Managing Outside Pressure – Strategies for Preventing Corporate Disasters

Authors: Matthias Winter; Ulrich Steger

In Chapter 1, the authors offer a historical statement of the Nobel Prize Laureate Economy Friedman from 1962: “In a free society, there is one and only one social responsibility or business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” With that, organizations became dominant in society. But more and more people believe that today the same organizations are causing much of society’s problems. This creates groups of activists and they start to exert pressure. A number of questions follow from this:

  • What is the stakeholder concept and how can they influence organizations?
  • What is the difference between a “transactional” and a “contextual” environment?
  • How do we evaluate the situation from the point of view of the organization?
  • How do we evaluate the situation from the point of view of the activists?

The authors provide answers to these questions in the course of a number of chapters.

The “Stakeholders” can be an extensive number of groups: consumers, customers, competitors, employees, shareholders, environmental organizations, local communities, local authorities, suppliers, special interest groups, owners, the media, the legislature, scientists and researchers, banks, … they all have an interest somewhere in the results and the operation of the organization.
These can be divided into two groups: the transactional environment and the contextual environment: the first has some professional business relationship with the organization. Normally they can negotiate with the management about the rules for the transaction. The contextual environment has no direct market or business relationships.

There are also activists: these can be loosely classified into environmental activists, health-related activists and socially motivated activists. That way they are mainly in the contextual environment. How can they influence an organization? The authors describe this with “Transmission belts”. The first is direct pressure of protest. A second is the search for associates in the transactional group, for example the customers. This impact can cause the organization a financial hangover. They can also find supporters in the contextual environment, for example with the legislator. They can best use both, since the clients can work flexibly in the short term, while the legislator works more decisively with regulations but more in the long term.

In chapter 3 the authors talk about “Corporate Early Awareness Models”. They state that the traditional model of the stakeholder analysis is outdated. After all, a number of things vary over time: the agendas of the various stakeholders, the importance and influence of different groups, how the organization behaves in the sector, and social values. The new analysis models try to make the difference between early identification versus a late intervention. One advantage on the first is that you can avoid the difficult things so that they are no longer relevant. The second means that you as an organization do not waste time and energy on what is not relevant. In addition, it is good to make a distinction between strong and weak situations. Strong situations are best identified early, while weak situations can usually be dealt with later on. The strong situations run the risk of going through the following stages:

  • “concern”
  • “issue”
  • “crisis”
  • “scandal”

Because it can become a “scandal”, it is necessary to intervene quickly. Weak situations do not usually reach this final stage.

To make a difference between a “strong” and “weak” situation in a systematic way, the tool has been proposed by the authors, from the perspective of the organization. This covers the following eight sections:

  • Are the arguments against the issue plausible?
  • Does the issue cause emotion? Is this understandable – visually and touching – to the public?
  • Is the issue media friendly?
  • Are there links with other issues of the organization or of other involved organizations or within the sector?
  • How strong is the “key” activist group?
  • How isolated is the organization?
  • How far have the dynamics of the crisis already developed?
  • How easy is it to find a solution?

To complete their “world view”, however, the organizations also need a picture of the situation through the eyes of the activists. Which factors make the situation “attractive” for them? And for which type of campaigners? For this, the authors brought the activists into four groups along two axes. First: integrating versus polarizing. Do they integrate the role of the business and the public interest in their own system of objectives or not? Integrators place a high priority on developing a productive win-win relationship with the business, while the polarizers simply push through their minds and do not cooperate with the organizations. The second axis shows whether the action group discriminates between organizations within an industry with regard to a genuine or perceived commitment of the organization to environmental issues, health issues or social issues. “Discriminators” look at the progress of the organizations with regard to benchmarks in their sector. The non-discriminators focus on the problems that the organizations and entire industries cause, without distinction between the good guys and the bad guys. These four groups have their own modus operandi.

  • Sharks arbitrarily attack organizations. They are not very organization-specific in their target and are generally harmless to individual organizations.
  • Sea lions are usually even less dangerous for organizations because they tend to only address weak situations and discussions about social values ​​in general.
  • Dolphins focus more on a single situation and work with the organizations to find a win-win solution.
  • The really dangerous activist groups are the orcas. They isolate the organization and humiliate them in public for their sins. They choose symbolic situations and use a lot of symbolism in their campaigns.

The authors’ research shows that most activist groups, but especially orcas and dolphins, have a collection of guidelines for when to engage in a situation.

When a situation meets the requirements of this or a similar list, the danger of a confrontation increases:

  • The campaign must have a clear goal.
  • The issue must be easily understood by the general public.
  • The issue has a symbolic value.
  • The issue has the potential to damage the image of the organization.
  • The opponent is strong enough (no “underdog” effect).
  • The issue can be packed in a campaign in which the public can be involved.
  • There are solutions that are confrontational, not gradual (political concepts, management concepts, product or process concepts, that are competitive in terms of price and quality).
  • There must be a drama element to the campaign to engage the media.

In chapter six the authors give a number of tips and examples of the application of these checklists. A possible template for a signal description of an upcoming issue includes a place for the following questions:

  • What is the issue?
  • Who is affected? (Internal? External?)
  • Who discovered the situation?
  • When did the signals occur?
  • Where did the signals occur?
  • What are the signals that have occurred?
  • Why can this become an issue that is relevant to the organization?

In Chapter 7, the authors present nine cases of issues that occurred, or were to act potentially in the near future at the time, arguing that the model works.

In chapter eight, the authors indicate that the organization always has the choice between two options:

  • Drop the project / action.
  • Carry out the project / action anyway.

In addition, they provide advice in both cases.

A possible template for these tools can be found in the attachment.

Firearms Acquisition By Terrorists In Europe

Research findings and policy recommendations of Project SAFTE

Authors: Nils Duquet; Kevin Goris
In this book, the authors provide an overview of the knowledge regarding the purchases of weapons in the EU by terrorists. This is a phenomenon that deserves a lot of attention because it has been shown in the recent past that this is “in our back yard”. After every terrorist act there are a multitude of questions from the population. Not only why this happened, but also how this could happen is regularly asked. This book tries to chart the share of the “arms market for terrorists” in the “how” of these questions.
In the first chapter the authors deal with legislation up to 2017. This discussion of the legislation on arms sales shows that the EU still has a lot of work to coordinate between the countries in order to remove legal loopholes concerning arms transports and arms sales.
In the second chapter, the authors discuss the illegal arms markets in Europe itself. This shows how difficult it is to have an overview of something that seems simple, namely how many illegal weapons are there in Europe? The estimate ranges between 81000 and 67000000. Difficulties in making estimates include closed markets, but also the increase in available military grade weapons on illegal markets. Include illegal production, theft and reactivation of deactivated antique weapons, and you will get an unclear picture.
In the third chapter, the authors discuss the accessibility of the arms markets for terrorists. That appears not to be that simple. The arms markets are a closed market. If you already have criminal offenses on your record, you are known and trusted. Moreover, the arms dealers are not as keen on selling weapons if they know that the aim is to commit a terrorist attack. In addition, it appears that these markets are not a single market. Procurement methods differ depending on whether they are separatists, religious terrorists, right-wing terrorist groups or left-wing terrorist groups.
In the fourth chapter, the authors provide a number of policy recommendations with regard to the countries and the EU. This includes a coherent approach to regulation. But they also provide operational advice, such as exchanging data, uniform data storage, collaborating on data analysis, monitoring the implementation of legislation, applying strict penalties … Collaboration with citizens has not been forgotten, by the possibility of them voluntarily turning in their weapons. In addition, they also have an eye for the capabilities to be built in the nations, international coordination and cooperation. Finally, they indicate the following risks to follow up:

  • The increase in available military-grade weapons,
  • The spread of firearms from legality into illegality,
  • The role of weapon collectors and enthusiasts, and handymen,
  • Arms transactions on the internet,
  • The future of 3D printing.

 

 

The Gray Rhino – How to recognize and act on the obvious dangers we ignore

Author: Michèle Wucker

In this book, the author tells about things that are uncomfortable. It is not about “Black Swans” but about “Gray Rhinos”. What is the difference? Where black swans are very popular as events with a small probability but huge impact, gray rhinos events that are common, have a big probability, and have a huge impact. Where black swans are difficult to predict, or totally unexpected, gray rhinos are often seen on the horizon. But often people choose not to (want to) see them.

So there are some questions that we can ask, on which the author argues, such as “What are examples?” and “When should we respond?” And “Why do we ignore them while the costs and consequences are self-evident, and often greater than we even think, and that while we know this? ”

The author tries to answer these questions by analyzing the stages of gray rhinos events. These stages are: prediction that elicits denial, denial, muddling, diagnosis of the situation, panic, action, and post-treatment “because a crisis is a terrible thing to waste”.

A very important advice from the author is: think long term.

But the most important take aways of the book are in the last chapter: in that chapter the author gives a “Gray Rhino Safari Guide”. These are a set of principles to deal with the stages of the gray rhins, so “How to Not Get Run Over by a Gray Rhino”. These are:

1 ° Recognize the rhinoceros. Recognizing the existence of gray rhinos is a step aside when it comes along. But more than that, that’s why you can learn to see problems differently and transform them into an opportunity. So dare to ask uncomfortable questions. Hear, see & speak no evil is not a good idea.

2 ° Define the rhinoceros. After some practice you recognize a number of rhinos. And that can be very intense in itself. You can not take all problems into account at the same time. So you have to prioritize. But for that you have to define a scope of each rhino. The way you do this is important to let people respond.

3 ° Do not stand still. If you can not work out the big things you have to do in one step, do it in smaller steps. You may muddle on for a while, as long as this muddling helps you on your way to take action. If possible, make a plan in time. For example, on a personal level, you can change your seatbelt when you drive a car. Not every ride leads to an accident however, but it is always possible. Preparation is the key to success.

4 ° A crisis “is a terrible thing to waste”. Sometimes you can not get out of the way of a rhino and you will be trampled. Then it is important not to lie down but to get up, to carry out repair work, and where possible also to make improvements with respect to the old situation.

5 ° Stay downwind. The best leaders respond to a threat if it is still far away. Because they know that the costs and the chances of impact only increase with procrastination. In doing so, you must distance yourself from group thinking and other bias mentioned in the book. Unfortunately, not everyone follows president Kennedy’s advice “It’s time to fix the roof when the sun shines”.

6 ° Be a rhino spotter, become a rhino keeper. A person who sees a (obvious or not) great danger coming to the organization, that is ignored by others. Someone who speaks out loud when others are silent. That is where the first step to success begins. Then you have to get others to come along. Identifying a need is one thing, but the hard work lies in convincing and executing appropriate actions. You must therefore dare to go against the crowd. So you have to be a bit mad. But also courageous. Because it often requires a sacrifice of yourself.

The Politics of Crisis Management – Public Leadership under Pressure Second edition

Authors: Arjen Boin; Paul ‘t Hart; Eric Stern; Bengt Sundelius

In this book, the authors discuss aspects of managing crises. Although the examples throughout the book have been chosen from politics, the book is an added value for organizations in private sectors, because of the strategic aspects of crisis management that it discusses, which are rather universal. In broad terms, the book deals with the following topics:

Improving the sense making of the crisis
  •  There are several reasons why a leader does not see a crisis coming.
Threats that policymakers see in time are the ones that can best be managed. Similarly, the same applies to opportunities: if they are spotted in time, they can be used best.
But why don’t they see some of the threats?
In some cases, none of their employees looked in the direction of the threat. That is why leaders must take measures to drastically reduce the chance of such blind spots occuring. They must also be alert to what they were not told and what they do not see in the surrounding area.Secondly, they can be surprised because the pieces of the puzzle are divided over several agencies and they do not succeed in getting all the pieces together in time, let alone that they know if they have all the pieces at their disposal.Eventually it may be that some of them saw it, but they did not want to stick their neck out to tell the leader, or that they did not want to see it. This is partly the principle of the “Gray Rhino”.
  • A crisis can get out of hand if the leader fails to get a good picture of the events that occur.

In today’s society, with the current state of technology, people talk about “Big Data” when an event of some magnitude occurs. From data, information must be created that is then transformed into knowledge to be treated with wisdom.

That is why the leader must encourage his employees to work methodically in finding the relevant facts in the explosion of data coming from the Crisis Management Team. Although this is the work of the employees, the leader must be aware of how the information came about and was filtered before it was brought to him.

  • Crises that test the personal sense-capacities of leaders are felt by them as a torment.

Every person is limited. Learning to deal with this is not easy and requires courage and wisdom. Especially in the midst of a developing crisis.

Confused leaders can easily slip away into system 1 thinking, where very simplistic visions of the situation can be adopted, where stereotypes of other parties are assumed to be true, and where they can become susceptible to passivity, fatalism, or a hasty decision making and overconfident recklessness behaviour. Under such circumstances, their prudence and their ability to make a sober diagnosis diminishes.

Improve Decision making in the crisis

  • The rhetoric of the “leader at the top” has little to do with the reality of effective crisis decision making and the coordination.

To be sure of a good approach and a proper course of the crisis, it is best using a combination of strategic choices and corresponding operational actions. This does not mean that a single leader at the top or a small team must make all the decisions. The subsidiarity principle is more appropriate. People who can say something sensible about the situation because it is their specialism must be able to make their (local) decisions.

The leader can best delegate that what does not belong to his specialty but to that of another agency. Where explicit supervision is requested this can be done, but the question is whether that question should always come from the leader, except for the need to keep an overview.

  • . . . But the bill is finally presented to the top (leader).

Somewhere between a careless “flight into action” and a freeze provoked by fear, leaders must make critical decisions that they alone can take. Even in the heat of the “struggle”, at the height of the crisis, strategic choices and normative considerations are essential in their functioning, their reasoning and in making choices.

  • In coordinating crisis response, planning (making the plans in advance) is more important than the plans (that they use at the time of the crisis itself).

Leaders must assume that the crisis will go differently than the plan of action stipulates. Even if their employees predict the right crisis. Even if everyone agrees on the nature of the crisis. The plan will fail, the necessary funds for the actions will be wrongly estimated. Training of employees who “have to do the job in the field” is necessary. The whole process of the crisis will have to be closely monitored. Deviations from the desired evolution will have to be corrected.

A crisis, by definition, disturbs the stable situation and creates uncertainty. It challenges the authorities to challenges that they are not used to and that they can never fully grasp in a previously drafted plan. Every correct crisis response therefore contains improvisations, which require flexibility and resilience rather than paper plans.

Improving the meaning making of the crisis.

  • Leaders who can not communicate skillfully can not lead in a crisis.

People try to understand their situation in times of uncertainty and discontinuity. They ask questions like “Why did this happen?” And “Why was this not prevented?”. In addition, they want to know what their leaders have done to prevent it. Or what they did to keep the crisis to a minimum. This is the collective concept formation. Several actors will provide their vision. (For example the media.) A kind of assessment can be drawn up from this. The media will “scrutinize” the leaders.

This means that the ability to create an image and an understanding of the situation is a very useful feature, and very helpful in setting a desired course of the crisis. Therefore, the art of “story telling” and the accompanying understanding of its underlying mechanism why a story can catch on and when not, is very important.

Unfortunately, leaders are often tempted to make a story that is created through their system 1 thinking on the basis of quick-by-the-turn arguments that seem to give an explanation at first glance. In addition, they sometimes make huge promises. This is a basic error.

Improve the Termination of a crisis and Accounting

  • Crises do not stop by themselves. They must be ended.

It is very tempting to consider the end of the operational actions as the same as the end of the crisis. That is not the case, because the political aftermath and aftercare follow their own logic. Various actors in the crisis will systematically explore the aftermath of the crisis to seek opportunities, which can be encouraged. But some also seek opportunities to attack their opponents, to seek praise or to initiate reforms or to make a profit on the hood of third parties (victims). That is why it is important to formally put an end to the crisis, also politically. That moment, however, the leader must determine carefully. And for this reason (currently) no (generally) valid criteria apply.

  • Accounting after a crisis is desirable and inevitable, but it is not without risk politically.

All involved actors will evaluate their positions, and possibly defend them. This happens especially when there are some involved who bear responsibility in the story. In addition to the media, formal institutional organizations will also identify responsibilities by means of legal steps eg in legal, political and professional arenas. These various, but often interwoven, responsibility-allocating processes do not necessarily have to escalate into an aggressive blaming game. But exactly that happens often and is a thing for the leaders to keep in mind.

  • . . . But to have it always as a “name, shame and blame” game would make it a “Self-destructive Prophecy”.

So instead of dreaming of a victory, leaders can better keep another scenario in mind, namely that of the black sheep because of polarization by the media, among others. In times when governments are easily victimized by polarization, leaders often run the risk of being hit by the social “blame & shame game”. In itself, nobody is actually served with it. It is often an attempt at a quick win from opponents.

Improve learning from the crisis situation

  • Drawing lessons should be more than copying seemingly successful policies and categorically rejecting what failed elsewhere.

When leaders are faced with a new crisis, they can never assume that it is similar to a previous crisis. They can not rely on a tried and tested repertoire of techniques. This can be a reasonable approach to the level where there are similarities. It will thus remove some of the leader’s uncertainty and increase the reaction speed and efficiency of the crisis response team.

But the present is not a copy of the past. Leaders can easily be misled into categorically implementing everything that has helped in a similar case from the past, without noticing that the crisis is taking a different turn. That is why meta-learning is also important. Classify the crisis into categories and think at a higher level within the Crisis Management Team in order to manage and adjust the Crisis Response Team depending on the turn of the crisis. (So ​​”learning to learn”.) The system 2 thinking is important in order to adjust the system 1 thinking.

  • Learning from crises means that you have proactive, interactive and continuous crisis planning processes.

Crisis management sometimes requires cooperation agreements across different (types of) boundaries. Such forms of cooperation (eg in working groups) must be established before a crisis takes place. Private Public Co-operations are necessary because a lot of vital resources come from the private sector. Operational activities must be shaped in conjunction with a general vision of how to manage crisis management. That vision on crisis management is in itself a result of political deliberation that must be fixed in advance. Once again, planning is more important than the plan.

  • Erasing everything and starting all over is often not the best way to learn from a crisis.

Crises are too often the result of a chain reaction on a political level or in high-risk technological systems. In particular, crises do not correspond one-on-one with the tasks of agencies or specialists.

It can be argued that in most cases the worst-case scenario (the whole system has failed, so everything has to be done differently) does not apply, and sometimes even does not exist. A better way of learning from the crisis stems from a leadership of “dynamic conservatism”. This strategy defends the idea of ​​core values ​​and the institutional commitment and obligations. It encourages leaders to flexibly adjust policy structures and modus operandi of public organizations to the oppressive context of crises rather than give in to the temptation of grand reformist rhetoric.

Conclusions:

  • Sense making:
    • Detecting (an) emerging threat (s).
    • Ensure that policymakers get a firm grip on what is going on.
    • Provide what next events will / can be.
  • Decision making and coordinating:
    • To shape the overarching direction and coherence of the common efforts.
    • To respond in a cohesive way to the crisis.
  • Meaning making:
    • Actively shaping the public understanding of the crisis.
    • This if it is possible in a democratic, mediatised political system.
    • The purpose of this is to align the common definition of the crisis in such a way.
    • Make it possible to work efficiently on the desired direction.
    • Let the crisis evolve towards a desired situation.
  • Accounting:
    • Taking control of the democratic process of explaining the ideas that were there and the actions that were taken.
    • This is tested against the values ​​of the government and the citizens.
    • With the aim of achieving closure with citizens and government with regards to the crisis.
    • This is necessary so that the community and politics can go further.

In the event of a crisis, certain characteristics of existing institutions, policies and customs can be harmed without the possibility of recovery.

  • Learning from the situation:
    • Drawing lessons and seizing opportunities
    • Reconsider and reform these characteristics of existing institutions, policies and practices in a follow-up period.

These issues are, as formulated here, all aspects of strategic crisis management as this can be applied by a government to its functioning and for the benefit of its society. However, by simply reading it all with the government in mind as an organization that also has to deliver its services to society, all this is (not always easy) translatable to strategic crisis management for private organizations. As a result, this book is a good dues for holistic crisis management, in addition to other books on operational crisis management, for which more literature is available.

Factfulness

Author: Hans Rosling with Ola Rosling and Anna Rosling

In this book the author tells about indicators about the world. He thereby asks the following thirteen questions as multiple choice:

  1. How many girls in the low-income countries finish the primary school? 20%, 40% or 60%?
  2. Where does the largest part of the world population live? In low-income countries, in middle-income countries or in high-income countries?
  3. During the past 20 years, the proportion of the world’s population living in extreme poverty has almost doubled, remained about the same, or almost halved?
  4. What is the average life expectancy in the world? 50 years, 60 years or 70 years?
  5. There are now 2 billion children from 0 to <15 years in the world. How many children will there be according to the United Nations in the year 2100? 4 billion, 3 billion or 2 billion?
  6. According to the UN’s forecast, the world’s population has increased by another 4 billion by 2100. What is the main cause of this? More children under 15, more adults between 15 and 74, or more old people aged 75 and older?
  7. How has the number of people who perish during the past 100 years changed due to natural disasters? More than doubled, about the same or decreased to less than half?
  8. There are now around 7 billion people in the world. Where do these people live? Americas-Europe-Africa-Asia: 1-1-1-4, 1-1-2-3, 2-1-1-3 billion people?
  9. How many children of one year or younger in the world are now vaccinated against a disease? 20%, 50% or 80%?
  10. Thirty-year-old men around the world have spent an average of 10 years at school. How many years have women of that age been on average at school? 9 years, 6 years or 3 years?
  11. In 1996, tigers, giant pandas and black rhinos were on the list of endangered species. Wow many of these three species are now even more seriously threatened? 2 out of 3, 1 out of 3 or none of 3?
  12. How many people in the world have any access to electricity? 20%, 50% or 80%?
  13. Climate experts around the world think that the average temperature in the next 100 years will increase, stay the same or decrease?

These thirteen questions are better answered by chimpanzees with marked bananas according to a thought experiment. Even people who call themselves experts in a specialist field, answer wrongly in large numbers to questions about neighboring disciplines. Even the great leaders of the world systematically give wrong answers. The question is why. Because that is the question that can lead to a change. It turns out that we are people with at least 10 instincts that bother us. 10 is a large number. Which are they? This is explained in as many chapters, richly laced with examples and events from his own life and events in the world.

  1. The gap instinct: the instinct that paints an image of two separate groups with a gap between them. To keep it in control, it is best to look for the majority. In this situation you have to be careful to compare averages, extremes, … and watch for a look from above because that distorts the view.
  2. The negativity instinct: negative news reaches us much easier because positive things have too little news value. To keep it in control you best count on bad news. Remember, too, that something that “something is going better” is not ”something is going well”. The past is often represented in a pink distorted image.
  3. The straight-line instinct: We often think further in terms of linear extrapolations. Continue straight on the line. Remember, however, that most lines are not straight lines. Do not just go out of a straight line.
  4. The fear instinct: Terrifying things are often not the most dangerous things. Calculate the risks. The world seems scary because the scary messages are passed on better. Do not make decisions when you are anxious.
  5. The size instinct: when a separate number is given, compare it best with other numbers within the context. Look at the proportions. They have more meaning. Use the 80/20 rule when you get a long list. Record the largest topics first.
  6. The generalization instinct: this is working with conclusions based on categories. This can be misleading. Therefore look for differences within groups, for similarities between groups, differences between groups. Beware of ‘the majority’. That can also be only 51%. Beware of examples if you do not know whether they are the rule or the exception. Start from the idea that other people are smart too.
  7. The fate instinct: Know that something is not constant when it changes slowly. Because that is also change. Follow the small changes closely. In the long term, these become big changes. Do not let your knowledge get outdated. Talk to your grandfather to know what has changed. Let culture renew itself.
  8. The one-shot instinct: having one perspective can limit your imagination. Find a 360 ° view of your business. Let people who disagree with you test your ideas. Be honest with yourself about what you do not know. Be open to ideas from other fields. Provide facts in addition to the figures. Do not go through (too) simple ideas and (too) simple solutions.
  9. The scapegoat instinct: If someone is to blame, the attention goes away from other aspects. Therefore do not point with a finger but look for solutions. Find the cause without looking for the guilty. Search for the systemic background. If you do not seek villains, you do not need any heroes either.
  10. The urgency instinct: Needing an urgent decision is often unjustified. Make a step-by-step plan with small steps to make improvements. Before you start you take a deep breath. Request the dates of the facts. Beware of fortune tellers. Their statements are about the future and therefore have a great uncertainty. Do not proceed too fast. Ask yourself what the immediate and long term consequences and the side effects will be.