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Coping with Crisis and Complexity

A complexity science-informed approach to crisis management

Master Thesis Zur Erlangung des akademischen Grades Master of Arts in Business der Fachhochschule FH Campus Wien Masterstudiengang: Risk Management und Corporate Security

Eingereicht von: Ludescher, Aldric F. Personenkennzeichen: c1010645031 Unter der Leitung von: Dr. Andr Gazs Eingereicht am: Wien, 20 September 2013

Coping with Crisis and Complexity

Eidesstattliche Erklrung

Eidesstattliche Erklrung:
Ich erklre, dass die vorliegende Arbeit von mir selbst verfasst wurde und ich keine anderen als die angefhrten Behelfe verwendet bzw. mich auch sonst keiner unerlaubter Hilfe bedient habe. Ich versichere, dass ich diese Arbeit bisher weder im In- noch im Ausland (einer Beurteilerin/einem Beurteiler zur Begutachtung) in irgendeiner Form als Prfungsarbeit vorgelegt habe. Weiters versichere ich, dass die von mir eingereichten Exemplare (ausgedruckt und elektronisch) identisch sind.

Ort, Datum: Dubai, 20 September 2013

Unterschrift:

Coping with Crisis and Complexity

Kurzfassung

Kurzfassung
In den meisten wissenschaftlichen Disziplinen spielt der Komplexittsansatz, d.h. die Bercksichtigung von Verbindungen und Beziehungen zwischen beteiligten Elementen, eine immer grere Rolle und ersetzt den vorherrschenden prskriptiven, mechanistischen Ansatz ein System in seine Bestandteile zu zerlegen um Rckschlsse auf das Ganze zu ziehen. Allerdings werden Krisenmanagementsysteme in Organisationen oft nicht unter Bercksichtigung dieser Grundstze erstellt und bieten die Illusion von Kontrolle komplexer Situationen durch detaillierte Anweisungen. Diese Arbeit identifiziert krisenrelevante Komplexittsgrundstze und beschreibt deren Auswirkungen fr das Krisenmanagement. Basierend auf den Grundstzen whrend der Komplexittslehre als werden Netzwerke und

Netzwerkverhalten

Krisensituationen

Modell

fr

erfolgreiches

Krisenmanagement herangezogen und die wichtigsten Eigenschaften solcher Netzwerke und ihre Anwendung fr das Krisenmanagement werden beschrieben. Anhand von drei theoretischen Modellen fr den Umgang mit Komplexitt wird ein einfaches aber praktisches Modell vorgeschlagen, welches es Krisenmanagementteams ermglichen soll Auswirkungen von Ereignissen zu antizipieren, die Komplexitt der Umgebung durch geeignete Modulation der eigenen Komplexitt zu absorbieren, und sich an die sich schnell verndernde Situation durch intelligente Signalerkennung und Interpretation zu adaptieren.

Coping with Crisis and Complexity

Abstract

Abstract
The complex system approach, which involves seeing interconnections and relationships, plays an increasing role in most scientific disciplines and has replaced the previous prescriptive, mechanistic approach of deconstructing a system into its components to understand the whole. However, often crisis management systems in organisations are not built in accordance with these principles and provide the illusion of control of complex situations through detailed instructions. This thesis first identifies crisis-relevant principles from complexity science and describes their implications for crisis management teams. Based on these principles, networks and network behaviours under crisis are used as a model for successful crisis management; the key characteristics of such networks are described and their application for organisational crisis management is outlined. By exploring three theoretical models for coping with complexity, the thesis then proceeds to offer a simple, yet practical, model enabling organisations to anticipate possible impact, absorb the complexity of the environment through adequate modulation of its own complexity, and adapt to the fast-changing situation through intelligent signal detection and interpretation.

Coping with Crisis and Complexity

Key terms

Schlsselbegriffe
Ashby Raum Eingeschrnkte Rationalitt Emergenz Heuristik Komplexe Adaptive Systeme Komplexitt Komplexittslehre Kreative Elemente Krise Krisenkultur Krisenmanagement Netzweke Netzwerkstrukturen Nonlinearitt Risikointelligenz Schwache Signale Schwache Verbindungen Selbstorganisation Signalerkennung Ungewissheit Unvorhersehbarkeit

Coping with Crisis and Complexity

Key terms

Key terms
ashby space bounded rationality complex adaptive systems complexity complexity science creative elements crisis crisis culture crisis management edge of chaos emergence heuristics network topology networks non-linearity risk intelligence scaleability self-organisation self-organised criticality uncertainty unpredictability weak links weak signals

Coping with Crisis and Complexity

Table of Contents

TABLE OF CONTENTS
Introduction ......................................................................................................................... 1 Issues and current state of knowledge ............................................................................... 1 Relevance and innovative character of this thesis .............................................................. 2 Objectives for this thesis .................................................................................................... 3 Methodology and structure of the thesis............................................................................. 5 Literature review ............................................................................................................. 5 Empirical study ............................................................................................................... 5 Limitations and constraints................................................................................................. 6 1. Organisations, Crisis and Complexity ........................................................................ 8 1.1. 1.2. Organisations as complex systems ......................................................................... 8 Crisis ......................................................................................................................10

1.2.1. Why crises occur ...............................................................................................13 1.2.2. Expert survey The state of crisis management ...............................................14 1.3. Complexity theories, complex systems and networks .............................................19

1.3.1. Complex Adaptive Systems ..............................................................................20 1.3.2. Principles of complex systems ..........................................................................22 1.3.3. Why networks matter ........................................................................................37 2. Coping with complexity ..............................................................................................54 2.1. Moving in the Ashby Space - response options to external stimuli in complex

environments ....................................................................................................................54 2.2. 2.3. 3. Bounded Rationality ...............................................................................................60 Fast and frugal heuristics for dealing with complexity in crisis ................................63

Rethinking Crisis Management from a complexity perspective ..............................68 3.1. Organisation and structure .....................................................................................68

3.1.1. Distributed control .............................................................................................68 7

Coping with Crisis and Complexity

Table of Contents

3.1.2. Enabling conditions for self-organisation ...........................................................70 3.1.3. Diversity and leadership ....................................................................................71 3.2. Information gathering and decision making ............................................................72

3.2.1. Internal context .................................................................................................72 3.2.2. External context ................................................................................................73 3.2.3. Impact and Triggers ..........................................................................................74 3.2.4. Response options .............................................................................................75 3.2.5. Communication .................................................................................................75 3.2.6. Review ..............................................................................................................75 4 Conclusions for Crisis Management in complex environments ..............................78

Annex A: Expert interviews ...............................................................................................80 Annex B: Expert survey .....................................................................................................91 Annex C: Interview questionnaire .....................................................................................96 List of figures .....................................................................................................................98 List of tables .....................................................................................................................100 List of references 101

Coping with Crisis and Complexity

Introduction

Introduction
Adopting a complexity perspective has important [...] implications with which management researchers and practitioners alike must come to terms [...] and potentially 1 change management education in consequence.

Issues and current state of knowledge


Our current, dominant world view that underpins most mainstream schools of thought in economics, policy-making, management, education and development still centres on the mechanistic idea that the world is objective, measurable, predictable, and controllable, despite almost overwhelming evidence to the contrary.
2

As managers, consultants,

executives and decision makers, our world view tells us that the world functions like a sophisticated machine, to be understood like a textbook engineering problem; in other words, like a home appliance, not like the human body. Our management systems and plans are very much built on the illusion of understandable relations between cause and effect, and, given a sufficient amount of data, being able to predict developments, plan strategically and prepare organisations for crises based on these predictions. According to Taleb, "corporations are in love with the idea of the strategic plan."4 However, there is no evidence that strategic planning works as advocated; indeed, there seems to be evidence against it. William Starbuck has published multiple papers questioning the effectiveness of planning, which, based on his findings, makes the corporation option-blind, becoming locked into a non-opportunistic course of action.
5 3

Nearly 200 years ago, Laplace created his famous demon:


"Given [...] an intelligence which could comprehend all the forces of which nature is animated and the respective situation of the beings who compose it--an intelligence sufficiently vast to submit these data to analysis [...] nothing would be uncertain and the 6 future, the past, would be present to its eyes."

1 2 3 4 5 6

Allen et al. 2011, p. 3 cf. Allen/Boulton 2011, p. 165 cf. Taleb 2012b, pp. C1 Taleb 2012a, p. 234 cf. Taleb 2012a, p. 234 Laplace 1819 ;, p. 248

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Introduction

Although technology and data-processing capabilities increase at an unprecedented pace, we are not capable of such Laplace-esque intelligence and paradoxically, the exponential increase in interconnectivity, communication technology and globalisation in general has led natural scientists, philosophers and management scholars to recognise that:
Conventional theories of management, forged in the era of industrialisation, vertically integrated companies, and relatively impermeable institution borders, can no longer cope with the immensely complex organisations that have emerged during two decades of 7 rising globalisation and decentralisation.

The mechanistic approach to management has strongly influenced the way organisational crisis management has been designed and structured. Within the last twenty years, the discipline of crisis management has emerged as an academic specialisation,8 and this scientific approach to the management of crises encourages a focus on prediction and control that can easily overstate predictability. This detailed planning approach often deliberately oversimplifies the complex: by reducing the uncertainty in the situation to a set of rules and steps, the perceived risk is reduced, and the world is made to appear more controllable.9 However, experience shows that such prepared solutions are unlikely to function in complex and ill-structured counterproductive.
10

crises,

and that

they may,

in fact,

be

Relevance and innovative character of this thesis


Little research has been conducted on crisis management from a complexity perspective. In line with the opinion of various academics, Paraskevas suggests that:
Organisations should redefine the role of crisis management teams. An effective crisis response should be viewed as a living (co-evolving) system within the organisation. By adopting complexity principles the organisation can make this system far more 11 effective.

Furthermore, McGrath states that:

7 8 9

Burstein/Holsapple 2008 cf. Weng 2009, p. 74 cf. Drner 1997 cf. PAS 200/2011 Crisis management, p. 6 Paraskevas 2006, p. 892

10 11

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Introduction

Our analytic tools havent kept up. Collectively, we know a good deal about how to navigate complexity but that knowledge hasnt permeated the thinking of most of 12 todays executives or the business schools that teach tomorrows managers.

By defining a specific management sector (risk management / crisis management) and studying the implications of research findings from complexity sciences for this sector, this thesis represents an innovative approach to crisis management and aims to contribute to a solid foundation for future interdisciplinary academic research in the field of strategic risk management. Innovation in this sector is a necessity, not a luxury and because complex systems have built-in unpredictability, the certainties of the command and control approach to management no longer hold true.13 The implications of complexity theory for organisations are massive. In times of increasing uncertainty and complexity, management theories that specifically address the problems of lack of control and information, and the interconnectivity of stakeholders and environment can support an organisation in rethinking the conservative mechanistic approach to management, enabling it to exploit emerging phenomena of intelligent, self-regulating systems such as efficient self-organisation and dynamic adaptability, thereby providing increased overall resilience and enabling survival of the organisation in complex environments. This thesis follows an interdisciplinary approach, ranging from behavioural science to biology and network science, combining the findings under the umbrella of complexity science. This tactic effectively embraces complexity by providing a large, heterogeneous and diverse pool of input, allowing for a variety of response options to the fundamental question of how to deal with complexity in times of crisis. Some concepts in this thesis constitute a shift in classic, mechanistic management thinking by embracing uncertainty, ambiguity, conflict and error. As a result, the research pushes the boundaries of traditional crisis management theory away from linear predictability and control.

Objectives for this thesis


The primary objective of this thesis is to examine mainstream assumptions about crisis management in the light of a meta-theory of complex systems and set the foundation for a complexity-informed approach to crisis management. This entails changing the prevalent

12 13

Sargut/McGrath 2011, p. 3 Burstein/Holsapple 2008, p. 7

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Coping with Crisis and Complexity

Introduction

perception of crisis management from purely focused on post-impact response to a more integral, multi-disciplinary approach, emphasising the multiple dimensions involved in a crisis. This will enable organisations not only to become robust and resilient to external and internal shocks, but ultimately to benefit from volatility. A complexity-based approach emphasises flexibility over standardised or pre-planned responses to threats. A general consensus amongst scholars and academics calling for a new approach to crisis management is to switch from a mechanical or an architectural to a more biological approach to read, seize, and handle emerging crises.14 Furthermore, this thesis aims to explain highly successful crisis management strategies by assessing systems that can claim long-term efficaciousness. By analysing biological and other complex networks, this thesis offers suggestions on how organisations can draw lessons from the permanent adaptation process of such networks, based on the generalities of these networks properties. As stated by Quill, there [are] universal principles that apply to different networks that scientifically [are] completely unrelated but mathematically [are] following the same architectural principles.15 These common network behaviours could offer exciting insights for management theories and future research. By incorporating empirical expert interviews with individuals in the fields of academia and organisational crisis management, this thesis also aims to describe the extent to which complexity science is already implemented, or at least acknowledged, within risk and crisis management, and consolidate the theoretical findings from complexity science and science of complex networks with the practicalities of crisis management. This is achieved by providing a complexity-informed protocol for anticipation, adaptation and (complexity) absorption during crisis situations. Finally, this thesis highlights areas for further in-depth research in various different disciplines.

14 15

Paraskevas 2006, p. 894 Quill 2012, p. 18

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Introduction

Methodology and structure of the thesis


Literature review
A detailed literature review and comparison of theories and models of complexity was conducted with the aim of creating a baseline understanding of the definitions and principles around complexity. This section also includes a short chapter analysing the definition of a crisis and an overview of the current approach to organisational crisis management. With the general principles of complexity thereby established, close examination of one subdiscipline within the wide field of complexity science will be presented, examining network science and describing how networks behave under crisis. This section is followed by a chapter describing generic models in coping with complexity, focusing on models that are simple and, therefore, potentially transferrable to organisational crisis management.

Empirical study
The empirical section of this thesis consists of a dual-faceted approach. Expert survey Firstly, a survey was conducted to inspect how thoroughly complexity is understood by senior crisis management professionals in commercial organisations, and if conclusions drawn from the theoretical research of this thesis match what can be observed in daily practice. The expert survey was conducted to gauge the implementation and (self-assessed) effectiveness of the organisations crisis management system. As part of a wider invitation-only commercial event on the political, security, and integrity risks in the Middle East region targeting approximately 150 risk, security, and crisis management professionals and decision makers from numerous sectors, including government, NGOs and commercial firms the author conducted a workshop with the title: Crisis Management What The Future Holds. During this workshop, a select group of 34 individuals were surveyed using tablet computers; the results were summarised and presented to the participants at the conclusion of the session. Expert interviews Secondly, three senior crisis experts from different industries and academia were interviewed, focusing on specific past crisis incidents. Taking a quality over quantity Page | 5

Coping with Crisis and Complexity

Introduction

approach, the interviews sought views from three different, relevant angles: from the CEO of an industry-leading company offering crisis management services to global clients; a highly experienced security professional who has been managing crises for his organisation for the past decade; and finally the perspective of one of the few scientists conducting research at the junction of crisis management and complexity. The study used the Critical Incident Technique (CIT),
16

first asking the participants to recall

and describe a crisis they had experienced, and subsequently for their insights on what was learnt from the crisis. The CIT interview was chosen for the following reasons: it allows participants to express their personal views of the described incident;17 it is inductive by nature especially when the topic being investigated has not been well researched;18 it yields a rich data set;
19

and it is culturally neutral, insofar as it invites participants to offer

their own perceptions, rather than respond to researcher-initiated questions.20 The interviews lasted between 50 and 130 minutes and were transcribed verbatim. The relevant findings from the interviews have been embedded into the chapters addressing complexity and coping with complexity, where appropriate. Finally, in section 3 the thesis brings together the various theoretical models and the conclusions of the empirical expert interviews and surveys, concluding with a suggested framework for an enabling and organic model for decision making under crisis and complexity.

Limitations and constraints


In comparison to other disciplines, complexity as a science is still very young and many of the theories about complex systems and complex networks will need to be validated in the coming years. Complexity itself is not something that is easily understood and much less

16

cf. Flanagan 1954, p. 352 cf. Stauss/Weinlich 1997, pp. 3750 cf. Grove/Fisk 1997, pp. 6873 cf. Zeithaml/Bitner 2003, pp. 4555 cf. Ruyter et al. 1995, pp. 177187

17

18

19

20

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Introduction

easily demarcated. In fact, a strict measure for complexity does not seem feasible. To describe a complex system you have, in a certain sense, to repeat the system 21. Hence, no categorisation or metrics of complexity and complex crises will be attempted in this thesis. Furthermore, research design limitations which do not allow broad generalisations need to be taken into consideration. The sample size of the study (n=34 for the expert survey, n=3 for the expert interviews) is very small and includes only executives and academia. By having a wider range of stakeholders the study would produce more perspectives, leading perhaps to richer, more robust findings.

21

Cilliers 1998, p. 10

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1 Organisations, Crisis, and Complexity

1. Organisations, Crisis and Complexity


In this section, the theoretical foundation for a complexity science approach to crisis management will be outlined, assessing accepted theories describing complexity as a phenomenon and its characteristics, complex systems and networks, as well as general models for dealing with complexity.

1.1.

Organisations as complex systems

Highly theoretical explanations about complex systems like biological, virtual, or social networks are a constructive approach to better understand and shape organisations and allow them to cope with the internal and external complexities they face in their environment. In support of this theory, Allen notes that complexity is the science of organisation and in particular its origin and evolution and is therefore the natural framework for considering organisations and connected entities.22 Similar to complex systems, organisations are complex [] they are characterised individuals.23
As executives and scholars recognise [] conventional theories of management, forged in the era of industrialisation, vertically integrated companies, and relatively impermeable institution borders, can no longer cope with the immensely complex organisations that have 24 emerged during two decades of rising globalisation and decentralisation.

by

non-linear

interrelationships

and

interdependencies

among

diverse

However, the implications of this realisation have not yet fully translated to management systems, especially when it comes to risk, crisis, and security management.25 A common theme in the literature reviewed for this thesis is that organisations are systems with social and technical dimensions that are complex and interdependent and, hence, need to be dealt with as complex, even biological or living systems.26 Taleb compares organisations directly with living systems by stating that:

22 23 24 25

Allen et al. 2011, pp. 34 Hazy 2011, p. 525 Burstein/Holsapple 2008 cf. Ludescher 26/06/2013, p. 12 cf. PAS 200/2011 Crisis management September 2011, p. 9

26

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Many things such as society, econom ic activities and markets, and cultural behaviour are apparently man-made but grow on their own to reach some kind of self-organisation. They may not be strictly biological, but they resemble the biological in that, in a way, they multiply 27 and replicate - think of rumours, ideas, technologies, and businesses.

Rational organisational design, based on mechanistic rules and predictions, do not apply in a complexity-filled environment, where we not only find complex systems and networks, but complex systems interacting with other complex systems, creating an additional layer of complexity. In fact, researchers have recognised that its not enough to know how isolated networks work; studying how networks interact with one another is just as important.
28

In mechanistic and deterministic management systems, the standard approach to problem solving is to: identify the cause of the problem, change it, and the problem goes away.29 As Sterman describes:
People generally adopt an event-based, open-loop view of causality, ignore feedback processes, fail to appreciate time delays between action and response and the reporting of information, do not understand stocks and flows, and are insensitive to non-linearities that 30 may alter the strengths of different feedback loops as a system evolves.

Several studies referred to by Sterman in his research indicate that when people tried to control a dynamically complex system their attempts were counterproductive. Even more thoughtprovoking is the fact that often their results were bested by a do-nothing rule31 or very simple heuristics (see Table 1: Performance of two fast and frugal heuristics and two linear strategies This difficulty to apply the rule of cause and effect is what Taleb calls causal opacity: it is hard to see the arrow from cause to consequence, making many of the conventional methods, in addition to standard logic, inapplicable.32 As Battram explains, one of the most important characteristics of complex non-linear systems is that they cannot, in general, be successfully analysed by decomposing and studying a set of properties separately and then combining those partial approaches in an attempt to form a

27 28 29 30

Taleb 2012a, p. 56 Quill 2012 Burstein/Holsapple 2008, p. 7 Sterman 1994, p. 304 cf. Sterman 1994, p. 304 cf. Taleb 2012a, pp. 5658

31

32

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Coping with Crisis and Complexity picture of the whole.


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1 Organisations, Crisis, and Complexity

To underline the ineffectiveness of designed, top-down systems to

control complexity, Taleb compares the failures of authoritarian regimes in Soviet Russia or Baathist Iraq and Syria34 with the relative success of a bottom-up mechanism, like cantonbased decision making in Switzerland. The implications for the management of organisations, especially in times of crisis, are significant and as Burstein et al. note:
"The decision to put resources and time into creating a solution strategy and team which has the capability of quick reaction, flexibility, resilience, robustness, adaptability, etc., is a very tough question for leaders and managers who think predominantly in terms of the bottom line 35 and are unfamiliar with the potential ramifications of complex problems."

These findings justify a closer assessment of the theories of complex systems and networks in order to identify general rules for navigating a complex system (the organisation) within a complex environment during times of crisis. However, before exploring the theoretical backbone of complex systems, it is necessary to define the term crisis with regards to an organisation.

1.2.

Crisis

One of the first significant tasks for discussing crisis management is to define what actually constitutes an organisational crisis. Although organisations (tribes, biological networks, societies, etc.) have been responding to crises since the beginning of their existence, organisational crisis management is a relatively new discipline that has emerged within the last twenty years as an academic specialisation.36 A vast quantity of definitions for crisis have been produced in management literature and debates continue over whether crises can be defined in a positivist manner with a rigid set of criteria or an interpretative one where the existence of a crisis depends entirely on individual perceptions.37 It is apparent that there is no universal allencompassing definition for a crisis. It very much depends on the viewpoint of the observer, the degree of perceived impact versus the actual impact, the degree of interruption an event causes, how waves triggered by the event ripple through an organisation and how an organisation is prepared to deal with it.

33 34 35 36 37

cf. Battram 1999, p. 12 cf. Taleb 2012b, pp. C1 Burstein/Holsapple 2008, p. 9 cf. Weng 2009, p. 74 cf. McConnell/Drennan 2006, p. 59

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The crisis models presented in contemporary literature either concentrate on incidents such as natural disasters, safety- and security-related events, reputational issues affecting an organisation or on financial and mismanagement crises. Nevertheless, none of the crisis type models are sufficiently comprehensive to encapsulate all crisis eventualities an organisation operating in the 21st century may encounter. In order to provide boundaries to distinguish a crisis from other events, the following definition used throughout this thesis has been created as a consolidation of key elements of scholarly definitions: A crisis is a change38 triggered by (perceived and actual)39 low probability events40 that are associated with an inherently abnormal, unstable and complex situation41 and (usually) have a short decision time and a varying degree of surprise42 associated with them. Crises are events with high or significant impact on the strategic objectives, reputation or existence of an organisation43 with a possible negative outcome44. An important crisis attribute is change. Change in this instance is referring to alterations in the external or internal environment. An element of that environment must shift for an event that can usually be managed on a day-to-day basis to grow into a crisis. Another significant crisis attribute is its likelihood of occurrence and subsequent length of decision time. The definition highlights that crises are low probability events with a varying degree of surprise, meaning that either the organisation is not aware that this event could occur, has determined that the likelihood is so low that it can take the risk, or is faced with a building

38

cf. Barton L. 2004, p. 15 cf. Indeed, many authors agree that a situation becomes a crisis when one or more stakeholder groups

39

perceive it as such. (Coombs, 2006)


40

cf. Weick 1993, p. 633 cf. PAS 200/2011 Crisis management September 2011, p. 1 cf. Barton 2004, p. 15 cf. PAS 200/2011 Crisis management September 2011, p. 1 cf. Knight/Pretty 1996, p. 14

41 42

43 44

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crisis, a low impact event that is mismanaged or underestimated and unpredictably develops into a crisis for the organisation. For the purposes of this thesis, it is indispensable to clearly demarcate the borders between contained incidents or events. Because incidents are essentially foreseeable events, caused by known risks that generate a broadly predictable set of consequences45, a fair degree of detail can be expected in incident management plans. However, crises with all their nuances do not lend themselves to such highly structured responses. This suggests that crisis management plans do not benefit from detailed lists of actions or activities. In fact, crisis management needs flexible capabilities, rather than pre-prepared response procedures.
46

A crisis can be seen as a function of impact and time; therefore, the organisational response to crises can be also plotted on the same two axes. Figure 1 below shows the traditional placement of crisis management within the spectrum of organisational response options.

Figure 1: The spectrum of organisational responses to unforeseen events

47

While structured and predictable incidents can be dealt with by applying pre-defined emergency response procedures, at the same time they have the potential to develop in a non-linear and scale-free (and hence, unpredictable) fashion through self-reinforcing mechanics like positive feedback loops. As stated in the British Cabinet Offices Standard for Crisis Management:

45 46 47

cf. PAS 200/2011 Crisis management September 2011, p. 6 ibid., p. 21 Authors own illustration

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"Crises are associated with highly complex problems, the full implications and nature of which may be unclear at the time. Each possible solution may have severe consequences of 48 one form or another."

These are inherent characteristics of complex systems and will be described in the following chapters.

1.2.1.

Why crises occur

Before analysing some of the facts identified earlier, a review of what shifts events into crises needs to be undertaken. This question sits at the core of every organisation dealing with a crisis. British Standards PAS200 (2011) states:
Crises may emerge from strategic shocks such as the catastrophic loss of a production facility involving severe loss of life; equally, they can arise from an initially operational-scale incident that cascades and escalates into an event of profound strategic significance for the 49 organisation.

British Standards PAS200 (2011) defines the difference between incidents and crises based on the process of identification:
Incidents are said to have structure because they are produced by identifiable and assessable risks and present themselves in fairly predictable ways. Crises, on the other hand, are often produced by risks that had not been identified or at least not identified with 50 the scale and intensity they presented"

British Standards PAS200 (2011) also acknowledges that crises may be the product of interdependent incidents developing in unpredictable ways. Even though these incidents can be individually captured in an enterprise risk management framework, crises may emerge as a result of inadequately managed incidents that are allowed to escalate in scale, duration and impact. They may also be the product of multiple incidents that present new types and compound levels of risk. In essence there are two possibilities: An event is of such a scale to be branded a crisis immediately. An event or number of smaller events have occurred and not been managed appropriately and have grown into a crisis. An event is not always immediately definable by its very nature as a crisis, but may become one through how it is perceived. One can find the terminology manifest crisis and the opaque crisis

48 49 50

PAS 200/2011 Crisis management September 2011, p. 6 ibid., p. 5 ibid., p. 6

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Coping with Crisis and Complexity in common crisis literature.


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1 Organisations, Crisis, and Complexity

Manifest crises are events of such proportion that the majority of

stakeholders perceive it to be one instantly. Examples include the loss of a key production facility for an electronics manufacturer or the kidnapping of a companys CEO. However, an event becomes more difficult to define hence opaque crisis where stakeholders are not in agreement over whether an event is a crisis. Riley argues that the reason managers do not see the dark clouds on the horizon is the entrenched process of linear thinking. He cites Newtons third law of motion every action provokes a reaction which cannot be seen through linear thinking.52 Reasons for the ineffectiveness of linear, designed, mechanistic systems in coping with complex situations will be explored later in this thesis.

1.2.2.

Expert survey The state of crisis management

The following section describes the findings of the expert survey that was conducted on 21 January 2013 in Dubai, United Arab Emirates.53 While the majority of the surveyed experts indicate that a formal crisis management system is in place within their organisation, it is surprising to see that 21% / 7 of the participants admitted not to have a system in place, considering that at the time of survey all participants held a crisisand security-related role within their organisation with a focus on post-Arab Spring Middle East and Africa. Even more surprising was the fact that 9% / 3 of the participants simply did not know if their organisation had a system in place or not.

51

cf. Kerchner 1982, p. 128 cf. Rieley 2006, p. 7 cf. http://www.zawya.com/story/RiskMap_2013_Subtlety_trumps_strategy-ZAWYA20130120094334/;

52

53

last visited 02 September 2013

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Figure 2: Survey results for the question: Does your organisation have a crisis management system?

In the subsequent question, 6% / 2 participants were not able to assess the maturity of their organisations crisis management; however, the answer indicates a generally high implementation status for those organisations that consciously chose to set up a formal system.

Figure 3: Survey results for the question: "How well embedded is crisis management in your organisation?"

These findings are congruent with the fact that most organisations choose to test their crisis management systems and train their crisis management teams yearly. However, the relatively high proportion of participants that train only every two years or dont train at all indicates a lack of implantation within some organisations. Plans might have been produced as part of a piece of mind initiative post-Arab Spring but never reached the implementation stage.

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Figure 4: Survey results for the question: "How often dies does your organisation train its crisis management team?"

Even though the concept of weak links (as described later in this thesis) is relatively new and its implications on crisis management yet need to be explored in greater detail, there was a clear understanding that informal connections and loose networks play a very important (35% / 12) or even indispensable (26% / 9) role for the successful management of a crisis.

Figure 5: Survey results for the question: "How important are your informal connections in management in a crisis?"

Not surprisingly, a vast majority of the participants had to activate their crisis management teams multiple times in the two years prior to the survey being conducted. This is assessed to be reflective of the political instability and accompanying security risks and crises for businesses operating in the Middle East and Africa since early 2011. This is further corroborated by Figure 7, which shows that the majority of crises were operational crises, which are mostly initiated endogenously by the environment in which the business operates.

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Figure 6: Survey results for the question: "Has your crisis management system been activated in the past 2 years?"

Figure 7: Survey results for the question: "Which type of crisis have you experienced most frequently?"

When examining the answers in Figure 8, some biases need to be taken into account. While a large proportion of those surveyed said that they think their approach to crisis management is effective, it is possible that organisations with an ineffective crisis management system might not have survived long enough through the turmoil in the region to be present for this survey. Further, the formal responsibility for crisis management very often lies with security directors the surveyed audience hence, a negative answer to this question would constitute admitting a professional failure.

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Figure 8: Survey results for the question: "Did you find your crisis management system effective?"

As for the outlook for the next 12 months, most participants assess regional political instability (26% / 9) or regulatory changes (21% / 7) to be the most likely causes for a crisis to impact their organisation.

Figure 9: Survey results for the question: "Which threat do you think is most likely to disrupt your business in the next 12 months?"

Based on the case study workshop conducted with all the participants the author assesses that most participants had a common understanding of the general approach to an effective crisis management system as described by Mitroff, who distinguished five phases in crisis management: signal detection; preparation / prevention; containment (damage limitation); recovery; and learning. However, in the authors experience as a crisis management consultant there seems to be a predominant focus on containment (damage limitation): the actual management of the incident.54 As described within the next chapters of this thesis, complexity requires that organisations embrace a crisis culture as a subset of organisational culture that creates enabling conditions for perceiving, behaving, and communicating crises within work settings. However, crisis culture cannot be imposed by senior management. Rather, crisis

54

cf. Mitroff 1998, pp. 1520

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culture is an emergent property arising from continuing negotiations about values, meanings and priorities between the organisational members and the environment within which they operate. 55

1.3.

Complexity theories, complex systems and networks

Much like crisis management, complexity and complexity science are still emerging bodies of knowledge, in which the same terms are defined by researchers in multiple ways. As Letiche notes, "complexity theorists can discuss emergence and self-organisation as well as 'complex adaptive systems' [] and actually be referring to very different universes of discourse."
56

In order to limit further confusion, major concepts in complexity theory will be described in the following chapters. Throughout, the links between complexity and crisis management will be the thread of this chapter. Van Uden et al. summarises: "complexity basically tells us that everything is connected to everything else".
57

There is an important distinction between complex and complicated. Some systems have a very large number of components and perform sophisticated tasks, but in a way that can be analysed accurately; such a system is complicated. Conversely, complex systems are constituted by such intricate sets of non-linear relationships and feedback loops that only certain aspects of them can be analysed at one time. There are various entertaining examples to better describe this difference, ranging from comparing jumbo jets (complicated) to mayonnaise (complex),58 a space shuttle to a souffl (complex because its ingredients are irreversibly (sometimes unpredictably) transformed during its preparation),59 or a washing machine to a cat.60 Comparing society, markets, and organisations to living, adapting systems is alluring and while these man-made systems may not be strictly biological, they resemble the biological in that they

55

Paraskevas et al. 2013, p. 144 Letiche 2000, p. 545 van Uden et al. 2001, p. 57

56 57 58 59 60

cf. Cilliers 1998, pp. 34 cf. Gilpin/Murphy 2008, p. 25 cf. Taleb 2012a, p. 234

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multiply and replicate. Taleb uses the example of rumours, ideas, technologies or businesses that are closer to the cat than to the washing machine but tend to be mistaken for washing machines.61 Hazy based his research on the assumption that organisations can be represented and understood as complex adaptive systems as defined by Holland, with individuals acting as interdependent, semi-autonomous agents, who learn and can incorporate information about the environment in the structure of the system; consequently, the collective as a whole can learn through changes to its structure.
62

This thesis follows this framework and, in line with the multi-disciplinary approach of complexity science, draws from findings from the fields of network science, biochemistry, medicine, and management theories, benefitting from broad experience and wide variety of evolutionary adaptation, as well as a very long period of successful self-organisation and crisis management. And where better to learn lessons about the dynamics of survival and adaptability than from life itself? What differentiates the complex from the complicated in its roots are not just observable characteristics like emergence and non-linearity (which will be explored in the following chapters); the main structural difference lies in the importance of the connections and the relations between the interacting, and interdependent agents of the system. Complex systems are full of interdependencies.63

1.3.1.

Complex Adaptive Systems

John Holland, a pioneer in the field of complexity recognised early that:


The mechanisms that mediate these systems are much more alike than surface observations would suggest. These mechanisms and the deeper similarities are important 64 enough that the systems are now grouped under a common name

and coined the term Complex Adaptive System (CAS). Holland summarises the distinct key features of CAS and determined that:
These systems change and reorganise their component parts to adapt themselves to the problems posed by their surroundings. This is the main reason the systems are difficult to 65 understand and control: they constitute a moving target.

61 62 63 64

Taleb 2012a, p. 56 cf. Hazy 2011, p. 525 cf. Taleb 2012a, pp. 711 Holland 1992, p. 18

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More than forty years later, Merali et al. define CAS as:
Systems that adapt and evolve in the process of interacting with dynamic environments. Adaptation at the macro level (the 'whole' system) is characterised by emergence and self66 organisation based on the local adaptive behaviour of the system's constituents.

Complex systems have received increased attention from disciplines over the past three decades particularly since Hollands research and academic literature in the field of complexity science identifies the following approaches, named after their geographical emergence: The European School of complexity draws from physical sciences with a focus on selforganisation, advocating the concepts of 'order out of chaos' and 'order through fluctuations. Using mathematical models, the European School focuses on how "unorganised entities in a given system seemingly organise themselves into coordinated structures that sustain or reproduce themselves when subjected to an external flow of energy."67 In contrast, the North American School draws from the life sciences and makes extensive use of computational approaches. The focus lies on agent-based models to simulate the emergence of order as well as hierarchical structures. One of the key theories explains that:
"Such a system of agents evolve spontaneously to a state of 'self-organised criticality (Bak, 1996) at which the size and frequency of restructuring events among agents is related by an 68 inverse power law."

Allen describes complex systems more technically:


A complex system is a 'whole' made up of a large number of interacting 'parts' or 'agents', which are each governed by some rules of force which relates their behaviour in a given time period contingently to the states of the past. [...] As individual parts respond to their own specific local contexts in parallel with other parts, qualitatively distinct emergent patterns, properties and phenomena can arise at the level of the system despite the absence of explicit inter-part coordination. Outcomes of this process of upward causality are very difficult 69 to predict from knowledge of the parts and rules however.

From this statement alone, consistent distinguishing features can be extracted that are significant for crisis management and are elaborated upon in the following chapter.

65 66 67 68 69

Holland 1992, p. 18 Merali/Allen 2011, p. 41 Maguire 2011, pp. 7980 Ibid., pp. 7980 Allen et al. 2011, p. 2

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1.3.2.

Principles of complex systems

In line with Allens description of complex systems in the last chapter, this thesis suggests seven principles applicable to all complex systems, in line with Gilpin et al.
70

These principles

explained below are supplemented with recent findings from complexity science and management theories. 1.3.2.1. Principle #1: Complex systems are composed of individual and interdependent elements / agents In crisis management terms, these may be persons, organisations or stakeholders that engage with each other with varying degrees of intensity. As stated by Cillier:
Complex systems consist of a large number of elements. When the number is relatively small, the behaviour of the elements can often be given a formal description in conventional terms. However, when the number becomes sufficiently large, conventional means (e.g. a system of differential equations) not only become impractical, they also cease to assist in 71 any understanding of the system.

The interaction between the components is rich; any element in the system influences and is influenced by other elements within the system. The interdependence of complex systems is a critical aspect of dealing with complex situations. This connectivity and interdependence of various elements in a system is the root cause of unexpected, high impact events, termed black swans by Taleb.72 Nevertheless, it is that very same connectivity and the variety of agents acting within a system that can enable organisations to successfully cope with complex crisis situations.73 Some complex systems have the tendency to create surprises that follow a power law. Burstein compares the size of cities in the United States to the distribution of heights of people in the world. While the latter is characterised by a Gaussian distribution with some medium (average) and then some tails on each side of the distribution function, the population of cities in a given country varies according to a power law (i.e. there will be four times as many cities with a population of hundred-thousand as those with a population of two-hundred-thousand). This

70 71 72

cf. Gilpin/Murphy 2008, p. 26 Cilliers 1998, p. 3 cf. Taleb 2007, pp. 1520 cf. Ludescher 12/09/2013, p. 9

73

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distribution is quite different to the normal (or bell curve) for Gaussian distribution. This is significant because the tails of the power distribution are considerably stronger; they contain a higher probability of an event occurring than the same tails of the bell curve. A fundamental difference between the two is that the bell curve is based on the independence of occurring events, whereas the power law takes into account some level of relationship between those events. By definition, complex systems are built with multiple interrelationships and therefore have an interdependence that may follow a version of the power law, which has a much higher probability of extreme occurrences than does the bell curve.74 1.3.2.2. Principle #2: Agents interactions alter the system over time These interactions need not be physical and will be most frequently be related to sharing information.75 Interactions are local with global effects Stuart Kauffman examined this characteristic from the standpoint of biological evolution and coined the expression the adjacent possible,
76

meaning that change within a living system

moves step-by-step but gradual expansion of the adjacent possible allows large-scale changes to emerge over time. The information is modulated along the way and can be enhanced, suppressed or altered in an unpredictable manner.
77

Mitleton-Kelly observes:

It is the actions of micro-agents and the immense variety of those actions that are constantly influencing and creating emergent macro patterns or structures. In turn the macro structure of the ecosystem influences the individual entities and the whole process moves constantly between micro and macro behaviours and emergent structures, influencing and recreating 78 each other.

Interactions are rule-based Complex systems have no single governing equation or rule that controls the system. Instead, complex systems have many distributed, interacting parts with little or nothing in the way of a central control. Each of the parts is governed by its own rules. Each of these rules may

74 75 76 77 78

cf. Burstein/Holsapple 2008, p. 9

cf. Cilliers 1998 Kauffman 1991 cf. Cilliers 1998, p. 4 Mitleton-Kelly 2003, p. 29

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79

participate in influencing an outcome, and each may influence the actions of other parts.

However, as can be seen in swarms, biological or social networks, there exist certain simple elements of common understanding on the macro level. Gilpin et al. refer to a study conducted by Marra that shows:
Rules for interaction are developed on the micro level with interaction between agents as a situation unfolds but are patterned by macro-level organisational expectations and 80 context.

These macro-level rules do contrary to what people believe, [] not require complicated systems and regulations and intricate policies. The simpler, the better.
81

From an organisational crisis management point of view, this principle is essential to build flexible and independent, yet effective, crisis management teams working on the micro level to resolve the actual crisis but at the same time understand the organisations macro-level strategic objective. In one situation, Expert A was confronted with the question of where to find the company rule book that states that no illegal activities shall be undertaken as part of the companys business.
82

As with complex systems, the same rule applies for crisis management teams when it comes to strategic guidance; the simpler the organisations objective can be described, the more room the crisis management teams have for improvisation and creative solutions within the organisations decision-making space. However, a minimum set of simple rules of engagement or behavioural code of conduct need to be in place, either informally through common values and a corporate culture reflecting these rules, or in a more descriptive manner through use of policies and codes of conduct. This is what Expert C describes as simple rules:
83

common

understanding that enables agents in the system to recognise early what constitutes a potential crisis and how to respond to such signals within the wider organisational strategic objectives.

79 80 81 82

cf. Holland 1992, pp. 2122 Gilpin/Murphy 2008, p. 26 Taleb 2012a, p. 11 cf. Ludescher 26/06/2013, p. 4 cf. Ludescher 12/09/2013, p. 9

83

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Gilpin et al. describes this feature as follows: effects of interaction are looped, meaning they can feed back at any point in the system, either positively (to encourage change) or negatively (to encourage stability).84 Burstein et al. describe "complex situations in a complex environment"85 as a Complex Adaptive Mess (CAM). In a CAM:
Feedback loops can either be self-reinforcing or damping, improving a situation or making it worse. In a CAM these often take the form of excitement or an energy surge due to a successful event or perhaps a decrease in morale due to over-controlling management. In turn, management may interpret decreased morale as laziness and put more pressure on 86 employees, creating a dangerous reinforcing loop.

In cases such as these, it may be very difficult or impossible to identify the initial cause and effect; this poses an inherent problem for rational, cause-and-effect based crisis management approaches for, as Taleb explains, in the complex world, the notion of cause itself is suspect; it is either nearly impossible to detect or not really defined. Interactions produce adaptability In 1954, Ashby proposed the law of requisite variety, whereby the range and variety of stimuli that impinge upon a system from its environment [must] be in some way reflected in the range and variety of the systems repertoire of responses.
88 87

Thus, in a rapidly changing environment,

the most effective organisations are those that generate a rich variety of possible responses. Another way of expressing Ashbys law is to state that the complexity of a system must be adequate to the complexity of the environment in which it finds itself.89 Following Ashbys law of requisite variety, the elements within a complex system need to constantly adapt to each other. This allows for the system to generate new patterns of behaviour that enable it to be adequate to the complexity of its environment.90 Taleb refers to Franois Jacob, who introduced the notion of options in natural systems to science. What

84 85 86 87 88 89 90

Gilpin/Murphy 2008, p. 26 Burstein/Holsapple 2008, p. 1 ibid., p. 4 Taleb 2012a, p. 56 Boisot 2000b, p. 187 ibid., p. 116 Boisot 2000a, p. 117

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Jacob calls 'bricolage' (best translated to 'tinkering') is nature's form of trial and error, by keeping what meets certain standards or rejecting what doesn't. Nature has an option and uses it, illustrating how optionality can be a substitute for intelligence if it is applied to adapt to the environment.
91

Gigerenzer, an advocate of simple heuristics for complex problems described a

very similar approach, describing it as being a backwoods mechanic and used part dealer".92
The backwoods mechanic has no general-purpose tool nor are all spare parts available to him. He must fiddle with various imperfect and short-range tools, a process known as vicarious functioning (Brunswick 1955). He will have to try one thing, and if it does not work, another one, and with step-by-step adjustments will produce serviceable solutions to almost any problem with just the things at hand.

This adaptive behaviour has also been identified as a critical skill for organisational survival:
"[] in order to adapt, organisations need to be flexible, as the ability of organisational networks to morph into different configurations could be the key allowing organisations to 93 perform properly and survive over the long run."

As Powell states, a good deal of organisational behaviour consists of adaptive responses to environment uncertainty.94 Boisot et al. renamed Ashby's law of requisite variety as the law of requisite complexity, stating that "to be efficaciously adaptive, the internal complexity of a system must match the external complexity it confronts."95 Increasing the organisations variety of responses to an external stimulus (crisis) is an example of such an adaptive behaviour. As elaborated by Expert C, organisations have the option of increasing their capabilities by hiring external, expert knowledge specific to the crisis situation, to enable this adaptability.96 This process of adaptation under pressure is closely tied to the self-organising behaviour of complex systems, described in chapter 1.3.2.3.

91 92

cf. Taleb 2012a, pp. 181182 Gigerenzer op. 2001, p. 43 Hidalgo 2011, p. 558 Davis/Powell 1992, p. 318 Boisot/McKelvey 2011, p. 279 cf. Ludescher 12/09/2013, p. 12

93 94 95 96

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Non-linearity in complex systems guarantees that small causes can have large results, and vice versa. It is a precondition for complexity.
97

Non-linearity of cause and effect in complex

systems are the root cause of the unpredictability of such systems. Within complex systems the connections and interactions between individual agents matter more than the characteristics of the individual itself. The results of these individual interactions are unpredictable. Small causes can have a profound impact on the organisation, while large events may not unsettle a complex system. This characteristic is often observed in the mechanics behind organisational change processes: while large-scale initiatives such as an organisational strategic realignment can show very little impact on the organisations day-to-day business, small rumours or gossip can create radical and rapid change, effectively constituting an organisational crisis. Boisot et al. state that the main parameters for allowing what they call tiny initiating events (TIEs) to propagate rapidly through a system, possibly producing extreme outcomes, are tension and connectivity. This can be exemplified by thinking about a fishing net being cut between two nodes of the net. If the net lies crumpled up in a pile, the cut will separate two nodes of the net but leave the rest of the net undisturbed. However, under tension, such a cut could instantly spread from one end of the net to the other; similar dynamics have been observed in large-scale power blackouts in the US,
98

where highly connected and

interdependent systems include unpredictable feedback loops. There are various examples of non-linear behaviours in organisational crises. The unpredictably violent and widespread reaction of the Muslim world after a Danish newspaper in 2008 published cartoons depicting the Prophet Mohammed is one example. complex systems is explained in more detail in chapter 1.3.2.3. Merali summarises the relations between adaptability, emergent behaviours and non-linearity by stating that:
Complex adaptive systems are systems that adapt and evolve in the process of interacting with dynamic environments. Adaptation at the macro level (the 'whole' system) is
99

This characteristic of

97 98 99

Cilliers 1998, p. 3 cf. Boisot/McKelvey 2011, pp. 290291 cf. BBC 2013, s.p.

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characterised by emergence and self-organisation based on the local adaptive behaviour of 100 the system's constituents.

As with the connection between micro- and macro-level rules described in 1.3.2.2, the same inter-level connections can be seen in the adaptive behaviour of a complex system to its environment: emergent characteristics on the local micro level cause system-wide, macro-level adaptation. This effect can be observed when the tactical activities of successful crisis management teams in a crisis situation allow the organisations strategic leadership to communicate the local successes to a global audience and gradually adapt not only their crisis strategy but potentially also the organisations orientation if opportunities arising from the crisis situation are identified and seized. 1.3.2.3. Principle #3: Complex systems are self-organising An essential feature of complex systems is that they are self-organising. As Price observed, one of the basic insights of complexity theory is that dynamic systems tend to evolve in the direction of increased complexity over time;101 this evolution does not necessarily accompany chaos or exhaustion of the system. The structures allowing such a self-organisation have been termed dissipative structures by Ilya Prigogine, who found that a dissipative system will disperse energy until it reaches a transition state at which it may either self-destruct or selforganise into a new, emergent form.
102

Burstein et al. call these events tipping points: a

tipping point occurs when a complex system changes slowly until all of a sudden it unpredictably hits a threshold, which creates a large-scale change throughout the system.103 Following the principles of complex systems, the PAS Crisis Management Standard notes that after a crisis:
"[] recovery presents an opportunity to regenerate, restructure or realign an organisation. The essence of recovery is not necessarily a return to previous normality. It may mean moving forward towards a model of business and organisational structures that represent a 104 new normality."

The concept of emerging reorganisation is closely linked to the adaptive capacity of a system and is finding its way into organisational crisis management.

100 101

Merali/Allen 2011, p. 41 Price 1997, p. 9 Gilpin/Murphy 2008, p. 37 Burstein/Holsapple 2008, p. 3 PAS 200/2011 Crisis management September 2011, p.86

102 103 104

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As Cilliers notes, when we have to explain unexpected, high-impact incidents such as a stockmarket crash or a sudden outbreak of political violence, we tend to seek individual factors that combined to cause it. This kind of analysis attempts to explain the behaviour of large, complex systems by extrapolating from the behaviour of small, simple systems. Unfortunately this extrapolation fails because of the self-organising behaviour of complex systems.105 Boisot et al. state that the two key elements giving rise to self-organisation are adaptive tension and connectivity.106 Connectivity between the interacting parts means that every interaction between agents is followed by a learning process. Eventually these small local movements lead to large-scale patterns. As Gilpin et al. note, the outcome of such a 'co-evolution' is often referred to as 'emergence', defined as "unpredictable patterns of order that appear through a process of self-organisation."107 Provitolo et al. describe it as follows:
"Emergence has many meanings within the complex systems. But all of the definitions proposed refer to the connections between the constituents of a system, to relations between the micro and macro levels, and to the appearance of structures, properties or 108 forms at macroscopic level."

To better visualise the connection between the micro and macro level and the unpredictability of emergent behaviours and self-organisation within a complex system, some authors refer to fractals
109

. Fractal-like phenomena (such as a cloud, where water droplets self-organise into

regular and identifiable patterns, yet it is impossible to predict exactly what form the cloud will take), show how slight alterations in the interactions between the elements of the system will, over time, develop into patterns at the macro level that can change the entire shape (and, thus, also the behaviour) of the system. In the literature of complex systems and networks this characteristic is often described as nestedness or scaleability.
110

The new discipline of econophysics is focusing on the outcomes of such self-organisation and emergent new order processes. These outcomes are non-linear and a source of what is often referred to as butterfly effects or scaleability. Boisot et al. explain butterfly effects as "tiny initiating event [...] that can produce extreme outcomes such as hurricanes, stock market

105 106 107 108 109 110

cf. Cilliers 1998, p. 96 Boisot/McKelvey 2011, p. 291 Gilpin/Murphy 2008, p. 28 Provitolo et al. 2011, p. 53 cf. Gilpin/Murphy 2008, p. 28 cf. Csermely 2006, p. 33

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crashes, giant firms, etc." and explain scaleability with the example of a cauliflower: cutting off a floret from a cauliflower will produce a smaller floret from which another smaller floret can be cut off and so on. Each will be smaller than the previous but each will have the same shape, structure and genesis. This means that scale-free causes or scaleability "generate the same dynamic, effect, or characteristic at multiple levels of a system."111 Taleb describes the impact of this fractal structure on macro systems. When a system (e.g. an organism) benefits from a harmful incident, it looks like successful adaptation to the environment from the outside. However, from the inside there are winners and losers: smaller systems within the system (e.g. organs in an organism or cells within an organ) will die while the macro system will survive. He calls this layering fractal self-similarity, referring to a vision by Benoit Mandelbrot.112 Self-organised criticality An important term within self-organisation is self-organised criticality, originally identified and described by Per Bak.
113

When a perturbation within a system cannot be dissipated, tension will

develop. Csermely describes it as follows:


W hen the perturbation is continuously repeated and the tension keeps on increasing. The development of tension does not lead to major problems for quite a while [], however, as more and more perturbations arrive, local tensions accumulate and may develop to a point 114 when a propagating relaxation suddenly occurs like a kind of avalanche.

Boisot et al. define the 'melting zone' as the region that lies between the 'edge of order' (where living systems become efficient and exploitative of their environment to the point that many lose their capacity to adapt and die), and the 'edge of chaos' or far from equilibrium (just before the interactions with the environment become too intense, leading to complete disorder and chaos.115 Networks on the boundary between order and chaos may have the flexibility to adapt rapidly and successfully through the accumulation of useful variations.116).

111 112 113 114 115

Boisot/McKelvey 2011, p. 282 cf. Taleb 2012a, pp. 7071 cf. Bak/Chen 1991 Csermely 2006, pp. 5960 cf. Thietart/Forgues 2011, p. 58 cf. Kauffman 1991, p. 80

116

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As described by Bak, entities that survive will maintain themselves in the melting zone in a state of self-organized criticality,117 which means that a process of self-organisation is initiated when "heterogeneous agents in search of improved fitness interconnect under conditions of exogenously or endogenously imposed adaptive tension.
118

New order is an emergent

outcome of this process and can be observed in biological and social networks during times of crisis. This concept is described in more detail in 1.3.3.1. In swarms and networks, as well as humans and organisations, this emergent self-organisation can be observed and described as panic quakes
119

or netquakes:

120

a herding behaviour that

is known scientifically as an allelomimetic tendency. Helbing et al. studied the behaviour of mice in a pool of water and found that they left the pool in groups with a scale-free distribution.
121

Nothing happened in the pool while tension built up; suddenly one mouse

jumped and a whole nest followed immediately, causing an instant relaxation, or panic quake.122 Other examples of complex systems where this behaviour can be observed are earthquakes, landslides, forest fires, fractures, volcanic eruptions, avalanches, protein quakes, qasar emissions, solar flares, dripping faucets, rain, and many more.123 Society, markets and cultural behaviour are apparently man-made but grow independently to reach some form of selforganisation. They may not be strictly biological, but they resemble the biological in the manner in which they multiply and replicate. To emphasise an earlier reference: they are closer to the cat than to the washing machine but tend to be mistaken for washing machines, which sometimes has led to crisis management plans being written like manuals for washing machines. Successful complex systems require some dose of volatility for self-organised criticality. Such variations in the environment act as purges. Taleb uses the example of small forest fires that periodically cleanse the system (forest) of the most flammable material, so that it does not have

117

cf. Bak 1996, pp. 1825 Boisot/McKelvey 2011, p. 282 cf. Csermely 2006, p. 61 ibid., p. 61 cf. Helbing et al. 2000, pp. 487490 cf. Csermely 2006, p. 61 ibid., p. 61

118 119 120 121

122 123

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the opportunity to accumulate, systematically preventing catastrophic forest fires. Humans die in favour of the human gene pool, trading individual fragility for the survival of humanity. In both examples, elements of the system regularly break down on a small scale, in order to avoid large-scale generalised catastrophes
124

. It is for similar reasons that stability can be detrimental

for organisations: firms become very weak during long periods of steady prosperity devoid of setbacks, and hidden vulnerabilities accumulate silently under the surface. To an evolutionary successful complex system, failure is a critical component of dealing with complexity and adaptability. Taleb goes so far as to advocate treating ruined entrepreneurs in the same way we honour dead soldiers, perhaps not with as much honour, but using the same logic. As Taleb explains, just as there is no such thing as a failed soldier, dead or alive (unless he acted in a cowardly manner), likewise there is no such thing as a failed entrepreneur or failed scientific researcher.125 Their sacrifice makes the system stronger. This phenomenon was also observed by Knight et al., who conducted a study on the impact of effective versus non-effective crisis management on the shareholder value of affected companies. The results of this study are shown in Figure 10 and are astonishing: organisations with effective crisis management saw an overall increase of 7% in their shareholder value and a healthy recovery whereas those who fail to plan and subsequently deliver an ineffective response, struggle to recover and see a decrease in their shareholder value by minus 15%.
126

124 125

cf. Taleb 2012a, pp. 100102; 350 ibid., pp. 100102; 350 cf. Knight/Pretty 1996, p. 14

126

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Figure 10: Impact of effective crisis management on shareholder value

127

This Schumpeterian approach to understanding complex systems128 is also described by Csermely, whose findings on biological networks and implications on complexity will be explored in chapter 1.3.3. The challenge in the practical application of this approach for organisational crisis management is to distil those characteristics and tactics that allow for the survival of the organisation; based on the fractal-like structure of complex systems, this also means accepted failure and death of components making up the system. 1.3.2.4. Principle #4: Complex systems are unstable As Gilpin et al. state, in complexity-based thinking, stability is not a desired state; indeed, it is possible only when the system ceases to be complex.129 Similarly, Cillier notes that:

127 128

Knight/Pretty 1996, p. 14
Schumpeter stated that the lifeblood of capitalism was 'creative destruction.' Companies rising and falling would

unleash innovation and in the end make the economy stronger. Stone, B; Vance, A. (2009) New York Times, "$200 Laptops Break a Business Model". URL: http://www.nytimes.com/2009/01/26/technology/26spend.html?partner=rss&emc=rss&_r=1& Retrieved 10.03.2013
129

Gilpin/Murphy 2008, p. 30

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Complex systems operate under conditions far from equilibrium. There has to be a constant flow of energy to maintain the organisation of the system and to ensure its survival. 130 Equilibrium is another word for death.

It is important to note that instability in complex systems is not to be confused with lack of robustness or resilience of the systems. As Csermely states:
Complex systems are almost never in a traditional equilibrium. It would thus be better to talk about robust behaviour gravitating towards certain parameter sets, or attractors of the 131 network, after perturbations.

In complex systems, an indicator for the stability of the system is the amount and intensity of the interactions between the agents in the system. Too few interactions mean stability (in a negative sense, as described above), while too intense interactions lead to a complete disorder. It is in the intermediate range, between too little and too many interactions, where emergent phenomena arise - at the edge of 'chaos'.
132

Together with the non-linear characteristic of complex systems, this instability poses the most significant challenge in an organisational crisis: intervening [] in a sensitive system in which everything is interrelated, [] can have drastic and unexpected results.
133

This fear of

intervening in highly complex and opaque pressure situations can often create analysis paralysis, as described in Expert Bs case study: in a fast-developing, high-risk situation, a highly trained reserve officer just could not cope with the amount and intensity of incoming and often conflicting information to the point where he could not be used for the simplest support tasks and had to be removed from the scene. In such a scenario, simple rules can help to keep only what is important within the frame of reference and can provide concise guidance in complex situations. 1.3.2.5. Principle #5: Complex systems are irreversible
134

Knowledge within a complex system is located at the level of the individual elements that comprise the system. This means that the history of the system is an essential feature of the

emerging patterns and behaviours. Cillier makes it clear that:

130 131 132 133

Cilliers 1998, p. 3 Csermely 2006, p. 103 Thietart/Forgues 2011, p. 58 Lagadec 1993, p. 178 cf. Gilpin/Murphy 2008, p. 30

134

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Complex systems have a history. Not only do they evolve through time, but t heir past is coresponsible for their present behaviour. Any analysis of a complex system that ignores the dimension of time is incomplete, or at most a synchronic snapshot of a diachronic 135 process.

A main difference between complex systems and the classic Newtonian models of systems is that in complex structures time is no longer considered reversible.
136

Each successive

development emerges from a specific set of previous developments [], but not in a linear sequence that can simply be folded or unfolded.137 To explain the impact of this on crisis management, Gilpin et al. refer to Marra who deduces that organisational culture, rather than a specific crisis plan, is one of several factors that determine successful crisis communication,138 and that because of the fractal-like structure of complex systems, organisational history puts its stamp on all aspects of a crisis, at all levels of an organisation.139 The importance of the history of a complex system is also reflected in the way successful organisations deal with complexity. From the analysis of High Reliability Organisations (HROs), Weick identified attentiveness as a key organisational behaviour that enables HROs to successfully make sense of the fast-paced and highly complex environment in which they operate.140 This sense-making is also firmly attached to history, as meaning comes from paying attention what has already occurred141 and emerges in the present while remaining firmly grounded in the past. Hence, every crisis constitutes an irreversible event for an organisation; organisational change, be it beneficial or detrimental, is obligatory post-crisis. Even organisations that successfully resolve a crisis return to a new normal and not to their pre-crisis state. 1.3.2.6. Principle #6: Complex systems have permeable and ill-defined boundaries

While general systems theories assume a distinct border between a system and its environment, complex systems theory builds on the understanding that complex systems adapt

135 136 137 138 139 140

Cilliers 1998, p. 3 cf. Gilpin/Murphy 2008, p. 32 ibid., p. 37 ibid., p. 30 ibid., p. 30 cf. Weick/Sutcliffe 2001, pp. 1017 ibid., p. 14

141

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142

constantly to their changing environments, which leads to changes in the environment system.144 In the words of Cilliers:

and,

thus, requires complex systems to be seen as open143 and as part of a wider complex

The interaction among constituents of the system, and the interaction between the system and its environment, are of such a nature that the system as a whole cannot be fully understood simply by analysing its components. Moreover, these relationships are not fixed, 145 but shift and change, often as a result of self-organisation

In successful crisis management teams, this manifests as the engagement of the team with multiple external stakeholders such as legal, regulatory, media, and others, and treat them as participants rather than static, external observers. However, this is also a significant challenge for organisations and the question of where the organisation begins and ends is not easily answered. Nevertheless, drawing a line to discern the internal from the external is necessary and constitutes a compromise when analysing complex situations. As Maguire states:
Distinguishing a complex system from its environment is, in the end, an analytic choice, i.e. determined by the purpose and perspective of the observer seeking to describe it, who is 146 therefore an active participant in the construction of complexity.

Gilpin et al. suggest focusing on relationships, seeing the organisation as an ongoing process and series of interactions rather than organisations-as-autonomous thing. similar approach by claiming:
When we look at the behaviour of a complex system as a whole, our focus shifts from the individual element in the system to the complex structure of the system. The complexity 148 emerges as a result of the patterns of interaction between the elements.
147

Cilliers follows a

The common approach of breaking down a complex crisis situation into manageable subsystems is in direct contradiction of the next principle: the irreducibility of complex systems.

142 143 144 145 146 147 148

cf. Cilliers 1998, p. 3 cf. Gilpin/Murphy 2008, p. 31 cf. Quill 2012 Cilliers 1998, pp. viiiix Maguire 2011, p. 80 Gilpin/Murphy 2008 Cilliers 1998, p. 3

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Coping with Crisis and Complexity 1.3.2.7.

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Principle #7: Complex systems are irreducible

As discussed earlier, due to emergent patterns and non-linear behaviours, a complex system is more than the sum of its parts. Therefore, it is not possible to reduce the system to its component parts or to look at samples and make generalisations for the whole, when seeking to understand a complex system.149 A large system of linear elements can usually be collapsed into an equivalent system that is very much smaller.150 The manner in which crisis management has been approached in the past involves schematising and simplifying potential crisis scenarios into generic components and is:
Built upon rational expectations about how a crisis will manifest itself and how the organisation will respond to it. It is these rational expectations that are precisely the weakness of this approach as crises increasingly become complex in nature, transboundary 151 and interconnected."

The principles discussed above, especially the irreducibility of complex systems, demonstrate why such an approach cannot be effective, as it fails to take into account history, context, and relationship networks of organisations.
152

To better understand these relationship networks, the

following section will explore network topology, structure and behaviours by assessing a variety of different networks, aiming to understand why network knowledge is a key asset when planning immediate countermeasures against crisis.
153

The seven principles described in this chapter are the foundation for understanding how complex systems and complex situations present themselves to crisis managers. The expert interviews and case studies in Annex A will aid in demonstrating how these principles apply to real-world crisis scenarios.

1.3.3. Why networks matter


Having the ability to predict let alone control the dynamics of complex networks remains a central challenge throughout network science. Structural and dynamic similarities among different real networks suggest that some universal laws might be in action. Krioukov et al. published a study in Nature that shows that the causal network representing the large-scale

149 150 151 152 153

cf. Gilpin/Murphy 2008, p. 32 cf. Cilliers 1998, p. 3 Paraskevas 2006, p. 894 cf. Gilpin/Murphy 2008, p. 32 Csermely 2006, p. VII

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structure of spacetime in our accelerating universe is a power-law graph with strong clustering, similar to many complex networks such as the internet, social networks, or biological networks.154 While these systems have been traditionally modelled as random graphs, it is increasingly recognised that the topology and evolution of real networks are governed by robust organising principles.155 Of course, certain constraints and limitations apply when comparing networks consisting of yeast bacteria with social networks found in a global corporation; social systems need to be studied in their own right as complex social systems.
156

However, by looking at the generic

characteristics or principles common to all natural complex systems and at the comparative anatomy of networks, researchers are able to show that there are universal principles that apply to different networks that scientifically are completely unrelated but are following the same mathematical and architectural principles.157 A wide area of research has long been devoted to understanding how players such as bodily organs, people, bus stops, companies or countries connect to networks. As Quill states:
An advance in the late 1990s led to a boom in network science, enabling sophisticated analyses of how networks function and sometimes fail. But more recently investigators have awakened to the idea that its not enough to know how isolated networks work studying how 158 networks interact with one another is just as important.

This recently lead to a somewhat meta-level science known as the science of networks of networks. Complexity science offers a robust theoretical model on the journey to understanding emerging properties and principles of self-organisation within such systems of networks, but the observation of such networks of networks also inform complexity science as a research field. The following chapter provides an overview of the key takeaways from networks research with implications for organisational crisis management.

154

cf. Krioukov et al. 2012, pp. 110 cf. Albert/Barabsi 2002, p. 47 cf. Mitleton-Kelly 2003, p. 2 cf. Quill 2012, p. 18 ibid., p. 18

155

156

157

158

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Coping with Crisis and Complexity 1.3.3.1. Dynamic network topology under crisis

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By looking at how yeast bacteria cultures react and modify their internal communication and structure under stress (in the case of the bacteria, stress means reduction of nutrients or exposure to heat shocks), Csermely found strong similarity in the observable behaviours of these bacterial networks and human, social networks.159 From a crisis management perspective, one of the most interesting findings was that bacterial networks undergo significant structural changes under crisis. Under normal circumstances their phenotype is described as large, meaning uncondensed, and displaying the typical connection characteristics of a complex system where everything is connected to everything without major differences in the strengths of these connections. However, when put in survival mode through application of external stressors, the network drastically reduced inter-group connections, thereby creating more separate network modules that were still connected, though the strength of these connections was significantly reduced; Csermely calls this the small phenotype. Essentially, the system rearranged itself and quarantined various modules to mitigate the destructive impact of free radicals which, in a tightly coupled system, could reach distant elements of the system more easily and cause more damage. Another positive outcome of this reconfiguration of the system was that the individual network modules could develop local and specific solutions to the crisis they were facing. While protein synthesis elements are the most important element of yeast networks during normal function, these elements become useless in the absence of nutrients from which protein is synthesised. Survival processes become more important and the yeast bacteria network modules change their internal workflow by redirecting its energy distribution to elements that could process protein degradation instead of synthesis, to allow for network survival as shown in Figure 11.

159

cf. Csermely 2008, p. 5

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Figure 11: Structural changes in yeast community in crisis mode (Bottom panel B: 15 minutes, 37C heat shock)
160

By creating more local, less-connected modules with less intensive contacts, the whole network achieves increased flexibility, better damage localisation, swifter specific and effective response, and better overall conflict management.161 More generally, Csermelys research team show that bacteria living in a variable environment have more separate network modules, as they are constantly exposed to crisis and the need for effective crisis management is a survival necessity. Figure 12 below shows an actual graphical representation of the different network structure of two different organisms, living in a variable environment (left) versus living in a stable host organism (right).

160 161

Csermely 2008, p. 10 cf. Mihalik et al. 2011, p. 3

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Figure 12: Small, multi-modular phenotype on the left of the free living E. coli bacterium versus large, single major core phenotype on the right of the symbiont Buchnera living a less hostile/variable environment. Black circles indicate network modules.
162

As stated above, the value of assessing crisis management from a complexity science and network science perspective lies in the general applicability of certain (not all) characteristics. Hence, another study in which communication patterns in social networks prior and during to a crisis event were observed, is of significance to organisational crisis management and its conclusions can be applied to an organisations crisis structure and approach to crisis resolution. Bagrow et al. explored societal response to external perturbations and identified real-time changes in communication and mobility patterns in the vicinity of emergencies, such as bomb attacks and earthquakes, which were surprisingly similar to Csermelys findings in yeast bacteria communities. Like the manner in which biochemists use drugs to perturb the state of a cell to better understand the collective behaviour of living systems, Bagrow et al. looked at emergencies as external societal perturbations, helping uncover generic changes in the spatial, temporal and social activity patterns of the human population. Bagrow et al. found that communication spikes accompanying emergencies were both spatially and temporally localised, but information about emergencies spread globally.163 As is the case with biochemical networks, the researchers could observe a change in the human social

162

Szalay-Beko et al. 2012, p. 2202 cf. Bagrow et al. 2011, p. 2

163

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network to adopt a small phenotype, with an increase in the number of calls placed to friends and a corresponding decrease in calls to non-friends, as opposed to non-emergency events where users were less likely to call a close contact.164 Aside from the obvious structural similarity to the modular E. coli network shown in Figure 12, Figure 13 shows how communication within a human social network changes from being unstructured, large and randomly connected (previous week) and structurally changed to a small, localised and modular web.

Figure 13: Top panel: the contact network formed between affected users during a bombing. Bottom panel: the call pattern between users that are active during the emergency during the previous week, indicating that the information cascade observed during the bombing is out of the ordinary.
165

164

cf. Bagrow et al. 2011, pp. S4 ibid., p. 5

165

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Looking at another highly successful crisis management organisation, the human immune system, the same properties can be observed166. When under attack, the highly connected, lowcomplexity network is transformed to a more sparsely connected network, exhibiting a higher degree of complexity. During these changes, the immune network can recruit and lose elements and change topology.167 For the purposes of this thesis, it is of interest to understand the underlying dynamics and conditions that allow the networks to adapt, and to draw conclusions for human organisational crisis management teams. What are the pre-conditions to allow networks to change their structure under crisis? The research of Csermely and Bagrow show that network topology changes under crisis to allow for more effective crisis management in biological cellular networks and human social networks. These changes in network topology are intended to enable the network to increase its performance under crisis and, based on the findings of Expert C, they are the prerequisites for emergent behaviours in CAS. By changing their topology from large, unclustered and loosely connected elements to compartmentalised, highly connected structures encompassing elements with defined and specific functions, networks can isolate the crisis, limit the risk of the crisis spreading through the wider network, and work on localised solutions, all while keeping information flowing through the network nodes. All these elements (diversity of agents, connectivity, rate of information flow) have been identified by Expert C as being crucial for successful crisis resolution in human, corporate organisations.
168

The quality of the connection between network agents is a concept that Csermely describes as essential to allow for network crisis management. The concept of weak links, weak signals and creative elements are discussed in the next chapters. 1.3.3.2. Weak links and stability of complex networks After observing and studying chaperone molecules, Csermely came to the conclusion that network knowledge is a key asset when planning immediate counter-measures against crisis.169

166 167

cf. Gause 2011, pp. 130-131 cf. Csermely 2006, pp. 158159 cf. Ludescher 12/09/2013, p. 9 Csermely 2006, p. VII

168

169

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A chaperone, or molecular chaperone, is a protein that helps the folding of other proteins by preventing their aggregation or by partially unfolding them to give them a new opportunity to refold. Chaperone synthesis is induced by stress or heat shock.170 Rutherford et al. found that if a certain chaperone molecule works in the fruit fly species drosophila, almost all the drosophilas show the same physical characteristics; however, if the chaperone molecule was damaged through stress, i.e. heat shocks, the fruit flies were seriously deformed and looked miserable; but, miserable in different ways:171 an unexpected diversity could be observed. Rutherford et al. demonstrated that stress induces a broader morphological diversity,172 an observation that can be explained based on the principles of complex systems as stated in chapter 1.3.2: a complex system will show an adaptive behaviour in order to co-evolve with its environment. To achieve this, the attacked system needs to be sufficiently complex to enable an adequate amount of response options; in the case described by Rutherford et al., the response options materialised in a variety of diverse drosophila mutations. Another interesting finding from this study is that chaperone molecules had a stabilising effect on the genetic code of the fruit fly. As stated in section 1.3.2.4, a key characteristic of complex systems is that they are unstable. Csermely defines the term stability as follows: "A network is stable if it shows a tendency to return to its original parameter values after a perturbation",173 and:
Network stability can be defined either as parameter stability or as network persistence (netsistance). The criterion of netsistance is rather simple: the network has to keep its integrity, meaning that most of its elements should stay linked to each other. In other words, 174 the so-called giant component of the network should be preserved.

To use the vocabulary of complexity science, it can be stated that chaperone molecules allowed the drosophilas genetic code to be resilient or robust, rather than stable.

170

cf. Csermely 2006, p. 328 ibid., p. VII ibid., ibid., p. 103 ibid., p. 282

171

172

173

174

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Csermelys research shows that the stabilising effect of chaperone molecules is based on their capability to build so-called weak links to a high number of elements within the network; he deduced generally applicable findings from analysing exactly how chaperones managed to make complex living networks robust against external stressors. Csermely defines a weak link as follows: a link is defined as weak when its addition or removal does not change the mean value of a target measure in a statistically discernible way.175 The principle of network resilience through the presence of weak links was initially described by Granovetter in the 1960s in social networks. Csermelys research and attempt to generalise this concept for networks indicates that weak links have a stabilising function not only in proteins and social systems but also on the psyche, animal communities, firm social nets, portfolios, towns, software, ecosystems, hormone networks, the immune system, language, electronic circuits, and many more.
176

Yet another example of system stability was revealed after the terrorist attack against the World Trade Centre on 11 September 2001. All of the employees of a company who knew the password to access a set of crucial data had died. Faced with this situation, the remaining employees chose the following approach:
They sat around in a group and recalled everything they knew about their colleagues, everything they had done, everywhere they had been, and everything that had ever 177 happened between them. And they managed to guess the passwords.

This example of an emergent capability is based on the existence of weak links within the organisational network.
178

Another example comes from the analysis of warfare. Zhao et al. showed that internal network dynamics, i.e. the emergence of inter-modular weak links, greatly prolongs a minority group's survival time.179 This behaviour is an underlying reason for the extraordinary dynamism of

175

Csermely 2006, p. 101 ibid., p. 277 ibid., p. 205 ibid., p. 205 cf. Zhao et al. 2009, pp. 14

176

177

178

179

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guerrilla or terrorist networks, which display weak links between distant areas of the network and decentralized control. Figure 14 below shows a simplified visual representation of individuals involved in the 9/11 attacks. While the main perpetrators (pilots) are connected by strong links, it is the weak links that connect remote areas of the network and allowed for secrecy in preparing the attack and surprising resilience after the attacks to withstand the War on Terror efforts of the United States.180

Figure 14: Network of individuals actively involved in the 9/11 attacks on September 2011. The thickness of the lines corresponds to the strength of the ties between the terrorists.
181

180 181

Krebs 2002, pp. 1-7 Ibid., p. 4

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The general model of Zhao et al. may be relevant in the explanation of the long-term survival of latent diseases, or metastatic cancer cells. The intensity and number of connections within a network also has deep impact on the performance of the human immune system:
The connection density has a profound effect on immune properties. If there a re too few connections, the network cannot function. This seems rather obvious. However, if there are 182 too many connections, the network will not function properly either.

The concept of weak links has also been recognised by the British PAS Crisis Management Standard:
"Informal communication structures are usually present in organisations among colleagues, friends, associates and peer groups. In some respects these can be problematic, such as in spreading myths and rumours. However, they can also be very useful if imaginatively used. They can speed up the exchange of information and understanding by bypassing formal 183 structures and utilising lateral lines of communication that have fewer links in the chain."

The importance of weak links in firm social networks for avoiding what Kauffman describes as complexity catastrophes is also described by Mitleton-Kelly.184 A complexity catastrophe due to conflicting constraints is a general property of complex systems and is linked to the principle of weak links described in this chapter.
185

In an organisation, a complexity catastrophe can occur

when the level and richness of interactions increases significantly as the number of individuals interacting with each other increases above a certain limit. Mitleton-Kelly sets this limit in the range of six to eight persons directly interacting with each other. If the number of direct connections remains small while the number of individuals increases, i.e. if each individual interacts directly with few other individuals within the network, then the network can grow without disintegrating.
186

Such loosely coupled connections in a network, which are only

activated when necessary, underline the importance of weak links for stabilising networks and avoiding complexity catastrophes.187

182

Csermely 2006, pp. 158159 PAS 200/2011 Crisis management September 2011, pp. 2829 cf. Mitleton-Kelly 2003, p. 9 cf. Kauffman 1991 cf. Mitleton-Kelly 2003, p. 9 ibid., p. 9

183

184 185 186 187

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Firms, governmental systems and most other organisations are typical formal networks, i.e. hierarchical structures where links are strong. Organisations could not function without these strong connections between elements of the network.188 Csermely strongly advocates the need for a careful balance between strong and weak links in business networks.
189

He differentiates

between problem types that are highly focused and require a normative approach strong links and diffuse problems and instrumental tasks where the imaginative and creative use of weak links can produce emergent solutions.
190

Diversity, the vast resource of the myriad of weak links, provides for the extremely important buffering capacity of complex systems, which increases their robustness and chances of survival in times of danger and crisis.191 Networks or webs are not constantly connected. Their robustness lies on their ability to re-establish dormant connections, when necessary.
192

Expert

C fully acknowledges the importance of loose connectivity in networks to allow for system resilience. While strong links tend to destabilise the system when nodes get congested by information or destroyed by crisis, it is the loose connections that allow the information to circumvent blocked nodes and give the system the required amount of flexibility.193 In organisational crisis management and resilience, the concept of weak links is closely related to an organisations capability to detect and react to weak signals. 1.3.3.3. Weak signals Noise (meaningless stimuli) in a system is bad for the network if high and continuous noise levels disturb all network functions.194 What is essential for early detection of a situation that could potentially develop into a crisis, is the ability to differentiate weak signals from the noise in

188

cf. Csermely 2006, p. 207 cf. Csermely 2006, p. 203 ibid., p. 203 ibid., p. 6 cf. Mitleton-Kelly 2003, p. 27 cf. Ludescher 12/09/2013, p. 16 cf. Csermely 2006, p. 52

189

190

191

192

193

194

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a system. The first documented observations of weak signals (or good noise) were sailors reports on the peculiar phenomenon that disordered raindrops falling on the ocean can calm rough seas.195 It is only after many months on sea that this pattern was recognized, the signal identified, and the knowledge captured and passed on. Expert C highlighted such signal detection as an essential element of crisis management / crisis prevention. Although C does not necessarily agree that every crisis emanates noticeable signals before it happens, he agrees that it is true in most of the cases and, hence, early signal detection is key to successful crisis management. C identifies three different types of detectors: core detectors (normal employees, staff), ad-hoc detectors (clients, suppliers, etc.), and expert detectors (risk professionals, consultancies, etc.).
196

Having a crisis management team ready to respond to any type of event is always prudent. If a crisis appears out of nowhere the team will react and manage it before too much damage is done. All that management needs is a simple sign of trouble and it is ready to react. But what signals a crisis? How will the team know to react? In early 2008, one of the worlds largest fast-moving consumer companies operating in Pakistan would have had a crisis at hand had it not been for perception. The company started to print the shape of a bathing woman on the back of its soaps and shower gels. The unfortunate aspect was that shape looked very much like the Arabic word Mohammed (see Figure 15). Mullah radios in southern Pakistan became aware of this and started blaming the company for using the name of the prophet to sell its products. At this point in time, the company did not face a crisis. There was no obvious threat and the company had obviously not suffered any losses. However, a number of employees listening to the radio allegations reported the event to senior management, who instantly agreed that this could become a major crisis if the rumours started spreading. A decision was made to withdraw all products as soon as possible and repackage and redistribute them. Although the recall cost the company financially, it was able to increase sales in the following weeks due to the mullahs still spreading the message, which encouraged curious consumers to buy their products. With no graphic confirming the allegations, the

195

Csermely 2006, p. 52 cf. Ludescher 12/09/2013, p. 4

196

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company had its bestselling month, now viewed in a positive light as the allegations were perceived to be false.
197

Figure 15: Unwanted similarity of logo and Arabic characters spelling the name Mohammed

198

Barton identified a list of typical warning signals an organisation should monitor for, citing indicators like public resistance to an innovation, patterns of minor incidents or near-miss events, persistent rumours, persistent customer complaints, and others.199 All of the above listed events will exist in various shapes or forms within an organisation; however, it is the signal strength that will determine reaction level. Through the use of filtering mechanisms, proper signals may be distinguished from the surrounding noise.200 The concept offers management a solution to the recurring problem of misalignment of strategic planning with the external or internal environment. An organisation is confronted with strategic surprises when neither the causes nor the possible responses are clear. 201 Strategic planning is converting environmental information into concrete action plans, programmes and budgets. This is where Ansoff identified a paradox: if an organisation waits until information is adequate for strategic planning, it will increasingly be surprised by crises; if it accepts vague information, the content will not be specific enough for thorough strategic

197

cf. Ludescher 9/08/2012 cf. Ludescher 9/08/2012, authors own illustration cf. Barton L. 2004, p. 55 cf. Mankelwic/Kitahara 2010, p. 3 cf. Ansoff 1975, p. 3

198

199 200

201

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202

1 Organisations, Crisis, and Complexity

The solution presented by Ansoff urges organisations to consider what actions are

feasible at a time when information becomes available. Initially, actions will be unfocused, aimed at increasing the strategic flexibility of an organisation. As the information becomes more precise, so should the organisations response, eventually terminating in a direct attack to the threat or opportunity.203 Considering both the strategic planning and operational level, Ansoffs model is key in crisis identification, detecting the smaller trigger events. It is rare that crises occur without any indication or adverse pattern of events that points towards a negative accumulation and a potential crisis. Weak links and reaction to weak signals are key pillars in organisms crisis management capabilities; however, network science has also identified the need for so-called creative elements. Section 1.3.3.4 describes the characteristics of creative elements and how organisational crisis management can benefit from their use in times of crisis. 1.3.3.4. Creative elements

Creative elements are the life insurance of complex systems, helping them to survive during any unexpected damage; the number and importance of creative elements should increase if the complex organism experiences a fluctuating environment.204 Csermely describes creative elements as being dynamic, somewhat unpredictable connectors of distant network modules. Most importantly, creative elements have transient, weak links leading to important positions (often hubs) in the network and become especially important when the whole system experiences an atypical situation requiring a novel, creative solution.
205

Typical examples of creative elements are the active centres of proteins, the stress proteins of cells, stem cells of organisms, practically any neuron in the human brain, and creative people or groups. Creative elements play a key role in the development, survival and evolvability of complex systems.206

202

cf. Ansoff 1975, p. 23 cf. Ansoff 1975, p. 23 Csermely 2006, p. 49 ibid., p. 329 ibid., p. 3

203

204

205

206

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Key characteristics of creative elements are that they connect distant network regions, and constantly change their position within the network. As the complexity of a system increases, the mobility of individual creative elements expands so that these elements cover more and more of the network.207 Farkas states that:
The internal structure of creative elements (the underlying network of atoms, proteins, cells, or persons that constitute the creative node of the upper-level network of proteins, cells, persons, or society) is more exible []. In contrast to [] other [] types of nodes, the 208 actions and outputs of creative elements are highly unpredictable.

This unpredictability of creative elements within a team can make them difficult and occasionally irritating for the team to work with, especially under non-crisis circumstances. Creative elements are not reliable, since they always discover a novel solution.209 Expert A indicated that those naturally disruptive, creative, iconoclastic individuals [] people that just look at the world differently
210

have always been an important element of the company and he

even rates them as indispensable when cases require out-of-the-box thinking and effective solutions. A conscious effort is undertaken to increase diversity throughout the organisation, including gender diversity up to senior management levels.211 The need for creative elements has been recognised in current formal crisis management advice. Based on Ashbys law of requisite variety, which states that the variety of response options needs to be adequate to the variety of the environment, the British PAS Crisis Management Standard states that:
Crises may also be the product of an unforeseen combination of interdependent risks. They develop in unpredictable ways, and the response usually requires genuinely creative, as 212 opposed to pre-prepared, solutions.

207

cf. Farkas et al. 2011, p. 2 ibid., p. 1 cf. Csermely 2006, p. VIII Ludescher 26/06/2013, p. 1 ibid., p. 1 PAS 200/2011 Crisis management September 2011, p. 6

208

209

210

211

212

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A key takeaway for organisational crisis management is the need to build a diverse, heterogeneous crisis management team that includes elements that are free from organisational handcuffs and can move within the network. The PAS notes that:
Barriers to success in achieving higher levels of resilience might include [] Rigid and inflexible core beliefs, values and assumptions. It can be difficult to challenge such norms if the organisational culture does not encourage or reward creative dissent or individual 213 initiative.

However, a crisis team consisting purely of creative elements would not achieve anything meaningful without what Farkas calls a problem solver. Most nodes are problem solvers and are specialised to a certain task that they can complete (solve) with high efciency.214 Other nodes are problem distributors; hubs that distribute signals. As Farkas concludes: [these] three types of behaviours described above can be mixed in more complex networks, particularly those encountered in the real world.
215

Organisations usually already have sufficient problem solvers (technical experts) and problem distributors (managers). What typically lacks in a crisis scenario are creative elements. The core crisis management team can be such a creative element, shifting its attention and allocating resources where they are most required. The preconditions for having this freedom of movement and creative potential are diversity and redundancy within the core crisis management team.

213

PAS 200/2011 Crisis management September 2011, p. 6 Farkas et al. 2011, p. 1 ibid., p. 1

214

215

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2. Coping with complexity


The following section describes the Ashby Space, a theoretical model explaining the limitations and borders of complexity decision making. The chapter will then examine the theories of bounded rationality and fast and frugal heuristics as techniques to support complexity decision making within these limitations.

2.1.

Moving in the Ashby Space - response options to external stimuli in complex environments

The concept of the Ashby Space by Boisot et al. is based on Ross Ashby's 'law of requisite variety, which states that "a system survives to the extent that the range of responses it is able to marshal as it attempts to adapt to imposing tensions successfully matches the range of situations threats and opportunities confronting it."216 For living systems, such a response can be either a purely behavioural one (e.g. a hormonal response or a reflex) or a blend of behaviour and cognition, which lead to a conscious decision based on representations of its environment that are constructed out of 'schemas' structured descriptions of an external world. The benefit of such schemas is that they allow a system to distinguish between meaningful information and noise.217 What constitutes information or noise for a system is mostly a function of the systems expectations, history, motivations and judgements, or in the organisational language, its core missions, aims and values and the emergent organisational culture. Based on Ashby's law, Boisot et al. developed a diagram illustrating the Ashby Space, shown in Figure 16 below.

216

Ashby 1956, p. 32 cf. Boisot/McKelvey 2011, p. 279

217

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Figure 16: The Ashby Space

218

The vertical axis represents the real-world stimuli that affect a system (or an organism); a low-variety stimulus for a crisis management team in an organisation could be, for example, the announcement of presidential election results in a country that has no linkage or importance to the organisations operations. A high-variety stimulus for the same team could be the rumour about a possible contamination of one of their products, with severe impact on consumers. On the horizontal axis, Boisot et al. show the variety of a system's responses to the stimuli, also ranging from low to high. A low-variety response to a low-variety stimulus could simply be to acknowledge the election result, make a mental note and otherwise take no action. A high-variety response to the low-variety stimulus could be for the team to stop all operations and withdraw all staff from surrounding countries where they operate. This would prove to be devastating for the business. The first response saves scarce resources of energy and time; the second wastes them. The diagonal in the diagram indicates the point at which variety can be considered 'requisite', which means that the variety of the response matches the variety of the incoming stimuli in an adaptive way it facilitates survival. Based on the intelligence of the system, the response will be either more cognitive (for more intelligent systems) or more behavioural (for less intelligent systems). In the example above, an intelligent system would use its analytical capacity to assess the impact of the incoming stimulus (election results), thereby separating noise from information, and could decide to

218

Boisot/McKelvey 2011, p. 283

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move the stimulus up on the vertical axis (in case of a potential impact of the election results). This would create the need for a more complex response (i.e. moving towards high on the horizontal axis) to meet the requirements of requisite variety for successfully adapting to the systems environment without under-adapting or wasting resources.
219

In one of the

case studies, Expert B describes a situation that arose following the death of the president in a crisis-prone sub-Saharan country in which his company was operating; the decision was taken to send B to the country to establish the necessary measures to be able to deal with a rapid escalation of the situation. This constitutes an increase in relevant cognitive capability of the organisation, allowing it to adapt to the incoming stimulus (upcoming elections) in an adaptive way. Other options would have been a full country evacuation to avoid any risks (entirely ceasing business activities), or ignoring the red flags, potentially placing employees (and, again, the business) at greater risk. Expert B spent five days establishing triggers and plans; the crisis erupted on day six.
220

The response of the system to a stimulus is restricted by available resources (i.e. energetic, temporal, and spatial). Boisot et al. call these available resources the 'budget' that a system can draw upon for the purpose of adaptation. Hence, a response in the Ashby Space can only be considered functionally adaptive if it occurs within the budget221 (within the region labelled 0AB in Figure 17).

219

Boisot/McKelvey 2011, pp. 279-290 cf. Ludescher 1/08/2013, pp. 1214 cf. Boisot/McKelvey 2011, p. 284

220

221

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Figure 17: The adaptive frontier

222

The limit of this budget is the 'adaptive frontier' of the system. A response that lies outside this frontier will overstretch the systems budget and eventually lead to its physical disintegration. If the variety of an incoming stimulus lies above the adaptive frontier, the "resources required to register [...], interpret [...], and formulate adaptive responses also exceed the system's resource budget, eventually leading to errors and to adaptive failure", an effect that was first described by Herbert Simon as 'bounded rationality'.224 Every response that lies above or below the diagonal in Figure 16 (even if it lies within the systems resource budget) indicates that the system is either under-adapting (above the diagonal) or wasting its budget (below the diagonal), relative to what is required to respond to the stimulus. Given its intelligence, a human (system) can spend resources on interpreting the incoming high-variety stimulus and separating information from noise (facts from assumptions), thereby turning it into a lower-variety stimulus or the other way round. On the opposite end, a less-intelligent system (e.g. a bird) can more advantageously utilise his resource budget
223

222

Boisot/McKelvey 2011, p. 284 ibid., p. 284 cf. Simon 1947, p. 27

223 224

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towards a more energetic response (e.g. fly away if something moves in its peripheral vision). This phenomenon was observed when analysing organisations reactions to the Arab Spring unrest in 2011. The unexpected outbreak of violent protests in Egypts capital Cairo led to unprecedented mass evacuations. Only in certain exceptional cases was the decision to evacuate not only dependants but full-country teams actually warranted, and most companies did not have the required resources (cognitive capability, expert security knowledge, access to reliable analysis, defined action triggers, etc.) to lower the intensity of the stimulus their only option was to stay put and risk getting eaten, or react and fly away in contemplation of the possible threats. During the most recent, equally violent outbreaks of unrest in Egypt in July and August 2013, the dynamics where very different: many companies had undergone thorough evacuation preparation and planning, and were capable of assessing the rapid developments in their environment. Somewhat counterintuitively, companies that had undergone an evacuation planning process (i.e. increased their cognitive capability and adaptive frontier), stayed in country longer (or did not leave at all) than companies that were unprepared and struggling to make sense of their environment.
225

Since intelligent systems have the capability to expand their adaptive frontier (i.e. through innovation, use of technology, and many more), Boisot et al. reformulated Ashby's law in a more dynamic way, by stating that "the rate at which a human system's adaptation budget increases variety i.e. at which the adaptive frontier expands must at least match the rate at which environmental variety increases".
226

So what are the options available to an intelligent agent or system in face of variety (and complexity)? The diagram in Figure 18 visualises the alternative responses in the Ashby Space. The agent's location is shown at point Q.

225

cf. Moro 2013, p. 1 Boisot/McKelvey 2011, p. 285

226

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Figure 18: An agent at point Q in the Ashby Space

227

Confronted with a high-variety stimulus Y the agent can respond in a mindless' behaviourist fashion"228 by either doing nothing or generating 'headless chicken' responses (i.e. full country evacuation in Egypt), which moves Q horizontally to the right until one of the responses proves to be adaptive (it hits the diagonal at point C). With this costly and inefficient response, the agent might well move outside the resource budget and, hence, put its survival at risk due to resource depletion. Alternatively, it can respond in a cognitive way until it hits the diagonal at point R, meaning that it treats all incoming stimuli as familiar regularities or noise. This is the overconfident, 'seen it all before' approach. In the Egypt example, this would be over-confident companies that were complacent to the potential for serious deterioration and would possibly have suffered severe losses and incidents in such a scenario. "Intelligent, adaptive agents are best off locating on the diagonal in the Ashby Space, somewhere between 0 and a point before which the diagonal [...] would intersect the budget line AB".
229

At this stage Boisot et al. introduce Holland's terms 'exploratory learning' and

227

Boisot/McKelvey 2011, p. 286 ibid., p. 286 ibid., p. 287

228 229

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230

2 Coping with complexity

a cognitive move up the Ashby Space means that the agent will

need to process a higher variety of stimuli (i.e. its schemas will become more complex) before responding with some action a horizontal move across the diagram "is only adaptive if it stops when it meets the diagonal and does so before exhausting its budget."
231

This is

what Holland calls exploratory learning, whereas exploitative learning draws on prior experiences and represents a downward move down the Ashby Space to reduce the variety of the stimuli and hence the complexity of the required schema. Every response to a stimulus is therefore a trade-off between energy resources (the bird) and data-processing resources (intelligent organisation / human). Once an organism or organisation reaches its cognitive limits and a stimulus surpasses the resource budget on the vertical axis, it has reached what Simon describes as the boundaries of its rationality.232 The Ashby Space concept demonstrates why an analytical, cognitive capability is essential for organisational crisis management to ensure an adaptive response. The capability to decrease the variety of an incoming stimulus through analysis or prepared response options for predictable and structured problems (incidents), or triggers based on anticipation of possible developments for complex, unstructured problems (crisis), can save an intelligent organisations resource budget while staying adaptive. Outsourcing this function to consultancies or information providers that include impact analysis in their products is common practice by companies operating in more than one country. However, the information and analysis provided by these companies are only an aid to reduce the initial noise from a stimulus. An efficient and adaptive response to a high-variety stimulus requires an internal analysis process that takes into consideration the companys strategic objectives, values, and the specific potential impact on a local and global level.

2.2. Bounded Rationality


To better understand how humans in organisations find effective ways to deal with complex stimuli that lie outside their cognitive budget, the concept of bounded rationality and heuristic decision making are explored in the following chapters.

230

cf. Holland 1975, pp. 2627 Boisot/McKelvey 2011, p. 286 cf. Simon 1986, pp. 209224

231 232

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Due to the complexity, dynamism and equivocality of the present and future environments surrounding decision making, Simon suggests that humans are not able to always act in an entirely rational manner, and that this inability will result in a general state of satisficing, in which solutions that may not be optimal are chosen if they meet minimum requirements. This satisficing occurs due to the limited rationality of humans, who are intermittently cognitively ill-equipped to evaluate all potential consequences of decisions being made.233 Simon proposes that humans are limited in their rationality due to at least three factors: 1. Rationality requires complete knowledge and understanding of the consequences of a given action. In fast-developing, highly complex crisis situations, gaining full understanding of future consequences is an almost impossible task, and therefore this complete knowledge is seldom present at the time decisions are made. 2. Given that consequences of actions, per definition, will emerge in the future, it is difficult for decision-makers to fully evaluate the future worth of their decisions. 3. Rationality requires that all alternative actions are known. In actual decision-making processes, very few alternatives are known, which inhibits humans in making optimum decisions.
234

These three points are the main reasons why humans or organisations cannot act as a fully rational economic entity. Decision makers are therefore inhibited in being rational, since they will primarily base their decisions on readily available data and knowledge, and not be able to incorporate unknown data or knowledge into their decision making.235 Consequently, Simon proposes that organisations should develop clear organisational goals for employees to follow. These goals should act as the value premises that underlie daily decision making. The value premises should communicate what ends are preferred or desirable to the organisation, and clearly distinguish between what is acceptable and unacceptable. This proposition is in line with the complexity science theories that describe emergent behaviours on the (individual agents) micro level and allow adaptation for the

233

cf. Selten 2001, pp. 15 cf. Gigerenzer/Selten 2001, pp. 36 cf. Selten 2001, pp. 1114

234 235

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organisation as a whole on the macro level as a result of having simple rules guiding microlevel activities.
236

In summarising research on the effects of task complexity on decision behaviour, Todd refers to studies conducted by Payne et al. who state that "the general hypothesis has been that increased task complexity [e.g. a large number of alternatives] will increase cognitive workload, which will in turn lead to the increased use of heuristics in decision making".237 However, this causality need not always be true for organisms and living systems, and as Todd rightly points out:
Given sufficient adaptive pressure to succeed in complex tasks, evolution could build complex information-processing structures so that cognitive workload and use of simple, sometimes erroneous, heuristics are not increased. Cognitive limitations can be circumvented over the course of evolution certainly at a price, such as the considerable costs involved in bearing a large-headed, long-dependent human baby, but 238 at a price that clearly has been paid in the past.

Adaptation and evolution to increase an organisations adaptive frontier is a change process closely linked to organisational knowledge management and organisational learning. For acute crises, heuristics that can not only be applied under time pressure (fast), but can also ensure that the organisation remains within its resource budget (frugal), are of great interest to crisis management teams for decision making under uncertainty, time constraints, and high stakes. Although no complete theory of bounded rationality currently exists,239 three classes of decision-making processes are described by Gigerenzer to navigate within the bounded rationality: 1. Simple search rules. The process of search is modelled on step-by-step procedures, where a piece of information is acquired, or an adjustment is made and then the process is repeated until it is stopped. 2. Simple stopping rules. Search is terminated by simple stopping rules, such as to choose the first object that satisfies an aspiration level. Simple stopping rules do not

236

cf. Selten 2001, p. 14 Todd. 2001, p. 54 ibid., p. 54 cf. Gigerenzer/Selten 2001, p. 8

237 238

239

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involve optimisation calculations, such as computations of utilities and probabilities to determine the optimal stopping point. 3. Simple decision rules. After search is stopped and a limited amount of information has been acquired, a simple decision rule is applied, like choosing the object that is favoured by the most important reason rather than trying to compute the optimal weights for all reasons, and integrating these reasons in a linear or non-linear fashion, as is done in computing a Bayesian solution.
240

When applied to the Adaptive Crisis Response Model described in chapter 3.2 during highpressure situations, these simple rules will speed up the decision-making process while maintaining an adequate level of accuracy (see Table 1: Performance of two fast and frugal heuristics and two linear strategies).

2.3. Fast and frugal heuristics for dealing with complexity in crisis
While predictions and predictive analysis are doomed to fail in complex environments, Taleb advocates the 'less-is-more' idea that can be traced to Gigerenzer, who found that in various contexts, simpler methods for forecasting can work much better than complicated ones.
241

Furthermore, studies about decision making in high-stress, real-life situations, using fire fighters and military personnel as examples, show that when under pressure it is not rational decision-making processes that guide the individuals choices, but subconscious, intuitive methods that are activated the moment they are confronted by the stressor.242 Faced with overwhelming incoming stimuli and uncertainty, a methodology is required that wont place the organisation under analysis paralysis, i.e. the total inability to reach a decision that results from detail-oriented managers requesting more information, reports, studies, statistics, evaluations, opinion, and research on a subject. This can result in no decision being made, as the efforts to garner information and hold endless meetings and discussions are viewed as a progress on the subject matter and have effectively depleted the cognitive budget of the organisation.

240

cf. Selten 2001, p. 8 cf. Taleb 2012a, pp. 305308 cf. Mistele, p. 1

241

242

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Gigerenzer and Goldstein coined the notion of fast and frugal heuristics that yield good decision-making results despite limited time, knowledge, and computing power.243 According to Gigerenzer, contrary to conventional wisdom, limitations of knowledge and computational capability need not be a disadvantage.
244

Evidence exists showing that fast and frugal rules

can be about as accurate as complex statistical models (e.g. multiple regression, Bayesian networks), while demanding less information and computational power (cognitive budget)245 and that the larger the noise in a set of training data, the better the accuracy of a simple strategy relative to a complex strategy (where simpler means fewer free parameters).246 Simple heuristics are meant to apply to specific environments, but they do not contain enough detail to match any one environment precisely. On the other hand, producing overly specific strategies can be too highly focused to be of much use; having a large number of free parameters to manipulate can be a hindrance.247 This phenomenon has been described by various authors and is referred to as over-fitting or hyperrationality.248 Gigerenzers explanation as to why simple heuristics work is threefold: firstly, they are ecologically rational, meaning that they can exploit structures of information in the environment, thereby saving on the limited cognitive budget. A second reason is the robustness of simple strategies compared to models with large numbers of parameters, which risk over-fitting, and, thus, lead to a loss of flexibility and adaptability as it is tailored to only one very specific scenario. Third, real-world situations especially crisis situations involve multiple goals (see Figure 19) that have no known common denominator, which poses serious problems to optimisation, but can be handled by models of bounded rationality.249 Strategic decisions in crisis situations are usually based on trade-offs and least

243

cf. Taleb 2012a, pp. 305308 cf. Gigerenzer/Selten 2001, p. 7 ibid., p. 9 cf. Goldstein et al. op. 2001, p. 188 cf. Todd/Gigerenzer 2000, p. 733 cf. Weng 2009, p. 77 cf. Gigerenzer/Selten 2001, p. 9

244

245

246

247

248

249

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bad options, reflecting the sort of dilemmas often associated with strategic choices in complex systems.

Figure 19: Strategic dilemmas in crisis decision-making

250

Given the conflicting objectives, an optimisation approach to decision making is not feasible when decision time is scarce.
251

Mitleton-Kelly comes to the same conclusion:

Complexity also indicates that the search for a single 'optimum' strategy is neither possible nor desirable. Any strategy can only be optimum under certain conditions, when 252 those conditions change the strategy or solutions are no longer optimal.

A key process in bounded rationality is limited search. Whereas in models of unbounded rationality, all relevant information is assumed to be available already, real humans need to search for information first. Search can be for two kinds of information: alternatives (such as

250

PAS 200/2011 Crisis management September 2011, p. 18 cf. Selten. 2001, p. 17 Mitleton-Kelly 2003, p. 20

251

252

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253

for houses and spouses) and cues (when deciding between given alternatives).

Reimer

et al. describe fast and frugal heuristics in line with the three key processes in a bounded rational model as identified by Gigerenzer:
Fast and frugal heuristics are composed of simple building blocks that specify how information is searched for (search rule), when information search will be stopped (stopping rule), and how the processed information is integrated into a decision (decision 254 rule).

One example for a simple heuristic that out-performed other approach linear strategies in empirical tests is Gigerenzers Take the Best approach: cues are searched through one at a time, until a cue that satisfies a stopping rule is found. The decision is made on the basis of the cue that stopped the search, and all other cues are ignored. In empirical tests, Take The Best used less than a third of all information available,255 saving on the limited cognitive budget as well as allowing for decision making with limited available information.
Accuracy (% correct) Strategy Frugality Fitting Heuristic 1 (Minimalist) Heuristic 2 (Take The Best) Linear strategy 1 (Dawes Rule) Linear strategy 2 (multiple Regression) 2.2 2.4 7.7 7.7 69 75 73 77 Generalization 65 71 69 68
256

Table 1: Performance of two fast and frugal heuristics and two linear strategies

Based on research to simulate decision making under complexity Brehmer et al. used computer-simulated micro-worlds and found that:

253

cf. Gigerenzer/Selten 2001, p. 5 Reimer/Rieskamp 2007, p. 347 cf. Goldstein et al. 2001, pp. 174178 Tests were performed across 20 datasets. Frugality indicates the mean number of cues actuall y

254

255

256

used. Fitting accuracy indicates the percentage of correct answers achieved by the strategy. Generalisation accuracy indicates the percentage of correct answers achieved when generalising to new data. (Todd/Gigerenzer 2000)

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There is some evidence that performance [] may correlate with intelligence, but only when the opaqueness is removed []. Some results indicate that a new variable [] might correlate with performance. This variable was called heuristic competence, and 257 may be defined as a general competence for coping with complex systems.

Based on key functioning principles of complex systems discussed in 1.3.2, and conclusions derived from observing network topology in 1.3.3, as well as the consolidated findings on the effectiveness of simple heuristics for decision making under uncertainty and time constraints as described in 2.2, the next chapter aims to provide suggestions for guiding principles for organisational crisis management.

257

Brehmer 1992, p. 223

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3. Rethinking Crisis Management from a complexity perspective


This section is divided in two sub-chapters: Organisation and structure, and Decision Making. The first summarises the topological characteristics suggested for organisational crisis management, while the latter suggests a model for signal identification, evaluation, decision making, and control for dealing with acute crises situations.

3.1. Organisation and structure


In the following section, the conclusions drawn from the previous chapters are put into the specific context of an organisational crisis management team.

3.1.1. Distributed control


Looking at super-organisms, such as bee networks, and how their organisational topology supports crisis survival, Seeley notes:
Colonies of social insects provide us with countless examples in which a group operates smoothly to make ecologically important decisions, ones that determine the success or failure of the entire group. [] There is no central authority in these colonies. Rather, each individual operates with extremely limited information and yet, somehow, correct 258 decisions are made.

Researchers from various fields come to the conclusion, that a centralised control approach is characteristic of mechanistic, linear systems thinking, while a distributed control approach is more compatible with complex adaptive systems thinking.259 A key principle behind this self-organisation is that it is done in response to each agents perception of the situation rather than through some central controlling mechanism.260 As per the observations of Azadegan et al., a system controller has to reflect the complexity in its decision making, as the system becomes more complex. This is in agreement with Ashby's law of requisite variety. As the complexity increases, so does the risk for a centralised controller not receiving

258

Seeley 2001, pp. 259260 Azadegan/Dooley 2011, p. 419 cf. Paraskevas 2006, p. 894

259

260

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261

all necessary information or becoming overwhelmed by too much information.

In general,

Azadegan et al. observed that in centralised control systems, controllers standardise reporting and response options (as per Ashby's law, an attempt to reduce the external complexity to match it to the internal variety), which very often minimises flexibility to change and adapt.262 The key determinants of a centrally controlled system are the ability for tight coordination of efforts, the ability to centrally decide on allocation of tasks, resources and control (routing and filtering) of the communication between agents in the system, to increase efficiency.263 As Azadegan et al. summarise: a centralised system is superior at making the best of a situation with limitations on resources and connectivity, and in finding optimalities within a less complex system,264 while distributed control strategies enhance flexibility and responsiveness by minimising the distance between sensing and action,265 a key feature when information is opaque and time is scarce. Paraskevas findings support a decentralised approach:
"The behaviour of the system is determined by its agents interaction at a local level and this is the reason why the control of the crisis response system has to be distributed 266 among its agents."

Another important advantage of distributed control in networks is the networks capability to pick up on weak signals and TIEs, discern information from noise, understand the potential implications and, hence, allow for early strategic anticipation of potentially critical developments.267

261

cf. Azadegan/Dooley 2011, p. 420 ibid., p. 421 ibid., p. 428 ibid., p. 428 ibid., p. 419 Paraskevas 2006, p. 900 cf. Boisot/McKelvey 2011, pp. 290291

262

263

264

265

266 267

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3.1.2. Enabling conditions for self-organisation


With de-centralised control comes empowerment of individual teams on the local / micro level and Paraskevas recognises that:
"The system should not aim at specific agent behaviours and actions but at the collective robustness and resilience of the organisation. It should set the rules of interaction 268 between its various agents but not dictate their actions."

The common tenor from researchers looking at complexity to progress management theories is that successful self-organisation with a complex system (an organisation) is more effective in dealing with crisis situations than systems that have been designed in detail.269 Such designed systems very often may block or constrain emergent patterns of behaviour if they attempt to design and control the outcome,270 because they tend to curtail or hinder the individuals self-organising abilities. However, if redesign concentrates on the provision of enabling infrastructures while allowing for emergent relationship pattern and work methods, new forms of organisation will arise that will be more robust and sustainable.271 MitletonKelly describes enabling infrastructures as:
[] the cultural, social and technical conditions that facilitate x whether that is the day to-day running of an organisation or the creation of a new organisational form. The 272 enabling conditions are developed usin g the principles of complexity.

Paraskevas concludes that all that is required is sufficient structure to hold and exchange valid information that will support agents actions towards the common goal [and] adju st their action [] toward the same goal.273 The complexity perspective argues for an organic approach to change. When allowed to selforganise and in the presence of enabling infrastructure, humans in an organisation will create the structures and relationships necessary to overcome the constraints constantly presented

268

Paraskevas 2006, p. 903 cf. Mitleton-Kelly 2003, pp. 1112 ibid., p. 12 ibid., pp. 1112 ibid., p. 29 Paraskevas 2006, p. 900

269

270

271

272 273

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3 Rethinking Crisis Management

However, complexity does not argue for a total hands-off approach


275

that would be going too far for the psychological health of most executives!

3.1.3. Diversity and leadership


Based on Csermelys and Farkas findings from observing cellular networks, a diverse crisis management team, including creative elements, problem distributors, and problem solvers will allow for an adequate amount of variety to respond to a complex environment. 276 While no leadership function can be identified in cellular networks, in social human networks, crisis leadership is a recurring emergent phenomenon.277 Porches description of emergent crisis leaders is very similar to Csermelys portrayal of creative elements:
"The participants described an environment in which the crisis leaders remained very busy. The crisis leaders were described as moving very quickly and engaging in multiple activities simultaneously. The leaders were constantly monitoring the situation, making 278 decisions, and [] engaging in other activities at the same time."

Porches description of the characteristics of a crisis leader sound similar to Csermelys description of creative elements in chapter 1.3.3. Porche goes on:
Crisis leaders were described as critically thinking and being decisive even when there was limited factual information. The crisis leader did not remain in one location. The crisis leader was highly visible and accessible throughout the institution. The crisis leader was everywhere from the board room to the frontline engaging in multiple activities, multi279 tasking.

The structural lessons that are described in this chapter demand de-centralised, empowered, self-organising, diverse, and creative teams that share a common understanding of the organisations strategic objectives, missions, aims, and values. Another important characteristic that was identified by complexity scientists and practitioners alike was

274

Mitleton-Kelly 2003, p. 29 ibid., p. 29 cf. Farkas et al. 2011, p. 1 cf. Porche 2009, pp. 1520 ibid., p. 76 ibid., p. 90

275 276

277

278

279

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redundancy. Spare capacity not only allows for conting ency options but provides robustness, space for development and the means for plasticity,280 whereas a highly efficient system removes slack and magnifies small changes.

3.2.

Information gathering and decision making

In the following section this thesis suggests a practical and simple model for an organisation to implement at every level of its crisis management system by applying the findings from complexity science and best-practice crisis management literature. Based on the findings from complexity science and the observation of crisis network behaviours, the models main objectives are to enable adaptability, anticipation, complexity absorption, local decision making in line with the organisations strategic objectives, guided and controlled by simple and global rules, all while ensuring a constant distribution of the right information to the right elements at the right time. For the model to reach its full potential, the organisation should have the enabling conditions in place, including the right diversity of people, distributed control, capability for selforganisation and fast and direct communication between the micro and macro levels of the organisation. However, even without any of those elements in place, the model should allow an organisation to take informed decisions where the complexity of the situation seems overwhelming, making it difficult to separate noise from information and prioritise what actions and communication need to be undertaken. The Adaptive Crisis Response Model as depicted in Figure 20 consists of the following chronological steps:

3.2.1. Internal context


Complex systems are permeable and have ill-defined boundaries. The differentiation between internal and external is not always clear but drawing a line to discern the internal from the external is necessary. The internal context is made up of defined roles, internal objectives and internal stakeholders.

280

Cilliers 1998, p. 10

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Coping with Crisis and Complexity Confirm roles and responsibilities

3 Rethinking Crisis Management

Based on the nature of the crisis, the right people need to be summoned. Usually, crisis management plans include a pre-defined core team and a selection of technical specialists that can be activated depending on the situation. At this step, expectations and assumptions can be clarified with each team member as well as an informal categorisation as creative elements, problem solvers, and distribution hubs. Typically, creative elements are the crisis team itself or its leader, distribution hubs are often middle managers, while problem solvers are technical experts and supporting external companies or advisors. Set the objectives A common objective provides principles and rationale for decision making. This step is essential and should not only be used to define what needs to happen for the crisis to be over, but also to align everyone involved in the management of the crisis with the macro-level simple rules. In an organisation with a functioning crisis culture, where there is a common understanding of the organisations ethics, behaviours, and strategic goals, this step is merely a reconfirmation. For organisations that lack this normative element, clarifying the rules of engagement is the initial enabler for local self-organisation and solutions. Identify (internal) stakeholders Understanding internal stakeholders is essential in ensuring that the right knowledge gets to the right people at the right time. Once identified, stakeholders can be categorised by influence and interest.

3.2.2. External context


To understand the external context, it is essential to separate noise from relevant information, as well as identify stakeholders outside of the organisation so that weak links can be activated, and influencers can be kept informed and engaged. The concept of creative elements, distribution hubs, and problem solvers also extends to external stakeholders. Facts Facts are not the only baseline for decision making but it is necessary to separate them from assumptions to understand where additional resources are required to collect or analyse information. Often, facts lead to immediate action requirements. As part of this step, these actions should be captured, assigned, and tasked to the respective problem solvers.

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3 Rethinking Crisis Management

Every assumption leads to a request for (more) information (RFI). Similar to actions, these RFIs need to be captured, assigned, and tasked. As more information becomes available, some assumptions will be confirmed as fact. As time and resources are often limited in crisis situations, clear priorities for actions and RFIs should be established at this stage. Identify (external) stakeholders Understanding the communication requirements of external stakeholders is essential for the distribution hubs to be able to function effectively. The mapping of these stakeholders will facilitate one of the later steps, targeted communication.

3.2.3. Impact and Triggers


While many crisis management teams focus on the development of specific scenarios, it is the actual impact on the organisation that often gets neglected and should be brought into focus when anticipating the direction in which the situation is likely to develop. Crisis situations are complex in nature and, hence, unpredictable. The aim of this step is not to develop precise predictions about what might happen, but to recognise trends, patterns, drivers, and anticipate the most likely impact. The credible worst-case impact should also be considered. If the situation is evolving and the crisis is still building, triggers should be put in place to enable the organisation to respond adaptively (i.e. neither over-reacting nor depleting its resource budget or under-adapting to the fast-moving environment). These triggers need to be in line with the initially defined objectives and need to be specific to the level on which they are defined, i.e. triggers for the crisis team on the affected site will be different to the triggers on the global corporate level of an organisation. Triggers should be internal and external, observable or measurable, and contain a relevant feedback element. In the case of Expert B, triggers on the local level allowed the crisis team to focus on preparation of evacuation options until the pre-defined triggers (violent riots passing through certain locations) were met, at which point the prepared response options were activated. Once defined, these triggers lead into the next step: the response options.

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3 Rethinking Crisis Management

3.2.4. Response options


Response options will be identified throughout the previous steps. These response options are the cumulative outcome of stakeholder engagement, creative elements, and problem solvers and should be linked to the triggers. These response options will require certain preparation steps which can be captured and prioritised as action items and should be allocated individuals or teams.

3.2.5. Communication
Once the facts are known and response options have been identified and prioritised, a key message containing these elements can be crafted and disseminated. Based on the understanding of internal and external stakeholders, targeted communication can be undertaken based on information requirements, importance, and influence of each stakeholder group. This communication is not a one-way street and should allow for an information flow back to the organisation. The organisation should have the capacity to receive and analyse this information in a structured way and include it in the initial steps of the model: the facts, the assumptions and the anticipated impact.

3.2.6. Review
To ensure that the organisation can adapt to incoming stimuli (new stimulus or in response to the teams actions) and the changing environment a review schedule of all the steps should be established. Most importantly, the review should consist of an update of facts, assumptions, and stakeholders (and the respective action items), and a comparison of the actual situation with the identified triggers and an assessment on the effectiveness of the chosen response option. The frequency can range from hourly to daily, depending on the intensity and phase of the crisis.

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3 Rethinking Crisis Management

Figure 20: Adaptive Crisis Response Model as described in 3.2

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3 Rethinking Crisis Management

The Adaptive Crisis Response Model is a prototype that can and should be implemented on every level of an organisation, in line with the principles of complex adaptive systems (selforganisation and irreducibility). It allows for scaleability of the system, and supports a decentralised control approach and local decision making and empowerment.

Figure 21: Self-organisation and individual decision making on every level guided by common objectives

Similar to the manner in which successful networks move to a small and more clustered phenotype under stress, the Adaptive Crisis Response Model allows for individual decision making on every level and supports local teams to identify local solutions for local problems, or global solutions for global problems. The examples of Expert A and Expert B indicate the importance of clear and simple rules on every level. Expert As case required the recalibration of whole regional offices because there was no rule book and regional managers assessed it to be appropriate to break laws to pursue the organisational objective of creating revenue, demonstrating the importance of having a rule book of policies and organisational culture. The case study of Expert B, in which a local guard supervisor took the individual decision to hand out shot-guns to guards during a violent riot at Bs site, disregarding the companys general rule not to store or use weapons, shows the importance of local empowerment in line with the overall objective: in Expert Bs case, the protection of staff as an objective would overrule guidance that was not adequate to the local circumstances.

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4 Conclusion

Conclusions environments

for

Crisis

Management

in

complex

The objectives of this thesis where three-fold: first, to introduce the current state of knowledge on complexity science and how it relates to crises in general; second, to examine if organisational management can draw lessons from networks and their behaviour under crisis, and third, to provide practical, yet empirically supported solutions for coping with crisis in human organisations. This was achieved by researching these elements and interviewing risk and crisis experts from various sectors, leading to the creation of a model to support organisational structure and crisis decision making under uncertainty and complexity. By looking at principles of complexity sciences and acknowledging that not only does todays organisation need to survive in an environment in which the next crisis is only one small interaction away due to its complexity, but that the organisation needs to be seen as a complex system itself, we recognise that prescriptive, mechanistic approaches to dealing with complexity crises are neither sufficient nor effective. The same principles that explain why a crisis can develop out of minute initiating events and spiral out of control due to positive feedback loops and unpredictable power laws, can aid in informing an approach to organisational crisis management by embracing the characteristics of complexity. By introducing the generality of network properties, the characteristics of different networks (which can be seen as complex systems themselves) were examined, identifying how networks increase their chances of survival by increasing the variety of agents in the system, the number of loose connections, as well as the rate of information flowing through the system. These principles can be related to different types of networks and the findings of the expert interviews (in addition to Csermelys research) indicate that they also apply to organisational, human networks. Furthermore, the concepts of weak links, weak signals, and creative elements also resonate with the principles of complex systems and have direct relevance to crisis management. While weak links stabilise complex systems by providing the required amount of flexibility to withstand shocks in unpredictable environments, it is the identification and correct interpretation of weak signals that enable organisations to anticipate the possible impact. The ability to recognise and act on these weak stimuli is inherently linked to an organisation-wide crisis culture and common understanding of the organisations main values and objectives. To make the step from general observations to conclusions for crisis management, three different models for dealing with complexity were analysed: first, the theoretical, complexity Page | 78

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4 Conclusion

informed model of the Ashby Space, which helped to shape the understanding of the limitations of any system navigating through complexity; second, the concept of bounded rationality, a model describing the psychological limitations humans face when trying to make sense of complex situations; and third, a practical, fast and frugal approach to decision making, creating the empirical fundament for the suggested Adaptive Crisis Response Model, by showing that simple strategies and heuristics often outperform overly detailed analytical decision-making models. The enabling conditions for intelligent self-organisation were described as being decentralised, distributed control, autonomy of agents guided by simples rules, a wide diversity of agents in the system and a permissive leadership, all of which help in shaping crisis culture, an emergent property of the organisation as a complex system. Simple rules instead of detailed checklists, diversity of employees instead of homogenous teams, local solutions and interactions, as opposed to centralised, global control, and redundancy instead of just efficiency are the reoccurring elements described in recent academic research and by crisis experts in industry-leading companies. By providing an Adaptive Crisis Response Model, which can constitute the core of any crisis management plan, the author has provided organisations with a simple model that can be quickly applied to any situation and offers a starting point for decision making in complex situations under uncertainty. The model, though following a process-like approach for better understanding, should enable an organisation to: Anticipate strategically (by de-centralised control, sensitivity to weak links and understanding the potential impact of events, not the event itself) Absorb complexity (by expanding the organisational adaptive frontier through cognitive budget, response capabilities, diversity, and self-organisation) Adapt constantly (by using triggers as waymarks and regularly reviewing not only the external development but also the systems response and the feedback it receives) The most promising area for future research in this topic stems from network sciences: how do networks interact with each other? How do successful networks manage the trade-off between efficiency and redundancy? How can complexity and network performance be measured and applied to organisations? These are just some of the questions to which this study gives rise; further research, involving empirical work with actual crisis management teams and under crisis scenarios would yield practical results and deeper insights into successful crisis management in an increasingly complex world. Page | 79

Coping with Crisis and Complexity

Annex A

Annex A: Expert interviews


This section contains a short biography and a summarised version of the expert interviews. The verbatim transcription can be found in the separate document: Interview Transcriptions.

A1

Expert A: CEO of a global crisis management company

Biography
Expert A is the Chief Executive Officer of an industry-leading company offering crisis management services to its clients. A is a frequent speaker on how geo-political risk can impact on a companys operations and on the role of the private sector in fragile and postconflict states. In 2007, he was called to contribute to a congressional oversight committee in the United States and to a foreign policy commission in the United Kingdom. A has an honours degree in Modern History and attended the Advanced Management Programme at INSEAD business school in France.

Interview summary
Crisis management structure and approach The organisation that A manages specialises in providing Fortune 500 companies with advice and support for political, security, and integrity risk. As part of this offering, the company is heavily involved in both their clients crisis management preparation and direct support during crises. While many crisis management plans that the organisation produces for their clients are quite voluminous documents, the companys own crisis management plans are fairly light: Its not the 75-page manual that has every conceivable scenario that might go wrong. Nor is it a mission statement with a phone number but it is nearer to the mission statement with the phone number than it is to the 75-pages, says A. When asked what type of incident would trigger the full activation of the crisis management plan in As organisation, A mentioned that he actually could not remember the exact definition and that for him this indicates that indicate that whilst the plan might have those definitions [] we will make that assessment on the day almost regardless of what our plans says. The fact that the company and A have been surviving in a very crisis prone business and environment indicates that in this specific case, a detailed crisis management plan and detailed knowledge of the plan are not pre-requisites for effectively managing crises. However, the company has been constantly growing since it was founded nearly 40 years ago and is just moving through the process of becoming a medium-size organisation, and certainly a global Page | 80

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Annex A

decentralised organisation that has the requirement for a greater level of bureaucracy. This new requirement for more bureaucracy runs deeply against the companys laisse z-faire culture but has been identified by A and his senior managers as being a requirement to cope with the increasingly internal and external complexities the organisation faces. Creative elements A mentioned that those naturally disruptive, creative, iconoclastic individuals [] people that just look at the world differently have always been an important element of the company. One of the companys best-known departments, which deals with high level / high impact / high severity crisis cases, mostly consists of such individuals, who during periods of less work turn that creativity inwards and say we need to completely turn around the way were doing business but are indispensable when cases require out-of-the-box thinking and effective solutions. The value of having such individuals as part of the companys historically more traditional / military-trained employee base has been recognised and a conscious effort is undertaken to increase diversity throughout the organisation, including gender diversity up to senior management levels. Crisis case study A1 When asked to speak about the more memorable crisis situations that affected the company itself (as opposed to affecting clients of the company), A brought up the example of a cyberattack during which some sensitive client information had been accessed and removed from one of the companys server. The hacker contacted the company multiple times over the coming years, threatening to release confidential client information but interestingly never made any demands. In this specific crisis the company had no control over the outcome and the importance of handling the potential consequences of the event was crucial. Decisions had to be made with the very sparse information that was available. The company proactively contacted the affected clients and since the impact of the incident was very limited it is now perceived as an averted crisis, but without being under the companys control. Crisis case study A2 Another case study developed into a full blown crisis from which the organisation only recently recuperated, even though the event took place nearly a decade ago. In this case study, one of the companys offices was involved in unethical business practices against journalists on demand of a major client. The incidents only became public many years later and the persons involved had already left the company or been dismissed. As part of his role at the time of the incident, A had to standardise and unify the various offices Page | 81

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Annex A

of the company that were working very independently and not necessarily representing the head offices values. It was during that time that the unethical business practice was uncovered and stopped by A. The situation seemed to have emerged as a clear outcome from the lack of a common, global understanding of the companys values and A had to lead lengthy discussions with the office involved about what was right and wrong. Years later, A noticed an article about the companys client at that time that had initiated the incident and instantly notified the head office of the potential for reputational damage. The possible impact of this article was underestimated and few days later the story had gained traction and a fullblown crisis was under way for the company. Even in hindsight, A does not think that this crisis could have been identified earlier or averted with more attention to weak signals. A was faced with the difficult decision of how to manage the reputational fallout of the incident, without being able to actually change the way the company was doing business: the malpractice had been stopped several years ago and control had been put in place to avoid this from happening ever again. Since the incident occurred in a different country and culture area than A was from, he initially relied heavily on the local offices advice, which was to launch a very visible advertising campaign. A was against the approach and decided that attaching the companys name to the crisis was not the right approach. Instead, client after client was contacted separately and the situation was explained. The crisis did eventually subside; however, it is difficult to assess if the local solution (suggested by the affected office) would have yielded better (or worse) results. Crisis case study A3 In another example that A shared, the office manager of a newly opened office in a very competitive emerging market discovered that one of her employees had still access to the email server of her previous employer, who is a competitor of As company, and they decided to use the information found on the server as a competitive advantage. The competitor company found out and approached A on HQ level, making the demand for A to instantly cease doing business in the region and close the office, otherwise they would report it to the authorities. In the meantime, A had realised that this was taking place, had conducted some forensic analysis and had taken the decision to pro-actively self-report to the local authorities. This made the competitors demands irrelevant and the potential crisis could be contained. Following this incident, the involved persons were dismissed, and organisation-wide, mandatory ethic courses were put in place for every employee holding management responsibility globally. Similar to a small forest fire removing combustible material without evolving into a catastrophic wildfire, in this case, employees were fired, the organisation underwent a change and potentially much bigger crises were averted. Page | 82

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Annex A

As in case study A2, in the A3 example, the justification presented by the culprits for their behaviour was thats just the way things are done here, i.e. a local interpretation of the context without consideration of the wider organisational values and potential impact of this behaviour. A clearly stated that at any time the companys approach was to adhere to standard international level of ethical behaviour and if that meant excluding certain markets from their business, so be it. A strong armed forces and intelligence services background of the involved individuals and lack of exposure to the corporate culture and rules of engagement might have further contributed to the situation.

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Annex A

A2

Expert B: Risk and Crisis Director Middle East & Africa for a

global energy company


Biography
Expert B brings over ten years of Special Forces experience, with an additional 7 years of crisis management and security expertise for a global industrial company with a special focus on the Middle East and Africa, where he has managed many sensitive situations. Bs crisis management experience includes managing security operations for the company in four different high-risk countries, followed by various engagements as Crisis Advisor in eight different countries. B was heavily involved in operational and tactical crisis resolution and is currently holding a more strategic management role with his organisation.

Interview Summary
Crisis management structure and approach As is the case with many technical companies in the energy, mining, and infrastructure sector, Company B uses a multi-tiered crisis management system with formalised plans and escalation criteria, and crisis management teams on site, country, region (zone), and corporate level. Bs role was created to support the country Managing Directors and provide guidance and tools for the development of the country security posture. Every Managing Director holds security responsibility. While some countries have dedicated security resources, others rely on case-by-case consulting support from external companies or have no security roles at all. B does not use a clear-cut definition of when dedicated security resources are required, but uses a risk management approach evaluating the companys exposure, the exact location and nature of operations, and the resulting risks. Company B is still operating in war-torn Syria, one of very few companies to do so. Bs approach to crisis management builds heavily on security risk management as a precondition for crisis anticipation, identification, and resolution. As part of his current role, B is developing a zone-wide risk assessment sheet including threats, vulnerabilities, level of readiness, risks, exact exposure (expatriates, travellers, visitors, etc.) for each site in 34 countries. This overview allows B to anticipate where and how a crisis scenario might affect the individual sites and country offices. Anticipation and learning from past events is crucial Page | 84

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Annex A

for Bs approach to crisis management (next time the fly comes this way, I will go there and I will catch it) and relying on having an excellent, trusted, and local information network. However, B also clearly states that not every crisis can be anticipated and that an organisations capability to respond to a crisis depends very much on the level of preparation and the capability to scale-up quickly, regardless of the specific scenario. Once these provisions are in place (anticipation, scaleable security capabilities, information network), security can be managed remotely in most of the cases but need to tightly administered and maintained. B mentions that crises can occur on every level and can represent a crisis for the level it affects, even though it might not be a crisis for the whole system. Company Bs crisis teams are under the HSE umbrella and composed of a core team / skeleton staff and technical specialists that can be summoned depending on the nature of the crisis. B mentioned the very strong commercial pressure under which security decisions have to be taken and that commercial requirements sometime lead to decisions that are not in the interests of security. B further mentioned the prevalence of technical, linear, and mechanistic thinking when it comes to security: [security] is not like HSE, HSE has rules, it is a law, you have to abide by it, you can measure it. Crisis case study B1 Bs company had been operating for a number of years in a relatively stable sub -Saharan country when the president of the country passed away and his son took over. The opposition candidate steered rumours about foul play and the country managers escalated the situation to the corporate team, asking for support in case the situation escalated. Even though the country had been unproblematic in recent years, there was a history of violent protests and the company had already undergone one full evacuation a number of years prior. B was deployed to the country to organise the companys crisis response option. After five days of preparation, the crisis broke out on the sixth day with surprising intensity and violence. B had anticipated that the protest movement would move towards their site and had estimated the time it would take for the mob to reach the location. Based on this, an escalation plan was developed, i.e. if the protestors passed a certain landmark, B would proceed in the escalation of the plan. However, B lacked the country-specific knowledge at the time and was surprised when he found out that his timings were wrong: It was my first experience in Africa and I had all the proper ideas of how we should organise security and Page | 85

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Annex A

conduct the evacuation etc., but two things I didnt see where the speed and the brutality. The mob was moving much faster than anticipated and were extremely violent, so that protestors had already started to climb the sites fence and intrude with company Bs employees still in the site. Finally, the guard forces managed to disperse the crowd but only after buildings were looted and people had been wounded. According to B, two factors contributed significantly to the successful resolution of the crisis. First, faced with his guards being caught in close hand-to-hand combat with the protestors, the local guard supervisor took the decision to hand out shot-guns to his men. This constituted a violation of the companys policy, which had advised that guns should not be kept at all on site. He knew that people were at risk if he would not keep the weapons [] so basically he is coping with the lack of responsibility of the company [] because he knows it is a proper thing to do. As soon as the first rounds of non-lethal ammunition were fired by the guards, the crowd started to retreat and finally dispersed. Second, some of the local guards managed to persuade the crowd not to storm and loot certain buildings by simply appealing to the crowd saying that they would lose their job if the sites got damaged. B also mentioned that part of his contingency plan at the time was the centralisation of people in just one building. The security guards were not sufficient to effectively protect all the sites in the city, so similar to a network that switches from a large phenotype to a smaller, more clustered phenotype under crisis, B concentrated the people and security guards at one site only: sometimes, you make sure that you have the main organs still alive. According to B, there was no possibility for the corporate crisis management team to support the country office while the crisis was escalating: it was a local problem that had to be dealt with by local resources with local knowledge about how things work around here. Another note-worthy remark was about the roles in the crisis team and crisis leadership. The crucial during this crisis is the capacity of the managing director to delegate the operations, always be capable of saying I dont want to go any further or not interfering if he chooses so. Like a creative element, the managing director needed to have total freedom of movement in his decision making and was relying heavily on B (his problem solver) and other managers (his problem distributors) to deal with the situation. This was perceived as positive by B during the crisis. B further repeated the importance of having security capabilities prepared, regardless of the specific scenario: it is too fast, it is too fast because all I described happened in 50 minutes,

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Annex A

the heat was on 50 minutes [] so it is that part of the anticipation and preparation that was absolutely crucial.

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Annex A

A3

Expert C: Senior Lecturer Strategic Risk Management at

Oxford Brookes University


Biography
Expert C is a Senior Lecturer in Strategic Risk Management in the Oxford School of Hospitality Management (Faculty of Business of Oxford Brookes University), teaching and doing research and consultancy in the areas of risk, crisis, business continuity and disaster management and has been in this role for the last 14 years. Coming originally from the hotel industry, Cs focus is on hospitality and tourism organisations and destinations. C often uses complexity thinking in approaching his research and is a member of the Complexity Research Group at the London School of Economics. Cs research on non-financial risk management ranges from enterprise risk management (ERM) and business continuity of international (mainly) hotel chains to terrorism and security of soft targets and disaster management and recovery of tourism destinations.

Interview Summary
Crisis management structure and approach Based on his extensive research on crises and crisis management in the tourism industry, Expert C had many examples to share. Expert C mentioned the ineffectiveness of the prescriptive approach that many companies have for crises many times during the interview. The suggested solution from Expert C is a common plan for all crises that can be adapted and modified to the specific crisis scenario. This common approach needs to contain the key elements of a crisis plan (composition of the crisis team, invocation, information, contact details, standard stakeholders, etc.) but can only work if there is a crisis culture within the organisation and common training and education for staff to enable such a culture to emerge within the organisation. Signal detection Expert C highlighted signal detection as an essential element of crisis management / crisis prevention. Although C does not necessarily agree that every crisis emanates noticeable signals before it happens, he agrees that it is true in most of the cases and, hence, early signal detection is key to successful crisis management. C identifies three different types of Page | 88

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Annex A

detectors: core detectors (normal employees, staff), ad-hoc detectors (clients, suppliers, etc.), and expert detectors (risk professionals, consultancies, etc.). However, even though the signal might be picked up, the sensor might not be able to interpret it. C uses the term risk intelligence to describe what Boisot et. al. describe in their Ashby Space model as cognitive capability to reduce an incoming stimulus. This risk intelligence is based on two different types of organisational knowledge: procedural knowledge, which is the knowledge about the standards and processes, and behavioural knowledge, which describes how one actually responds to the crisis event. It is the behavioural knowledge that often lacks in organisations during crisis situations. For organisations to extend their adaptive frontier (as per Boisot et. al.), such knowledge can be brought into the system externally through use of expert consultants. Expert C mentions the example of the Fukushima crisis in Japan, during which he worked with a hotel chain on resolving the crisis. The chain had good procedural and behavioural knowledge to deal with the initial earthquake and the tsunami that followed, but the nuclear disaster was so unexpected that they had to consult and hire a CBRN expert to advise them about the required measures and responses. With this additional knowledge, the organisation quickly identified that uncontaminated water was urgently required to keep up their core processes and became the largest bottled water buyer in Japan within hours. When faced with an unexpectedly complex environment, the organisation quickly increased their own internal complexity and, hence, the variety of their response options, to deal with the changed environment successfully. The ignorant use of contaminated water would have represented an under-adaptation and would have likely led to the end of the organisation, quite literally. C mentioned that as crisis organisations grow in complexity, the more they become aware of their gaps which spurs further growth. Another significant area for early detection are the simple rules that tell an employee to detect the abnormal (implying that the employee first needs to understand the normal), which could be irregularities in daily workflow or specific patterns. The organisations role is to make communication platforms available to report these abnormalities. Once these abnormalities have been reported, it is the organisations risk intelligence that enables an adequate response. In organisations, risk intelligence can be increased through fusion hubs. Since fusion is the first step towards sense making, Expert C advocates a wide communication for these initial weak signals to a wide variety of managers or some specialised functions (e.g. risk managers) that can put the signals into context and draft, recognise their importance, and draft an appropriate response.

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Coping with Crisis and Complexity Anticipation and response

Annex A

When asked about how best to deal with uncertainty, Expert C mentioned scenario planning as a suitable tool to explore the space of possibilities. C used the term the adjacent possible, which basically describes a heuristic similar to Gigerenzers fast and frugal approach, not by optimising a solution but by identifying what is possible at all in the circumstances and use this as a starting point for crisis response. C also highlighted the importance of a big variety of actors and participants for anticipating how an organisations survival might be challenged while avoiding organisational bias and group-think. Networks Expert C stated that network theories are applying to his theories of signal detection in terms of how information is being transmitted and distributed through a network or a system. When it comes to emergent behaviours, C mentioned that networks show emergent behaviours under crisis and there are three parameters that influence these: (1) the diversity of agents, (2) the nature of connections amongst these agents, and (3) the rate of information flowing through the system. An increase in any of these three factors will increase the effectiveness of the network response to a crisis situation. C also mentioned the importance of loose connections (equivalent to the concept of weak links) to increase connectivity in the system all while staying flexible in terms of connectivity. Creative Elements As one crucial element in crisis resolution Expert C mentioned the resourcefulness of people as one of the most significant contributors to increase the requisite variety. C refers to the successes that a company experienced after choosing a risk manager with a very different background than the usual police, military, or intelligence experience.

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Annex B

Annex B: Expert survey


Ex pe rt Date Collected Does your organisati on have a crisis managem ent system? How well embedded is crisis management in your organisation? Defined, documented, structured and linked processes It is an undocumented ad-hoc process Defined, documented, structured and linked processes Some formal processes, unstructured and repeatable Some formal processes, unstructured and repeatable Formal management control processes implemented It is an undocumented ad-hoc process It is an undocumented ad-hoc process How often does your organisation train its crisis management team? How important are your informal connections in managing a crisis? Has your crisis management system been activated in the past 2 years? Which type of crisis have you experienced most frequently? Did you find your crisis management system effective? Which threat is most likely to disrupt your business in the next 12 months?

2013-0121 13:07:17 +0400 2013-0121 13:07:04 +0400 2013-0121 11:53:46 +0400 2013-0121 11:52:10 +0400 2013-0121 11:50:55 +0400 2013-0121 11:49:13 +0400 2013-0121 11:47:44 +0400 2013-0121 11:46:21 +0400

No

Yearly or less

Very important

More than 5 occasions We haven't activated it in the last 2 years We haven't activated it in the last 2 years We haven't activated it in the last 2 years We haven't activated it in the last 2 years

Informational (IT infrastructure or data affected)

Somewhat

Data breach

No

Not at all

Indispensable

We have never had a crisis

No

Cyber terrorism

Yes

Yearly or less

Indispensable

We have never had a crisis

It wasn't used

Political instability

Yes

Not at all

Important

We have never had a crisis Informational (IT infrastructure or data affected)

It wasn't used

Conflict with Iran

Yes

Yearly or less

Very important

It wasn't used

Regulatory changes

Yes

Yearly or less

Indispensable

1-2 occasions

No

Not at all

Indispensable

1-2 occasions We haven't activated it in the last 2 years

Operational (impaired ability to function properly) Behavioural (alleged illegal or questionable conduct) Informational (IT infrastructure or data affected)

Somewhat

Political instability

Yes

Regulatory changes

Yes

Yearly or less

Important

Somewhat

Cyber terrorism

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Coping with Crisis and Complexity


Ex pe rt Date Collected Does your organisati on have a crisis managem ent system? How well embedded is crisis management in your organisation? Defined, documented, structured and linked processes Continually improving process performance Defined, documented, structured and linked processes Some formal processes, unstructured and repeatable How often does your organisation train its crisis management team? How important are your informal connections in managing a crisis? Has your crisis management system been activated in the past 2 years? Which type of crisis have you experienced most frequently? Did you find your crisis management system effective?

Annex B
Which threat is most likely to disrupt your business in the next 12 months?

10

11

12

13

2013-0121 11:46:11 +0400 2013-0121 11:45:30 +0400 2013-0121 11:45:10 +0400 2013-0121 11:43:54 +0400 2013-0121 11:43:40 +0400 2013-0121 11:42:53 +0400 2013-0121 11:42:30 +0400 2013-0121 11:42:29 +0400 2013-0121

Yes

Yearly or less

Important

1-2 occasions

Operational (impaired ability to function properly) Operational (impaired ability to function properly) Operational (impaired ability to function properly) Operational (impaired ability to function properly)

Yes

Political instability

Yes

Yearly or less

Very important

1-2 occasions

Yes

Political instability

Yes

Every 2 years

Very important

1-2 occasions

Somewhat

Regulatory changes

Yes

Yearly or less

Mildly important

1-2 occasions

Yes

Conflict with Iran

I don't know

14

Yes

15

Yes

16 17

Yes Yes

I don't know Formal management control processes implemented Formal management control processes implemented Defined, documented, structured and linked processes Continually improving

I don't know

I don't know

I don't know

We have never had a crisis Behavioural (alleged illegal or questionable conduct)

I don't know

Financial instability

Once every six months or less

Very important

3-5 occasions

Yes

Crime

Yearly or less

Very important

3-5 occasions

Operational (impaired ability to function properly) Operational (impaired ability to function properly) Operational (impaired ability to

Yes

Financial instability

Once every six months or less Every 2 years

Very important Indispensable

More than 5 occasions 1-2 occasions

Yes Yes

Political instability Political instability

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Coping with Crisis and Complexity


Ex pe rt Date Collected Does your organisati on have a crisis managem ent system? How well embedded is crisis management in your organisation? process performance It is an undocumented ad-hoc process How often does your organisation train its crisis management team? How important are your informal connections in managing a crisis? Has your crisis management system been activated in the past 2 years? Which type of crisis have you experienced most frequently? Did you find your crisis management system effective?

Annex B
Which threat is most likely to disrupt your business in the next 12 months?

11:42:05 +0400 2013-0121 11:41:26 +0400 2013-0121 11:41:01 +0400 2013-0121 11:40:55 +0400 2013-0121 11:40:28 +0400 2013-0121 11:40:12 +0400 2013-0121 11:39:33 +0400 2013-0121 11:38:50 +0400 2013-0121 11:38:49 +0400

function properly)

18

Yes

Not at all

Indispensable

19

I don't know

20

Yes

21

Yes

22

Yes

I don't know Defined, documented, structured and linked processes Defined, documented, structured and linked processes Formal management control processes implemented It is an undocumented ad-hoc process Continually improving process performance Formal management control processes implemented

I don't know

Negligible

3-5 occasions We don't have a crisis management system We haven't activated it in the last 2 years

Operational (impaired ability to function properly)

No

Political instability

Yearly or less

Important

We have never had a crisis Behavioural (alleged illegal or questionable conduct) Operational (impaired ability to function properly)

I don't know

Regulatory changes

It wasn't used

Conflict with Iran

Yearly or less

Mildly important

1-2 occasions

Yes

Financial instability

Yearly or less

Important

23

No

Not at all

Very important

1-2 occasions We don't have a crisis management system

Operational (impaired ability to function properly) Operational (impaired ability to function properly) Operational (impaired ability to function properly)

Somewhat

Civil unrest

Somewhat

Regulatory changes

24

Yes

Yearly or less

Very important

1-2 occasions

Yes

Data breach

25

No

Yearly or less

Important

3-5 occasions

Operational (impaired ability to function properly)

Yes

Natural disasters

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Ex pe rt Date Collected Does your organisati on have a crisis managem ent system? How well embedded is crisis management in your organisation? Formal management control processes implemented Some formal processes, unstructured and repeatable Formal management control processes implemented Some formal processes, unstructured and repeatable Formal management control processes implemented Some formal processes, unstructured and repeatable Formal management control processes implemented Continually improving process performance How often does your organisation train its crisis management team? How important are your informal connections in managing a crisis? Has your crisis management system been activated in the past 2 years? Which type of crisis have you experienced most frequently? Did you find your crisis management system effective?

Annex B
Which threat is most likely to disrupt your business in the next 12 months?

26

27

2013-0121 11:38:07 +0400 2013-0121 11:37:35 +0400 2013-0121 11:37:25 +0400 2013-0121 11:37:22 +0400 2013-0121 11:36:34 +0400 2013-0121 11:36:13 +0400 2013-0121 11:35:59 +0400 2013-0121 11:34:12 +0400

Yes

Yearly or less

Mildly important

More than 5 occasions

I don't know

I don't know

Important

I don't know

Operational (impaired ability to function properly) Behavioural (alleged illegal or questionable conduct)

Yes

Terrorism

I don't know

Political instability

28

Yes

Yearly or less

Indispensable

29

No

Not at all

Indispensable

More than 5 occasions We don't have a crisis management system

Operational (impaired ability to function properly) Behavioural (alleged illegal or questionable conduct)

Yes

Civil unrest

Somewhat

Regulatory changes

30

Yes

Every 2 years

Mildly important

More than 5 occasions

Operational (impaired ability to function properly) Operational (impaired ability to function properly)

Somewhat

Data breach

31

No

I don't know

Very important

1-2 occasions

I don't know

Regulatory changes

32

Yes

Once every six months or less

Very important

3-5 occasions

I don't know Informational (IT infrastructure or data affected)

Yes

Civil unrest

33

Yes

Once every six months or less

Very important

3-5 occasions

Yes

Data breach

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Coping with Crisis and Complexity


Ex pe rt Date Collected Does your organisati on have a crisis managem ent system? How well embedded is crisis management in your organisation? Formal management control processes implemented How often does your organisation train its crisis management team? How important are your informal connections in managing a crisis? Has your crisis management system been activated in the past 2 years? Which type of crisis have you experienced most frequently? Did you find your crisis management system effective?

Annex B
Which threat is most likely to disrupt your business in the next 12 months?

34

2013-0121 11:34:08 +0400

Yes

Once every six months or less

Indispensable

More than 5 occasions

Corporate (corporate/financial well-being affected)

Yes

Political instability

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Coping with Crisis and Complexity

Annex C

Annex C: Interview questionnaire


Introduction
The aim of this thesis is to examine mainstream assumptions about crisis management in the light of a meta-theory of complex systems and setting the foundation for a complexity science approach to crisis management. A complexity based approach emphasizes flexibility over standardized or pre-planned response activities to threats. A growing body of scholars call for a new approach to crisis management and the general consensus amongst scholars and academics seems to be to switch from a mechanical or an architectural to a more biological approach to read, seize , and handle emerging crises. By looking at biological networks and complex networks in general, this thesis aims to make a proposition on how organisations can draw lessons from the permanent adaption process of such networks, based on the generalities of these networks properties.

Approach
After conducting theoretical research the fields of crisis management, complexity science, and the science of networks, Im in search of practical examples/ case studies that will either support or challenge theoretical findings. The aim of the interview is to talk through an example during which you were actively involved in the management or resolution of an organisational crisis. The below questionnaire should guide the qualitative interviews. Please note that it will be the discussed event itself that will set the scene and guide the conversation.

Questionnaire
Crisis Management
What is your position within the organisation? What is a typical crisis for you/ your organisation? How would you define a crisis? What types of crisis has your organisation been involved in the past? How often do crisis occur? Monthly? Annually? Every few years? Have you ever been actively involved in managing a crisis for your organisation? Does your organisation have a formal crisis management structure? If so, can you describe it? Page | 96

Coping with Crisis and Complexity

Annex C

For a successful crisis management within your organisation how important is it to be able to predict crisis scenarios? Who is tasked within your organisation with the management of crises? Can you describe the crisis event(s) you have witnessed or have been involved? How did the organisation become aware of the event? Can you explain the decision making process on the various levels: incident/ on site, country management, regional management, corporate management? What did change in the organisation? Was there a restructuring? Did people get fired? Did the company engage in a review process of procedures and policies? Did the organisation stop the activity?

Organisational Complexity and Networks


Have you ever come across complexity theories before when dealing with organisations or crisis managements Would you consider your operating environment to be complex? Do you consider your organisation to be complex? How does your organisation deal with the complexity of the environment? Is there a strategic approach to managing complexity? Have you experienced situations where the organisation was not capable to deal with the complexity of the situation? What happened?

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Coping with Crisis and Complexity

List of figures

List of figures
Figure 1: The spectrum of organisational responses to unforeseen events ..........................12 Figure 2: Survey results for the question: Does your organisation have a crisis management system? ........................................................................................................................15 Figure 3: Survey results for the question: "How well embedded is crisis management in your organisation?" ................................................................................................................15 Figure 4: Survey results for the question: "How often dies does your organisation train its crisis management team?" .............................................................................................16 Figure 5: Survey results for the question: "How important are your informal connections in management in a crisis?" ...............................................................................................16 Figure 6: Survey results for the question: "Has your crisis management system been activated in the past 2 years?" .......................................................................................17 Figure 7: Survey results for the question: "Which type of crisis have you experienced most frequently?" ....................................................................................................................17 Figure 8: Survey results for the question: "Did you find your crisis management system effective?" ......................................................................................................................18 Figure 9: Survey results for the question: "Which threat do you think is most likely to disrupt your business in the next 12 months?" ...........................................................................18 Figure 10: Impact of effective crisis management on shareholder value ...............................33 Figure 11: Structural changes in yeast community in crisis mode (Bottom panel B: 15 minutes, 37C heat shock) .............................................................................................40 Figure 12: Small, multi-modular phenotype on the left of the free living E. coli bacterium versus large, single major core phenotype on the right of the symbiont Buchnera living a less hostile/variable environment. Black circles indicate network modules. ...................41 Figure 13: Top panel: the contact network formed between affected users during a bombing. Bottom panel: the call pattern between users that are active during the emergency during the previous week, indicating that the information cascade observed during the bombing is out of the ordinary. .....................................................................................................42 Figure 14: Network of individuals actively involved in the 9/11 attacks on September 2011. The thickness of the lines corresponds to the strength of the ties between the terrorists. ......................................................................................................................................46 Figure 15: Unwanted similarity of logo and Arabic characters spelling the name Mohammed ......................................................................................................................................50 Figure 16: The Ashby Space ................................................................................................55 Figure 17: The adaptive frontier............................................................................................57 Figure 18: An agent at point Q in the Ashby Space ..............................................................59 Page | 98

Coping with Crisis and Complexity

List of figures

Figure 19: Strategic dilemmas in crisis decision-making .......................................................65 Figure 20: Adaptive Crisis Response Model as described in 3.2 ..........................................76 Figure 21: Self-organisation and individual decision making on every level guided by common objectives ........................................................................................................77

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Coping with Crisis and Complexity

List of tables

List of tables
Table 1: Performance of two fast and frugal heuristics and two linear strategies.................66

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List of references

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