MSc HCM MSc BIS 1 What theory can be found to underpin the inevitability of a crisis? Group 3: Perry Trienekens Bram Boerman Janine Jaquet Kenny Ensink Daan Verkaik

MSc HCM MSc BIS 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 2

MSc HCM MSc BIS Crisis in all its forms What is 'crisis'? 3

MSc HCM MSc BIS Crisis in all its forms 4

MSc HCM MSc BIS Crisis in all its forms 5

MSc HCM MSc BIS Crisis in all its forms 6

MSc HCM MSc BIS Crisis in all its forms 7

MSc HCM MSc BIS "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 8

MSc HCM MSc BIS '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

MSc HCM 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. 10

MSc HCM MSc BIS Chaos Theory 11

MSc HCM MSc BIS Chaos Theory Outcomes from the chaos: 1. The tension fades We go back to the old way of working. 2. A new order A new way of working is gets implemented and then refined. 3. Recession The old order is rejected by the organization, but there isn't a new order. 12

MSc HCM MSc BIS 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. 13

MSc HCM MSc BIS '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. 14

MSc HCM MSc BIS Icarus paradox Craftsman -> tinkerer A focus on high quality products turns into an obsession with small unimportant details. Builder -> Imperialist A smart mind that knows how to expands starts expanding without reason. Pioneer -> Escapist The thirst for being the first turns into blindly choosing the latest technology. Salesman -> Drifter Great marketing turns into bland all the same sales pitch where the product doesn't matter. 15

MSc HCM MSc BIS Icarus paradox The momentum a company builds comes from a couple of sources. 1. Leadership traps 2. Current culture and skills 3. Power and politics 4. Memories 16

MSc HCM MSc BIS Icarus paradox The paradox has two sides 1. 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. 17

MSc HCM MSc BIS 'The black swan: The impact of the highly improbable', Nassim Taleb (2010) The Black Swan 18 BA

MSc HCM MSc BIS The Black Swan They are hard to predict They have a big impact/consequence Not able to predict beforehand but "obvious" after it happened. 19

MSc HCM MSc BIS 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… 20

MSc HCM MSc BIS The Spectrum of Variability 21 Different kind of crisises

MSc HCM MSc BIS 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 22

MSc HCM MSc BIS 23 Disruptive Innovation

MSc HCM MSc BIS Disruptive Innovation Established Companies  Traditional view  Customer needs Technology changes  Not radically new 24

MSc HCM MSc BIS Disruptive Innovation Technological Innovations  Sustaining technologies  Maintain Rate of improvement  Disruptive technologies  Different package 25

MSc HCM MSc BIS 26

MSc HCM MSc BIS Disruptive Innovation How to spot & cultivate Disruptive Technology? Determine Disruptive / Sustaining Locate initial market  Customers  Experimenting rapidly, iteratively and inexpensively with both product & market 27

MSc HCM MSc BIS Disruptive Innovation How to spot & cultivate Disruptive Technology? Strategic Significance  Plotting product performance in a graph 28

MSc HCM MSc BIS Disruptive Innovation Spot & cultivate Disruptive Technology Responsibility for building disruptive technology Keep disruptive organization independent 29

MSc HCM MSc BIS Disruptive Innovation Enabling Disruptive Innovation Internal  HR  Organisation  Structure 30

MSc HCM MSc BIS Disruptive Innovation Enabling Disruptive Innovation Context Customer 31

MSc HCM MSc BIS 32