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What theory can be found to underpin the inevitability of a crisis?

Group 3:Perry TrienekensBram BoermanJanine JaquetKenny EnsinkDaan Verkaik

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Contents of this lecture

Crisis in all its forms Chaos theory Icarus paradox Black Swan Disruptive innovation Business Case: Municipality of Amsterdam Thomas Kilmann Test

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Crisis in all its forms

What is 'crisis'?

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Crisis in all its forms

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Crisis in all its forms

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Crisis in all its forms

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Crisis in all its forms

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"Communication, organization, and crisis" Seeger, M. W. et al.; (1998)

Crisis in all its forms

Defining characteristics of crisis: 1. unexpected (i.e., a surprise) 2. creates uncertainty 3. is seen as a threat to important goals 4. need for change

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'Understanding the Complexity of Economic, Ecological, and Social Systems', Holling (2001)

Crisis in all its forms

Three properties shape the future of a system: 1. Inherent potential 2. Internal controllability 3. Adaptive capacity

"Surprise and structural change are inevitable in systems of people and nature." p. 391

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MSc BIS'De logica van chaos in veranderingsprocessen' (the logic of chaos in change processes), Zuijderhout, Wobben, ten Have, Busato (2002)

Chaos Theory Chaos theory suggests that sometimes you

can't manage change. That you have to let go.

When a system or organization builds up energy it gets complexer. In the end the complexity will bring forth chaos.

However the system will bring order to itself if it gets the chance.

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Chaos Theory

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Chaos Theory

Outcomes from the chaos:

1. The tension fadesWe go back to the old way of working.2. A new orderA new way of working is gets implemented and then refined.3. RecessionThe old order is rejected by the organization, but there isn't a new order.

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Chaos Theory

Stuck in chaos?

There are three things you need to get out.1. The pressure to change.2. Elements that can't stay the same.3. New options.

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'The Icarus Paradox: How exceptional companies bring about their own downfall' , Danny Miller (1992)

Icarus paradox Successful organizations are prone to failure. Working strategies get supported and

integrated into processes. Company starts to lose sight of other ideas. Same goes for people. They found 4 main tracks that a company/

person can follow.

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Icarus paradoxCraftsman -> tinkererA focus on high quality products turns into an obsession with small unimportant details.

Builder -> ImperialistA smart mind that knows how to expands starts expanding without reason.

Pioneer -> EscapistThe thirst for being the first turns into blindly choosing the latest technology.

Salesman -> DrifterGreat marketing turns into bland all the same sales pitch where the product doesn't matter.

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Icarus paradox

The momentum a company builds comes from a couple of sources.

1. Leadership traps2. Current culture and skills3. Power and politics4. Memories

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Icarus paradox

The paradox has two sides1. Success can lead to failure.2. The things that can make you succeed can also make you fail.

Can we combat the paradox?Reflection and keep monitoring the situation.

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'The black swan: The impact of the highly improbable' , Nassim Taleb (2010)

The Black Swan

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

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The Black Swan

They are hard to predict They have a big impact/consequence Not able to predict beforehand but "obvious"

after it happened.

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The Black Swan

Why is it hard to see a Black Swan coming? We are looking for patterns and predictability

Enterprise Risk Management (ERM) Focus on the White Swans

Blind for coincidence and let us run opportunities…

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The Spectrum of Variability

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Different kind of crisises

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Coping with Black Swan events

Need to learn to be able to deal with them. Don’t try to predict them.

Investing in resilience Building in redundancy Organization not operating ‘on the edge’ Focus on positive ones

Prepare for the impact

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Disruptive Innovation

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Disruptive Innovation

Established Companies Traditional view

Customer needs

Technology changes Not radically new

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Disruptive Innovation

Technological Innovations

Sustaining technologies Maintain Rate of improvement

Disruptive technologies Different package

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Disruptive Innovation

How to spot & cultivate Disruptive Technology?

Determine Disruptive / Sustaining Locate initial market

Customers Experimenting rapidly, iteratively and

inexpensively with both product & market

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Disruptive Innovation

How to spot & cultivate Disruptive Technology? Strategic Significance

Plotting product performance in a graph

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Disruptive Innovation

Spot & cultivate Disruptive Technology

Responsibility for building disruptive technology

Keep disruptive organization independent

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Disruptive Innovation

Enabling Disruptive Innovation

Internal HR Organisation Structure

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Disruptive Innovation

Enabling Disruptive Innovation

Context

Customer

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