Phase 1: Release
Phase 1: Release
Release describes the movement from quadrant 1, equilibrium, to quadrant 2, crisis. In the equilibrium quadrant, the cause/effect relationships are known. The company is making profit, the managers are satisfied and nothing needs to be changed. There is a pursuit for efficiency and preservation and improvement of the market position. The equilibrium should not be disturbed. This phase can be described as a business in a usual phase where any improvements take place within the existing objectives and the prevailing business model.
Thus, at any moment there might be an external influence that can disturb this equilibrium or even a black swan. In this case, the company immediately moves from the equilibrium phase to a crisis. Within this pace, the existing management cannot be under control. As soon as the organization becomes aware of this, its confidence will change to insecurity. A so called Gestalt switch occurs, from confidence to insecurity, which cannot be explained by the actual events. Therefore, the point that marks the crisis coming into being is based mainly based on perception.
At this stage there is a double identity. One the one hand, the crisis may arise from fear of the unknown; on the other hand, it may also be result in a desire for a new future. This creates a situation that results in a lack of connection to the old but that also does not as yet have a potential answer for the new. Holling describes this phase a the release phase, a release to transition. This means that essential changes are required. This may be changes in the shape of new management, the search for new markets, entering into new relationships, coalitions, mergers, and so on. In other words it is time for looking for alternatives and a change of behavior. In the case of Fast Lane, about a year ago, they formed an international organization with different independent companies in six countries, trying to build one big international company, but still keep the companies independent. What they actually had to do is to build new processes where all the existing other processes fit in. Furthermore,it is also necessary to align the enabling technologies with the membership needs and support (new) processes. In Fast Lane the technology that is being used is Cisco’s Telepresence and WebEx suites. Telepresence allows an instructor to present remotely and share their desktop. The instructor also has live interaction with the students in the remote classroom. With Cisco’s WebEx tool, the students could even partake in the class from home. What is more in this phase, the resilience of an organization is low, but is increasing. Resilience is originally referred to a material's ability to be both elastic and shock resistant. In our case, resilience implies the ability of the company to get up again after a shock or disturbance and to develop new capabilities specific to the organisation. An organisation's resilience involves systematic evaluation and transparent management of a crisis. As far as our case study company is concerned, they already exist seven years and although they now have a larger staff compliment and it has become more difficult to be flexible and handle change, they still manage well. This makes their company more resilient to changes.
In sum, the release phase is a period of decline and destruction, and people are looking for alternatives and change of behavior.
A crisis has occurred, but what can initially cause a crisis?
A crisis can be caused by several elements, as for example weather or natural effects, workflows, changes in policies/placements and/or the economy of a country (for instance the Greece crisis).
- Weather or natural effects: This can include such inclement weather as tornados, hurricanes, earthquakes, flooding, etc. Those effects can be from just disturbing (e.g. when a tree falls in a roof) to completely disasterous (e.g. Hurricane). When Hurricane Katrina happened, for instance, there were lots of businesses that had to shut down for a long time as they were completely destroyed. The Hard Rock Hotel and Casino Biloxi,for example,a casino and resort located in Biloxi, Mississippi was constructed in 2005 and originally scheduled to open on September 1 of that year. However, a couple of days before the scheduled grand opening, Hurricane Katrina struck the Gulf Coast, destroying the casino and damaging the resort. Eventually, it only managed to open two years after, in 30th June, 2007.
- Work flow: When a business loses certain key characteristics mainly basing on them. Such characteristics can be a vital employee, a main supplier or a sales vendor. Fast Lane has already been in that position as one of their best support employees got an opportunity to do a consulting job and although they gave him this possibility they were not able to fill in the gap. They also had to change their registration system They initially used to have a registration system that they built themselves, and now they have to use an international system which is not so user friendly as the previous one as is not built according to the needs of the situation they have in the Netherlands.
- Changes in policies / placement: It is easy for people to get confused when there are any changes in policies or placements. According to the NetApp Business Manager at Fast Lane Benelux, Kees Boot, Although they are refining their strategy every year, they still manage to have a clear division of roles so that there is no confusion between the employees.
- A country's economy: It is really unavoidable for a business to resist the changes of the economy of the country it exists in. A very good example is almost every business nowadays in Greece. People do not have to read newspapers or watch to the news in order to understand the bad consequences of their country's poor economy in businesses. Only a simple walk on the streets is enough to notice that the shops are shutting down one after another and those that are still resisting have always "special offers" or sales.
Video ‘Economy of Greece”: http://www.youtube.com/watch?v=7inY3k8y4d0
Types of Crisis
Several elements can cause a crisis, but there are also several types of crisis. The appreciate the depth of preparation needed, executives should examine their crisis capabilities in:
- Technical systems: Its components include those mechanisms that organise a company's work or specific tasks and the materials and equipment necessary to support task completion. The availability and condition of tools and equipment and the existence of any alarms and shut down mechanisms should be taken seriously into account.
- Human factor systems: The machinery should be appropriately designed to fit user needs. What is more, managers should also consider the user's cognitive and emotional limitations as, especially in a case of crisis, workers' behavior can be really unexpected. For Fast Lane, it is extremely important to have both well defined procedures and also flexibility to act when things go wrong. When something unexpected happens, or when operations people think they can act differently in order to achieve a better result, they are free to do so and they have the responsibility to do their job well.
- Infrastructural systems: There must be open and effective communication channels among levels and across divisions. In addition, the job descriptions which specify who is accountable for supporting crisis management activities and reporting bad news. In Fast Lane, for instance, everyone is aware of his or hers own tasks so that no employee is getting confused and their are free to take their own decisions if they think they can achieve a better result. Last but not least, permanent crisis management teams must be established in addition to contraventional infrastructure systems.
- Cultural systems: These include safety practices and attitudes towards messengers of bad news.
- Emotional / Belief systems
Phases of crisis management
- Signal detection: In order to phase and overcome a problem an organisation must identify it timely. There are a lot of technologies nowadays that can help enterprises to find out the problems internally and externally. These technologies could be, for instance, InnoCentive, Web crawlers or other internal information channels. In Fast Lane, they rely on people to signal when things go wrong. What is more, in order to support internal and external communication, instant messaging software is being used; also TelePresence software (Skype and WebEx) is being used.
- Preparation / prevention: Most managers adopt the belief "If it ain't broke, don't fix it". Thus, if we do not fix the problem at the beginning, it will maybe too late afterwards.
- Containment / Damage Limitation: Sometimes, even the organisation works perfectly, some damages, inevitably happen. In this case, managers have to at least try to limit the damages as much as they can by avoiding to let the bad consequences affect those parts of the businesses that are not infected yet. In order to achieve this, there must be some evacuation plans or neutralise product spills.
- Recovery: What is important in this phase, is to have some short-term and long-term business recovery plans and data back-ups.
- Learning: This is the most important phase of a crisis management, as if the managers do not learn from the whole process, they will repeat the same mistakes. What Kees Boot always tries to say to people is that they can do everything wrong, but only one time!.They have a culture where they try to learn immediately from the things that go wrong, making it easy to plan for changes in the future.
Example video on Communication: http://www.youtube.com/watch?v=NNKmSbaTKS0
Role of Technology in the Release phase? And why?
This phase can be facilitated through the use of technology. Technology can facilitate both internal and external cooperation. Examples of technologies which can be used during this phase:
- Video Conferencing
- Social Media
- Wiki, Blogs, etc.
- Cloud Computing
- Software for blind people (Jaws, etc)
- Cisco's Telepresence
- WebEx Suites.
A survey conducted by McKinsey among 3103 companies shows that companies use social technologies to scan the external environment and to look for new ideas. 
Social network analysis
Another example of a method supported by technology that could be useful in this phase we think is social network analysis. An example of how social network analysis could be used in the release phase is given below.
An organization can be seen as a network of actors. This network of actors can be analyzed to test the current state of the network. The analysis of the network can be done by inquiring who people collaborate with, or by conducting personality tests like spiral dynamics. The analysis of a network can be supported by electronic questionnaires or social network analysis software (if this is used in an organization). When there is a clear view of the current situation of the network, then it will be possible to change patterns of the network. This can be done with the aim to improve knowledge transfer to create a more exploration focused network and increase innovation. We think that technologies (e.g. knowledge management technologies or social technologies) could have a big role in changing the patterns of a network.
Example video of Social Media & Crisis Management: http://www.youtube.com/watch?v=aMUPaDBXqlk
- Bughin, J . "Wiring the open-source enterprise," McKinsey Quarterly (2012:January) 2012.
Back to student lecture of Group 4