The slew of organisational debacles and crises that have hit the business world in the past year or so have put it under intense pressure. They range, of course, from those of the infamous Enron, Arthur Andersen, and WorldCom collapses to the less publicised but pervasive smaller crises such as layoffs and slumping levels of organisational innovation.
Leaders have suddenly found themselves trying to mitigate crises or, if they occur, react to them as best they can. Most do good job of managing crisis once it occurs. But why leave yourself having to manage crisis? Why not prevent it before it occurs?
Most organisations resign themselves to the notion that crises are bound to happen. They make very little effort, if any, to conduct conscious actions that seek to evade the occurrence of crises. Consequently they put large crisis management and contingency plans in place. The documents containing the specifics of the plan spend good 95 percent of their pages on what to do after the crisis occurs. Wouldn’t it be better to take similar approach to preventing crisis?
The successful management of information and knowledge is the key to pre-empting an organisational crisis. Post mortems of crises attest to the fact that most are predicated on warning signals or signs. Take the 9/11 attacks on New York’s Trade Towers. Almost three years earlier, the various US intelligence agencies had indications of an impending attack. The signals were not processed effectively and efficiently enough to generate knowledge of the impending crisis.
The ideal organisation has well-matured knowledge management capabilities that ensure the identification, distribution, protection, application, and destruction of knowledge. An organisation must be able to put pieces of information together much like solving jigsaw puzzle. The complete puzzle lends knowledge, which if acted upon can prevent crisis.
Knowledge capabilities
An enterprise needs set of capabilities to adequately manage knowledge. These capabilities should ensure the optimal generation and distribution of knowledge. An organisation should be able to:
1. Generate and discover knowledge
of impending crises.
2. Identify knowledge of the impending crisis.
3. Distribute knowledge to the right decision makers.
4. Use the knowledge to make good decisions to avoid crises.
5. Eliminate old knowledge that prejudices new or better approach.
6. Protect knowledge for future use.
The first job is to generate knowledge of an impending crisis. This is where most organisations do poor job. The reason is lack of attention to creativity. Crises are creative in their own right. They invariably strike at unprepared areas of an organisation. Organisations must, in turn, be creative to counter this probability. Most organisations, however, stifle creativity and preserve rigidity. Employees who question organisational norms and myths are invariably shunned or subject to ridicule. Employees are asked to be specialist and focus on their jobs.
To avoid crises, organisations should encourage out-of-the-box thinking. Easier said than done no doubt, but employees should be encouraged to generate novel knowledge and bring it to the fore. Mistakes, even expensive ones, will occur but they will serve as learning mechanism.
In an effort to generate knowledge on terrorist activities, the US Department of Defense recently proposed Terrorism Future’s Market. The idea could be applied and set up in organisations, where employees are rewarded for leads they develop which signal crises. Incentives to generate and manage knowledge will, in time, improve foresight for impending crises.
Organisations need good search and retrieval mechanisms for seeking and identifying relevant knowledge. The identification capability must be able to support multiple forms of knowledge querying – exploitation and exploration. Exploitation helps the organisation refine knowledge on existing domains. Exploration is searching for knowledge in novel areas. The ability to strike the right balance between the two extremes is critical determinant of the maturity of firm’s identification capability. Get too caught up in exploitation of existing knowledge and you run the risk of being caught unprepared to deal with unconventional problems. Too much exploration and you get superficial knowledge in multiple arenas of little or no value.
Seeking knowledge
Seek knowledge of impending crises from both formal and informal channels. Take NASA for instance. Before the Challenger and Columbia disasters there were memos and emails detailing faults with the spacecraft. These were not retrieved adequately to avoid the crisis. Scientists also had long informal discussions on the risks posed by certain shuttle parts but these grapevine conversations also went unnoticed. Organisations need to develop good hearing and seeing capabilities to adequately identify crisis knowledge.
Unless an organisation can effectively distribute the knowledge it has generated it won’t get return on the cost of generating it. An organisation must be able to both distribute and apply knowledge. It is easier to ensure the distribution of explicit knowledge because much of it is captured electronically and can be moved through information networks. To distribute tacit knowledge, that which is locked up in the minds and experiences of individuals, is much more challenging. It requires making tacit knowledge explicit or moving tacit knowledge from one part of the organisation to another. Facilitating this process is not easy but it needs to be done regularly and across all sectors of the organisation.
Knowledge, once distributed and understood, must be turned into actions. Most organisations fail here. Knowledge of impending crises can cause disruptions, either because it calls for swift action to evade it or it calls for change to current organisational practices. In either case change is invariably unpopular. Change requires giving up comfort in exchange for untested grounds. So, even though knowledge of an impending crisis is present, decision maker may well choose not to act and stick instead with the status quo. This behaviour is pervasive in the examination of failed information technology projects in organisations. It’s called the “mum” effect – no one speaks up even though all knowledge points to the probable failure of project. Lastly, an organisation must also destroy knowledge. Unless old knowledge is destroyed habits remain ingrained in organisations. They remain unwilling to change or see novel phenomena. The rule that when “given hammer everything looks like nail” remains true.
Organisations need to routinely evaluate their knowledge stock. Employees must be retrained, old manuals destroyed, and current practices must be questioned for validity and usability. Practices exist without rationale in most organisations. Practices invariably start out valid but over time the need changes and the practice might become counterproductive. Old is not always gold. The destruction of old knowledge leads to the creation of new knowledge. When old knowledge is deleted, employees are forced to rethink and generate new knowledge. M
Kevin Desouza is researcher and consultant in knowledge and crisis management at the Department of Information and Decisions Sciences, University of Illinois, Chicago.
