Crisis and Opportunity

1. Virtual organizations in a dynamic context Toon Abcouwer & Bas Parson Crisis and Opportunity Thrasyvoulos Loukas (Akis), Eleni Thalassinou, Tobias Lensker, Martin Dimmler, Tobias Friedrich

2. Agenda • Crises: opportunities for change • Real life examples • How can it be done? Lessons from the theory • Translationin terms of the adaptive cycle model

3. 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

4. Some etymology The word crisis comes from the Greek “κρίσις”, meaning “choice” or “decision.” Only two options: either we remain inert and lament our sad fate when crises eventually overtake us orwe mobilize our resources, change, become creative, and make decisions

5. The value of innovation http://www.youtube.com/watch?v=BpZt_ar_8IM

6. The old school approach • Seek golden recipes • Avoid crisis – Even deny its existence! • Secure stability • Ignore threats - tunnel vision • Ostrich algorithm in action • Crisis management in a static way • Crisis descriptors inappropriately focusing on: • Homeostasis, • Equilibrium, • And, static developmental notions of crises…

7. But is denial really an option? http://www.youtube.com/watch?v=juLcLxVoOac

8. New ways of thinking Swift in the way we view crisis. Acknowledging the inevitability of crisis step towards the right direction. Next step: find opportunity in crisis It has been done in the past. …Opportunities within crisis, real life examples.

9. Crisis at a national level Argentine economic crisis 1999 By 2002 GDP growth had returned, surprising economists and the business media. Military dictatorship’s legacy  severe economic problems Hyperinflation, corruption, riots Crisis as a chance for change Wealth redistribution Emerge of cooperatives

10. 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.

11. “Never waste a good crisis” Rahm Emanuel, Mr. Obama's former chief of staff http://www.youtube.com/watch?v=_mzcbXi1Tkk

12. Crisis as an opportunity for a local business 1993: Jack in the box restaurants – USA’s fifth largest hamburger chain. Bacteria epidemic kills 4children 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.

13. Crisis as an opportunity for a local business Entire 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.

14. First commercial after the outbreak – mindset shift http://www.youtube.com/watch?v=zGeUl7h5Kcc

15. “The Toyota Way” To see how they made it  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 principles Challenge Kaizen (improvement) GenchiGenbutsu (go and see) Respect Teamwork

16. 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.

17. 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 months Management 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.

18. But is it easy to find opportunity in a crisis? http://www.youtube.com/watch?v=Mw266W5dXpI

19. 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.

20. 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: Acknowledge the crisis Communicate Take control Use the pain for future gain

21. Step 4:Use the pain for future gain See 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.

22. The Bounce model – Sam Cawthorn Crisis: Uncover all the aspects of the problem, try to fix it. Downturn: This is the point of make or break. Crucial time for tough decisions. Bounce: Things will begin to turn around. Most trying time, lowest point of the circle. Opportunities: Time to act; things are looking up and more and more opportunities are coming as you continue to create and innovate. 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.

23. The Bounce model is based on five principles Principle 1 – Crisis Moments Create Opportunity Principle 2 - Focus on causes not symptoms Principle 3 - Holding Hands in Traffic Principle 4 - Bouncing forward not back Principle 5 - Different problem different thinking

24. Crisis management framework - Ian Mitroff 1993

25. Learning - Mitroff • Reflection 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

26. Crisis Types - Mitroff

27. Preventative Actions - Mitroff

28. Archetypal Stakeholders within a crisis - Mitroff

29. Crisis Life-Cycle Model – Harvard 2005

30. Leadership Strategies

31. Crisis as an opportunity for leadership A 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

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

33. So, change is critical but are people willing to change? http://www.youtube.com/watch?v=9qZofcaI5U8

34. Linkage with the Adaptive Cycle of Resilience Crisis can be a chance to realign: Reevaluate what you want Challenge what you can do Rediscover what you need desirable achievable necessary Optimum would be one overlapping circle

35. Linkage with the Adaptive Cycle of Resilience Little space for opportunity Opportunity is high Almost no opportunity Certain room for opportunity 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.

36. 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…

37. 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.”

38. And something to close with: “Crisis is good!” http://www.youtube.com/watch?v=1guZfD0tBts

39. 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

40. References continued Braden, 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

41. Thank you for your attention! Any questions?