Crisis and Opportunity
The slides used during the presentation are uploaded in the wiki and are available HERE (.ppt file)
- 1 Wise men said…
- 2 Some etymology
- 3 The old school approach
- 4 New ways of thinking
- 5 Real Life Examples
- 6 How can it be done?
- 7 Linkage with the Adaptive Cycle of Resilience
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."
"The pessimist sees difficulty in every opportunity. The optimist sees opportunity in every difficulty."
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
OR we mobilize our resources, change, become creative, and make decisions.
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…
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, so it can be done in the future as well.
Real Life Examples
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
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.
Crisis as an opportunity for a local business
- 1993: 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.
“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.
- Kaizen (improvement)
- Genchi Genbutsu (go and see)
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.
France 1999 – The BNF case
Bibliothèque 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.
How can it be done?
- 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.
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.
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
Crisis management framework - Ian Mitroff 1993
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
Crisis Life-Cycle Model – Harvard 2005
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
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
- 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.
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.
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.