Phase 2: Reorganisation

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Phase 2: Reorganisation

Adaptive Cycle - Reorganisation

This phase is connected to the crisis quadrant. The organization is aware of the fact that disruption can no longer be dealt with using the available repertoires of actions. If during the crisis, the management’s basic attitude is uncertainty, the creative powers, which game to fruition within the organization, will create a situation where the future can be looked at with a nucleus of confidence. The moment when the basis attitude of fear for the future and searching for new alternatives is altered towards confidence in the future marks the transition form quadrant 2 to quadrant 3. This transition cannot be identified univocally either.

Once again, this involves a Gestalt swith that creates new insights into the current situation. This new insights involves that the organization sees new futures that could be chosen. This leads to an optimistic and hopeful look towards the future. In this respect, the strategic view on innovation may change by collaborating with others across the border of the organization: open innovation. In this new situation, the potential for coping with the new is developed but there is no solidarity yet because one has not chosen which opportunity from the various options will be utilized. Because this should enable a far reaching restructuring of the organization, Holling labels this phase with the term reorganization.

Reorganization

Today’s organizations are confronted with rapidly changing markets, under these conditions traditional approaches and analytical planning methods are considered to be insufficient. The Reorganisation quadrant represents choice, what to choose – looking for new combinations, solutions and testing possibilities through:

  • Pilots
  • Shareholders
  • Venture capital activities
  • Management buy outs/
  • Sell off auxiliary businesses


In Fast Lane’s case, they are looking at combining their own operations with the international operations. They are also looking at optimising premises by moving to smaller premises which would mean reorganising their operations. Technology plays an important role in this phase. Certain technologies can be used to facilitate chooses, new combinations, solutions and testing. Examples of such technologies are:

  • Social Network Analysers
  • Data Mining
  • Data warehousing
  • Analysis


These technologies will make it possible to profile customers and to use predictive modelling to predict certain behaviour of customers. It more or less identifies customers although face to face will continue to to be an effective means to communicate amongst customers. But also technologies as a Business Plan Analysis, Decision Support System, Financial viabilities and Strategy forming can be used in this phase. These computerised information systems can support businesses and the organizational decisions making activities. These interactive software based systems are intended to help decision makers by identifying problems and aid in decision making in the reorganization phase. Such systems extend the capabilities of a manager by supplementing judgement and experience. Using a combination of these machine learning, statistical analysis, modelling techniques and even data technology helps finds patterns and relationships in data that allows the prediction of future results.

Revolt

Within searching for new combinations / reorganization:
Two levels of a panarchy are illustrated to show the two connections that are critical in creating and sustaining adaptive capability.
Different levels interact, you can view a system on different scales or levels (leave, tree, forest, landscape / person, team, project, organization, society).
“Revolt" – occurs when fast, small events overwhelm large, slow ones.

Example: “As when a small fire in a forest spreads to the clown of trees, then to another patch, eventually burning down the whole forest”.
These Triggers - affects both larger and smaller scale systems within the adaptive cycle, it denotes the destabilising factor from one scale to another.

Examples:
1. Forces of rebellion against order (way things are done /procedures & policies), People are also not satisfied with established processes; people are in the process of losing their jobs. People are tired of what the bosses do, new ideas develop and new leaders are born. The existing order is changed. (Strike action).
2.Within a project one can think about an individual getting demotivated about a procedure (revolt). Almost sabotaging the process. This process has an effect on the department and could cascade to the organisational level.

If we connect these concepts with the adaptive cycle introduced, we can see that the larger scales will have slow cycles that can span a large time frame, and the lower levels have short, fast cycles. Although these levels can interact in a lot of ways, Panarchy focuses on “revolt” and “remember” as explained. It may cause a critical change in one cycle to cascade up to a vulnerable stage in a larger and slower one. In reorganizing, these triggers impact change on various levels.

In reorganizing, these triggers impacts change on various levels.

Examples of this sequence are:
1. For institutions: Those speeds might be operational rules, collective choice rules, and constitutional rules. We see that the education system or curriculum is changing. It is all about distance learning, MIT or LTU and Tele-presence.
2. For economies:They might be individual preferences, markets, and social institutions. The forces of globalisation and outsourcing has impacted these to a greater extent.
3. For developing nations: They might be markets, infrastructure, and governance
4. For societies: They might be allocation mechanisms, norms, and myths. Some groups may oppose to certain work process. Such a change occurred in New Brunswick, Canada when a few small groups opposed to spraying insecticide over the forest were able to transform this region’s vulnerable forest management policies and practices.
5. For knowledge systems: They might be local knowledge, management practice, and world view.

The Arab Spring/ Revolution

The Arab Spring/ Revolution

Political and technological changes have a history of going hand in hand. Technology empowers individuals to overcome their isolation and connect to share ideas, information, hopes, and dreams. The most recent phenomenon in this long history (which dates back at least as far as the Gutenberg printing press) is the Arab revolt that has swept the Middle East since last December, brought on by a generation of cell phone and social media users. How to deal with this phenomenon—and how to help steer it toward a pro-democratic outcome—are challenges for policymakers here. And the question of how to control it is more difficult for autocratic rulers in the Middle East (Dale, H. 2011)[1].

The “Arab Spring” is only the most visible example of the impact of technology and social media on policymaking, social movements, and protest. Globally. This means that the potential for revolts similar to the Arab Spring exists far beyond the Middle East. The popular revolts in Egypt, Tunisia, and Libya have been called a “Facebook revolution,” but mobile telephony has played an equal or dominant role in Syria in circumventing news blackouts and censorship. A societal version of small, fast events that occurred is the Arab Spring. Local activists succeeded in their efforts to transform regional organizations and institutions, because the latter have become broadly vulnerable. (They were able to transform the government.)

Technology such as the internet providing global connectivity was the vehicle for mobilizing youth and communicating their message beyond the Arab boarders. Social media and mobile telephony has facilitated and accelerated this transformational change Communication technologies: Mobile and digital technology is changing parts of the world where communication infrastructure has hindered economic growth. The developing world accounts for two-thirds of cell users worldwide.

Role of Technology cooperation

Role of Technology cooperation

Technology cooperation goes beyond just that!!! It is more than how we communicate. It takes on many different forms. These range from highly structured, formal to technology transfer contracts to less formal types of cooperative agreements (patents, computer software technical services and assistance. In developing countries technology cooperation is key to sustainable development.

1. Technology Transfer
From those who have to those who need, or, from those who know to those who need/want to know.

The recipients :An enabling environment.

Government actions can transform conditions under which Technology cooperation takes place. Sounds economic and regulatory frameworks, transparency and political stability can make a country a more attractive option for both public and private sector technology and cooperation.

(For example no one will be investing in an unstable country).

Technology provider: Generating acceptance and understanding
Acceptance and understanding should be generating at the local user level. At 1st basic explanations should be communicated as to ‘why” a technology should be adopted. This is important to reduce initial resistance as well as generate buy in. Establishing clear benefits from a project is vital for generating initial acceptance and maintaining enthusiasm & commitment.

Example: finding project partners & engaging capacity building participants requires the clear conveyance of economic benefits. (It may also be essential to provide appropriate incentives in addition to knowledge and skills.)

2. Technology cooperation

Requires all cooperating parties to gain from the cooperation. Building partnerships between those who have the technology and those we need it, is likely to be more effective when both parties have a vested interest into the success of the project and the continuing operation. Technology cooperation can be enhanced via business to business partnerships, as in the case of Fast Lane. Such cooperation is thought to be most successful in a commercial setting that involves beneficial cooperation bet two companies. In addition cooperation with research institutions, local and national governments, NGO’s and inter-governmental organisations strengthens the adaptation, diffusions and sustainable use of new technologies. A commitment from all parties is vital for the successful implementation & sustainability. In Fast Lane’s case, their training provisions are technology based and are provided through a global platform. The outcome of the training provided by them is that participants should obtain their international certifications which are recognised by most companies around the globe.

3. Capacity building;

Technological hardware is insufficient on its own, Software is equally important to the successful diffusion of technology. For the development of industrial Technological capabilities and economic, it is vital that a transfer of knowledge and skills accompanies physical technologies.

4. Sustainable development

Particular emphasis was on sustainable development. Development that involves building up an infrastructure, wealth generating capacity and competitiveness of an organisation and a country is important.

Reorganization Example 1 – DaimlerChrysler: Sisal Fiber project -South Africa

In search of new combinations /possibilities: DaimlerChrysler: capitalised on the opportunity for growth through technology cooperation. The objective of the technology transfer & Cooperation was a project to set up an entire process chain based on the use of sisal fibres. This project included the farming of sisal, processing of the fibres, manufacturing of the components and the release to Mercedes-Benz plant of Daimler C. South Africa. DaimlerChrysler then sent a technical team down to South Africa to help set up the new manufacturing plant.

One of the companies processed the raw material (Sisal). The other did the production and the assembling of the sisal items. The 1st locally produced sisal items were released into Mercedes Benz C class vehicle in 2001. It makes up 75 % of the material in Mercedes Benz C class rear shelf. These are only two local firms that have benefited from the technology transfer. Sustainability was not limited to the 30 new jobs in the processing and manufacturing plants nor to just the stabilization in jobs in farms.

This has lead to more and more automobile manufacturers using natural fibres and hence the demand for sisal continues to grow. In 1995 South Africa exported no vehicles and in 2000 they exported 100,000. Thus in 2010 - South Africa sold $1.8 billion worth of cars to the US, putting them ahead of Sweden and Italy as suppliers to the US market then in 2011 - 460,000 units.

Relation to adaptive phase of reorganisation could be that DaimlerChrysler.

  • Saw this as an investment opportunity, venture it capital activities to expand globally.
  • Aimed at improving quality, a move to environmental friendly materials.
  • Cut costs by increasing local content in vehicles as opposed to importing materials.



Reorganization Example 2: Kodak Files for Chapter 11 (Jan 2012)[2]

1. What do we remember Kodak for? I guess everyone has their own memories captured on some “photo”

2. So has any heard about the Chapter 11 bankruptcy?

It is code used under the American government to allow organisations to file for chapter 11. The objective in a Chapter 11 case is to adjust and reorganize a debtor's obligations so as to allow the business to continue. Once the case has begun, the debtor (organisation) remains in possession of his property, develops a plan, and generates funds to pay his debts. Kodak was remembered for its film and photography, once the leaders the company filed to adjust to the digital revolution that affected the industry it dominated. Some of their smaller subsidiaries also filed for chapter 11 business reorganisation in New York.

Kodak wants to build smaller but profitable company, they did not catch the transition . They moved from film to digital enough but missed out on grounds against their Japanese competitors. The business reorganisation is intended to monetized non strategic intellectual property and resolved legacy liabilities and enable the company to focus on its valuable business lines. To continue its business operations during this bankruptcy process Kodak has obtained US 950 million from citigroup.

They plan to use this money to pay employees wages and benefits and continue serving of its customers. Kodak is taking this Chapter 11 to reorganise their business model to focus on two successful products.
1. Digital capture patents used in devices that capture digital images generating over 3billion US in licensing revenues since 2003.
2. Printing and deposition technologies.

How could technology facilitate experimentation?

An important process that takes place in the new combinations phase is the experimentation process. In the new combinations quadrant, the organization needs to make a selection from the available new opportunities that it wants to continue with. Snowden (2007 describes this via the Probe–Sense–Respond process approach. First you probe your activity, then sense the reactions and react based on the reactions by stabilizing or destabilizing the probes. A couple of ways in which technology could support this experimentation process are described below.

Virtually testing the effects of the experiment/pilots/probes by simulation

Testing of new products, services, systems etc. before actually building them could be facilitated by simulation or expert systems. An example of this is: Application of simulation software to test new processes, products etc. (E.g. Flexsim, example video on simulation)

The Internet, being the backbone of the Global Village, makes collaboration between institutes conducive to experimentation. For educational institutions to set up interactive virtual classroom environments, quality-of-service (qos) needs to be enabled on Internet devices such as routers and switches, giving high priority to real-time video and audio demands. It was for this reason that Universities set up the high-speed research networks such as GÉANT and others. In South Africa, the Tertiary Education and Research Network (TENET) provides the higher education institutes with the backbone network. However, the challenge of providing qualified staff to set up quality-of-service remains a requirement and it was with this idea in mind that the advanced network educational laboratory was set up (Heyer & Martin, 2004)[3].



Supporting the process of (rapidly) creating new products, services, business processes, systems etc. (could also be creating new technology itself) (Roberts et al, 2010; Ciborra 1996) [4]
Technology facilitating experimentation in building new information systems

Prototyping would be an example of an approach facilitated by technology to rapidly create new information systems. In general software engineering, numerous common prototyping tools and methodologies have been developed (Freiberg et al, 2012)[5]. A prototyping tool could be a software toolkit to quickly construct a (part) of a system in order to quickly discover flaws, sense the response, have something to help with communication with different stakeholders etc. The emphasis of this approach should be on evaluation.

Facilitating Internal and external reflexivity can be supported (and increased) by technology. (Roberts et al, 2010)
Technology could also increase internal and external reflexivity (Roberts et al., 2010). This can be done by focusing on measuring the outcomes of the probes and incorporate the lessons into the organization. This means integrating feedback from both internal and external stakeholders (e.g. a set of users or customers).

Examples are:

  • Google Online Services
  • Or applied to a more traditional setting: A fast-food company uses IT systems and analytics at test sites to gauge the impact of new menu choices on revenue, operations, customer experience.

Incorporating the mentioned technological support to experimentation would require the right set of technical capabilities, close collaboration between business and IT teams and a flexible IT environment.

References

  1. Dale, H. 2011. New Technology and the Arab Revolt. [Online]. Available: http://blog.heritage.org/2011/10/04/new-technology-and-the-arab-revolt/
  2. Nguyen, A. 2012. Kodak files for Chapter 11 bankruptcy, under reorganisation [Online]. Available: http://womstech.com/2012/01/19/kodak-files-for-chapter-11-bankruptcy-under-reorganisation/.
  3. Heyer, AB & Martin, DH. 2004. Anyone for IPv6? [Online]. Available: http://www.tenet.ac.za/about-us/tenet-documents-and-publications/publications/IPv6%20in%20South%20Africa.pdf/view
  4. Roberts, R., Sarrazin, H., and Sikes, J. "Reshaping IT management in turbulent times," McKinsey Quarterly (2010:December) 2010.
  5. Freiberg, M , Striffler, A, Puppe, F, 2012, "Extensible Prototyping for pragmatic engineering of knowledge-based systems" Expert Systems with Applications 39 (2012) 10177–10190

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