Many professionals often overlook the importance of a Business Continuity Plan (BCP). History has proven that even the largest industry leaders can stumble and either collapse or experience significant financial loss if they neglect to address critical vulnerabilities when preparing for crises.

These vulnerabilities may stem from overconfidence in their skills and technological tools to a lack of geopolitical awareness. Without careful management, these blind spots can escalate severe crises, potentially jeopardizing the business’s future.

This article examines three catastrophic BCP failures that led to the downfall of industry giants. All organizations can learn valuable lessons from these instances to avoid repeating the same errors.

Overconfidence in technology — How Facebook lost brand value

Several prominent social networks previously placed great trust in AI and automation, assuming these technologies would resolve crises without human involvement. However, this overdependence can lead to significant issues when dealing with complex situations.

In 2018, Facebook faced a significant setback due to its overreliance on automation. An automated network configuration tool improperly applied changes, disrupting services for millions. This incident revealed a critical flaw: the absence of a manual override to swiftly address the problem.

As a result, Facebook endured reputational harm as both users and advertisers began to question its reliability, and it highlighted the company’s slow response when engineers had difficulty identifying the issue due to unclear system dependencies. Moreover, there was a lack of redundancy, as no backup systems were activated to circumvent the malfunctioning automation.

The big lesson to be learned from Facebook’s error is that automation is still just a tool and not yet a replacement for human judgment. BCPs must always include fail-safes — i.e., manual overrides for critical systems, scenario testing, which means regular drills for technology failures, and transparency in order to ensure clear communication protocols during outages.

A failure to recognize geopolitical certainty led to Adobe usurping Kodak

It is important for major companies to always pay attention to geopolitical shifts and understand that a company has to regularly adapt depending on what happens in the world. Kodak was guilty of treating geopolitical shifts as distant risks, and this shortsightedness led to its downfall.

It was actually Kodak that invented the digital camera, but rather than further developing it, they opted to bury the technology in order to protect their film business. Upon noticing that humans were migrating to digital systems, Adobe migrated earlier than Kodak, embracing cloud-based tools and recurring revenue models. Kodak paid the price for reacting too late and had to file for bankruptcy in 2012.

Kodak paid the price as their leadership clung to legacy revenue streams, they didn’t have a BCP for disruptive tech adaptation and as they had ignored hard trends such as digital migration, which was inevitable.

Learning from the example of Kodak, it is always important for companies to monitor trends and especially identify hard trends such as demographics and technology evolution in order to predict disruptions. Flexible frameworks should be developed in order to allow rapid pivots, and there should be shareholder alignment to ensure that leadership and teams are prepared enough for transformational change.

The semiconductor shortage crisis was caused by underestimating supply chain vulnerabilities

Many BCPs opt to focus on internal risks, such as cyberattacks, and neglect external dependencies such as global supply chains. The 2020-2022 semiconductor shortage was an example of this, as it crippled industries from automotive to consumer electronics.

The Covid-19 pandemic disrupted most industries — global logistic networks and many companies that rely on “just in time” manufacturing, such as Toyota, faced massive production delays. Companies that did not have diversified suppliers and inventory buffers lost billions in income. Ford is estimated to have lost $2.5B due to chip shortages.

Because of single-point failures and the fact that there was an overreliance on a handful of suppliers, some were toppled. There was also a lack of contingency stock, and the lack of buffer inventory for critical components greatly impacted businesses, while slow adaptation delayed reshoring and supplier diversification.

The lesson from all of this is that for a BCP to be resilient, it must include supplier diversification, stress testing and inventory buffers. There should be partnerships with vendors across regions. Stress testing will stimulate supply chain disruptions in BCP drills, and inventory buffers help to maintain strategic reserves for critical materials.

In today’s day and age, the difference between survival and collapse will often lie in analyzing and recognizing blind spots before they become problems. All businesses should aim to learn from the above scenarios because, in business continuity, complacency is the greatest risk of all, as it can lead to a business’s downfall.

With the world and technology now constantly evolving, a company must embrace change and continuously work on finding ways to be relevant for the far future.