Crisis and Opportunity

Thrasyvoulos Loukas (Akis),Eleni Thalassinou, Tobias Lensker,Martin Dimmler, Tobias Friedrich

Virtual organizations in a dynamic contextToon Abcouwer & Bas Parson

Agenda

Crises: opportunities for change

Real life examples

How can it be done? Lessons from the theory

Translation in terms of the adaptive cycle model

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Wise men said…

In a crisis, be aware of the danger, but also recognize the opportunity.

- John F. Kennedy

We are continuously faced by great opportunities brilliantly disguised as insoluble problems.

- Lee Iacocca

The pessimist sees difficulty in every opportunity. The optimist sees opportunity in every difficulty

- Winston Churchill

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Some etymology

The word crisis comes from the Greek “κρίσις”, meaning “choice” or “decision.”

Only two options:1. either we remain inert and lament our sad fate

when crises eventually overtake us2. or we mobilize our resources, change, become

creative, and make decisions

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The value of innovation

http://www.youtube.com/watch?v=BpZt_ar_8IM

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The old school approachSeek golden recipesAvoid crisis – Even deny its existence!Secure stabilityIgnore threats - tunnel visionOstrich algorithm in actionCrisis management in a static wayCrisis descriptors inappropriately focusing on:

Homeostasis,Equilibrium,And, static developmental notions of crises…

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But is denial really an option?

http://www.youtube.com/watch?v=juLcLxVoOac

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New ways of thinkingSwift in the way we view crisis.Acknowledging the inevitability of crisis

step towards the right direction.Next step: find opportunity in crisisIt has been done in the past.…Opportunities within crisis, real life examples.

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Crisis at a national levelArgentine economic crisis 1999By 2002 GDP growth had returned, surprising

economists and the business media.Military dictatorship’s legacy severe economic problemsHyperinflation, corruption, riotsCrisis as a chance for changeWealth redistributionEmerge of cooperatives

Crisis as an opportunity at politics - USA

President Franklin Roosevelt uses the great recession of1930s to bring a new economic agenda.

1973 Arab-Israeli shocks the Middle East status quo: President Jimmy Carter completes the historic Camp David peace accords between Egypt and Israel.

Crisis creates a sense of urgency. Actions that once appeared optional suddenly seem essential. Moves that might have been made at a leisurely pace are desired instantly.

Crisis opportunity for Obama. Plans for an activist government agenda given a boost by crisis atmosphere.

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“Never waste a good crisis”

Rahm Emanuel, Mr. Obama's

former chief of staff

http://www.youtube.com/watch?v=_mzcbXi1Tkk

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Crisis as an opportunity for a local business1993: Jack in the box restaurants – USA’s fifth

largest hamburger chain. Bacteria epidemic kills 4 children and 600 more

report sick…Crisis-management absent – managers literally

burst into tears hearing the news. Microbiologist  David Theno becomes vice

president. This leads to the first HACCP program, ensuring the safety of food at every point.

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Crisis as an opportunity for a local businessEntire new food cooking system in place and rapid

change at every level."It wasn't just for show. It's a different mindset. I

think everyone realizes that we needed to overhaul our procedures but more importantly how we thought about our customers. It's like a whole new company with a new culture, a new self-image.”

Took them only 2 years to bounce back. Nowadays 2200 stores. Plans to expand worldwide.

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First commercial after the outbreak – mindset shift

http://www.youtube.com/watch?v=zGeUl7h5Kcc

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“The Toyota Way” Since 1937, more than rich history. Able to overcome and even thrive through crises, including the Oil

Crisis(1970s), the Recession (2008) and the Recall Crisis (2009). Main axis: respect for people and continuous improvement. 5 principles1. Challenge2. Kaizen (improvement)3. Genchi Genbutsu (go and see)4. Respect5. Teamwork

To see how they made it

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The NYPD case - 1994 Double challenge: reduce crime within the city and

fight internal corruption NYPD was homeostatic at equilibrium phase but

without seizing any benefits Harlem Mosque incident: Muslim activists hold

hostages two police officers. Chance to broadcast the message that ‘law and

order will be enforced”. “revolution in blue” CompStat Software Bratton’s Strategy: putting NYPD in disequilibrium

to break its resilience stage that had neutralized all the previous reform initiatives and then rebuilding a new system.

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France 1999 – The BNF caseBibliothèque Nationale de France - 7.2 billion FF project

“Driven by ‘technical arrogance’, a direct consequence of its political arrogance!” (CEO’s words)

Super sophisticated IS is implemented without asking the librarians.

Result: General strike for many monthsManagement decision uses the strike to put the project

back on track through a new participative strategic plan. The crisis gave the project the resilience it never had saving

a huge investment from certain failure.

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But is it easy to find opportunity in a crisis?

http://www.youtube.com/watch?v=Mw266W5dXpI

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So, how can it be done?There are no recipes

but there is relevant theory.

Models, frameworks etc.

Here we make a selection of useful material taken from separate scientific fields.

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Since there are people advertising it…Consultancy firm Price Waterhouse Cooper“Identify opportunities offered by the crisis to achieve significant

changes that bring lasting value to your organization, such as process efficiency improvements, enhancement of governance and control structures and sharpening your risk management capabilities.”

Four steps function: 1. Acknowledge the crisis2. Communicate3. Take control4. Use the pain for future gain

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Step 4:Use the pain for future gainSee the big picture, chance for major

transformations. In crisis nothing is a taboo.Rebuild to the latest standards.Capitalize on the cost.“Radical Surgery” approach: a crisis can only be

a symptom: find the cause, all that is wrong and eradicate it.

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The Bounce model – Sam Cawthorn

1. Crisis: Uncover all the aspects of the problem, try to fix it.

2. Downturn: This is the point of make or break. Crucial time for tough decisions.

3. Bounce: Things will begin to turn around. Most trying time, lowest point of the circle.

4. Opportunities: Time to act; things are looking up and more and more opportunities are coming as you continue to create and innovate.

5. Bounce Forward: It’s not about bouncing back from the crisis, it’s about being the thought leader and enjoying the rewards of coming through the Bounce Cycle.

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The Bounce model is based on five principlesPrinciple 1 – Crisis Moments Create

OpportunityPrinciple 2 - Focus on causes not symptomsPrinciple 3 - Holding Hands in TrafficPrinciple 4 - Bouncing forward not backPrinciple 5 - Different problem different

thinking

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Crisis management framework - Ian Mitroff 1993

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Learning - MitroffReflection and critical examination, lessons learned Many organizations do not since “only reopens old

wounds.”Reverse has been found in those organizations that

integrate lessons learned into their crisis management process.

"no fault learning”: without assigning blame (except in cases of malfeasance) so that all pertinent information -both positive and negative- can surface.

Focus on improving future capabilities and fixing current problems

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Crisis Types - Mitroff

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Preventative Actions - Mitroff

31Archetypal Stakeholders within a crisis - Mitroff

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Crisis Life-Cycle Model – Harvard 2005

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Leadership Strategies

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Crisis as an opportunity for leadershipA difficult and illusive key to leadership is creating enough

disequilibrium to keep the organization in the learning zone but out of danger.

During the emergency phase, leaders have a small window of opportunity.

“there is nothing ideal or good about a state of equilibrium …

…achieving adaptive change probably requires sustained periods of disequilibrium.” Ronald A. Heifetz

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What you could also do… or another life cycle “model”:

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So, change is critical but are people willing to change?

http://www.youtube.com/watch?v=9qZofcaI5U8

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Linkage with the Adaptive Cycle of Resilience

Crisis can be a chance to realign:1. Reevaluate what you want2. Challenge what you can do 3. Rediscover what you need

desirablenecessary ac

hieva

ble

Optimum would be one overlapping circle

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Linkage with the Adaptive Cycle of Resilience

At the equilibrium quadrant there is no room for opportunity.

Running on the right hand side of the model provides room for innovation and change.

The crisis quadrant is associated with high danger but also with opportunity to evolve, change mindsets, perform Gestalt switches etc.

Opportunity is high

Certain room for

opportunity

Little space for

opportunity

Almost no opportunity

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Linkage with the Adaptive Cycle of Resilience

The key point is to take advantage of the revolt force.

Make use of the modern meaning of the term “creative destruction”.

This transition gives room for experimentation, revolution, major change.

But as mentioned before danger is real and this is not easy to ignore…

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Leadership can make the difference… To operate at the right side of the model successfully you

need managers that are: Systemic, functional, integrative, interdependent,

existential, flexible, questioning, accepting and most of all creative.

In terms of the Spiral Dynamics theory you need people that mainly belong to the yellow color.

“Wave Riders are curious people possessed of an innate capacity to go with the flow, constantly seizing upon opportunity when others see no possibility, or even

disaster.”

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And something to close with: “Crisis is good!”

http://www.youtube.com/watch?v=1guZfD0tBts

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References Pearson, C., & Mitroff, I. (1993). From crisis prone to crisis

prepared: a framework for crisis management. The academy of management executive, 7(1), 48–59. Retrieved from http://www.jstor.org/stable/4165107

Co, V. S. (2004). Crisis and Opportunities THOUGHTS AND LESSONS, (January). Retrieved from http://scholar.google.com/scholar?hl=en&btnG=Search&q=intitle:Crisis+and+Opportunities+THOUGHTS+AND+LESSONS#9

Mead, S. (2001). Crisis as an Opportunity for Growth and Change, (September), 1–3.

Get up to speed presentation price waterhouse cooper retrieved from https://www.pwc.com/en_GX/gx/consulting-services/pdfs/get_up_to_speed.pdf

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References continuedBraden, V., Cooper, I., & Klingele, M. (2005).

Crisis--A Leadership Opportunity. Retrieved from http://oai.dtic.mil/oai/oai?verb=getRecord&metadataPrefix=html&identifier=ADA477120

Liker, J., & Orden, T. (2011). Toyota under fire: Lessons for turning crisis into opportunity. Retrieved from http://scholar.google.com/scholar?hl=en&btnG=Search&q=intitle:UNDER+FIRE+LESSONS+FOR+TURNING+CRISIS+INTO+OPPORTUNITY#0

http://www.openspaceworld.com/waveriders.htm

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Thank you for your attention!

Any questions?