Never Underestimate the Power of a Backhoe: Integrating Single Points of Failure into Strategic Planning

SWOT (strengths, weaknesses, opportunities, threats) analysis is probably used more often than any other management technique in strategic decision making. There appears to be a greater emphasis, however, on identifying strengths and opportunities while weaknesses and threats are examined less closely. Such bias may be problematic because firms may overlook single points of failure (SPOFs), which are elements that, upon malfunction, render an entire system unavailable or unreliable. These threats and weaknesses are most often presented in information technology and engineering discussions of equipment, machine, and device breakdowns, but may have applicability in a number of other areas important to organizations including people; materials and supplies; methods and processes; and shock events—natural and human-made disasters. To be resilient in today’s 24-7, 365 days a year global business world, it is critical that organizations effectively anticipate, evaluate, prepare for, and mitigate SPOF risks that can have a seriously negative impact on a firm’s performance. The paper concludes with a three-step approach to help managers reduce and effectively respond to SPOFs. Companies that integrate the concept of SPOFs into their strategic planning could develop high-impact management skill, leading to improved corporate profitability