurt your business, it probably will.
- Don’t go into denial. Prudent business leaders accept that bad things happen, and react to them with swift and thoughtful solutions.
- Don’t let pressure from shareholders, employees, customers, or peers force you into doing something you know is wrong and could be harmful to the business.
- Don’t believe the government when they tell you that everything is fine or under control.
- And, always, always, always have a plan!