Contingency Planning Problems and Real Life Application - Research Paper Example

Question 1 Contingency plan Nunamaker et al. acknowledges the fact that during a crisis situation, an organization behaves and performs in a significantly different manner than a non crisis situation. He emphasizes that intelligent decision making is the most efficient way to handle a crisis situation. The author classifies intelligent decisions as those that are well timed, appropriate and prosperous. Five significant organizational concepts are enlightened in the article, namely, centralization of decision authority, rigidity in response, construction of information processing, pressure for explanation, and conflict in resource management the individual concepts are “constriction of information processing and lack of decision readiness” (Nunamaker et al, 1989: 12). If these organizational concepts are not dealt with efficiently, it may result in frustration, inflexible decision roles and delay in application of contingency plan. Also inappropriate application of individual concepts might lead to stress ad poor decision making. In order to respond to a crisis situation in a proper manner the organization should follow specific process and methods, the organization should form a contingency plan that is categorised into, pre crisis and crisis and post crisis activities. Essential activities like these are crucial in predicting, managing, examining and evaluating a crisis situation. The author proposes that employees are an integral part of controlling the flow of information and disseminating it throughout the organization (Nunamaker et al, 1989: 12). Hence to prepare oneself for a crisis situation, a management needs to identify several alternative situations which might arise during the changing times. It should therefore be prepared for the short term and also the long term (after the crisis is over) to restore the situation. For each alternative scenario, plans should be drawn and it is important to simulate the crises and each plan. The most common problem is in dealing with a sudden incident which offers challenges to the company. It is also important to identify the warning signs leading to a crisis. The employees should be informed and trained to act accordingly. William Andrews enlightens theories, considering contingency planning and designing efficient information systems for organizations to deal with crisis situations. The author assumes the fact that information systems are amongst the most essential aspects of contingency planning. He emphasizes the importance of creating realistic contingency plans from personal, equipment and overall cost perspective. The author stresses the fact that the most significant area of information system lies in the data centre, and if the data centre is non functional or inoperable then the organization altogether is at a potential risk. The second most significant part is user operations. The proper continuity of these operations can permit the departments in an organization to successfully function in a crisis situation. Third most essential is those companies that support the organizations information system, but are outside their control permit. Finally the organization should make efficient plans to allow the company to operate within the company-specific time frames (Andrews, 1990: 30). Hence it is important especially for financial organizations like the banks (where information security is absolutely crucial) to devise strategies recover user operations during crises situations. This should be done on the basis of effective risk assessment. Nikolic (2007) acknowledges in his article, that the organizational contingency plan is essentially dependent on the information systems that are structured to implement the plan. Enhancing the models of information system is significantly important to ensure the optimal effectiveness of the information system. The author emphasizes on simulating a crisis, which ensure organizational control and efficient crisis management. Organizations should develop crisis-management teams in order to implement proper appropriate action plans. The teams formed should be efficient enough to deal with a crisis situation in a timely manner. With proper implementations of the systems, the management will be facilitated to store, exchange and distribute organizational knowledge. Knowledge enhances organizational learning and intelligence, and thus improves the chances of the company to cope in a crisis situation. Hence a trained knowledge management department should be maintained to prepare the employees in dealing with changes brought by crises. It might sometimes be effective to utilize the knowledge of some of the key employees of the business in structuring the plan. Setting the goals for risk management is the first step usually since it helps in deciding which opportunities to be targeted and what strategies to pursue. For that knowledge is the prime requirement. Contingency Planning Problems and Real Life Application The article “Why forecasts fail. What to do Instead” enlightens the shortcomings of contingency planning, due to the fact that it is essentially problematic to predict the future of a crisis situation. The author emphasizes on the formation of flexible plans, rather than the rigid ones. The flexibility in the plans will help in dealing a wide array of different crisis situations. The author also portrays the fact that although statistical models might be efficient in explaining pat event, but their part in predicting the future events is very limited (Makridakis, Hogarth, and Gaba, 2010). Also, simple statistical models are more efficient in predicting future outcomes than their more complex counterparts. Hence it might therefore work to learn form other companies’ experiences in similar situations. For instance, the financial crisis of 2008 has encouraged banks to re-evaluate their credit rating systems and lowering of benchmark rates. Eriksson in his article, ‘Contingency Planning for Crisis Management: Recipe for success or political fantasy?’ proposed that the relationship between crisis planning and crisis management outcome is effectively more complex and multifarious than what is presumed to be. Contingency planning may seem adequate in the pre-crisis stage, but does not necessarily guarantee a successful crisis response. Also, it is not necessary that contingency planning failures in the pre-crisis stages will translate into flawed crisis responses. The author enlightens the fact that only some crisis situations can be accurately conceived, and therefore, limited crisis responses can be prepared (Eriksson et al, 2011: 89). Carolyn Castillo in his article “Disaster Preparedness and Business Continuity Planning at Boeing: An Integrated Model” acknowledges the rethinking of contingency plans by Boeing. Boeing changed his plans by shifting the prime focus to specific disaster events an immediate relevant response plans. Prior the 9/11 disaster, Boeing learned essential lessons regarding the restoration of business operations. Due to the disaster, Boeing went through a loss of prioritizing business resumption activities infrastructure, communication with existing customers, which resulted in loss of large volume of sales orders. Due to this, Boeing changed its traditional theory of dealing crisis situation, of response and recovery into a more enhanced four-step plan: response, stabilization, assessment and business continuity. Boeing emphasized the fact that the crisis management team develops a risk assessment, and helps in stimulation of various scenarios of a potential crisis situation, the members of the crisis management team perform their individual roles and responsibilities. After the situation is dealt with, a discussion is conducted on the crisis situation to identify the weakness and mistakes made so that it could be improved in the forthcoming situations. Most essentially, managers need to develop dynamic continuity plans that are capable of handling crisis situations of organizations (Castillo, 2004, pp-14). Final remarks A detailed approach of development and the process of development of contingency plans in organizations are discussed by the authors. The eminent shortcoming of these articles is the assumption that risk can be assessed easily and prediction of crisis situations can be done in an accurate manner, which, if true would aid in effectively developing a contingency plan. The basis for this particular theory has its roots to the fact that predicting a crisis situation is significantly impossible, until it unfolds. As the prediction is difficult, organizations should implicate flexible plan, in order to adapt in a variety of crisis situations. Managers are entrusted to identify the specific variables that affect their organizations. The roles and responsibilities of every member who are involved in a crisis situation should be clearly defined to them to avoid duplication of duties. This ensures minimization of internal conflicts, and also manages the response time. Development of effective information system is essential to enhance the speed of disseminating information throughout the organization, which minimizes the response time. Question 2 STRATEGIC INNOVATION The term innovation in a management organization is the process of turning knowledge into economic activity. It is deemed to be the process of discovering, learning, and implementing different technologies and techniques into enhancing the performance of an organization (Tang, 2006, p.68). Innovation in management is very much essential to ensure progressive growth in an organization. What Supports Innovation Slack Resources Innovation in an organization and organization slack are significantly important concepts, in the discussion of strategic innovation and performance of an organization. The authors in their literature paper emphasized on the fact that slack is the pool of resources in an organization in excess of the minimum necessary to produce the given level of organization output (Nohira & Gulati, 1996). As the phenomenon of slack is an innovation enabler, it receives attention because of its potential to cushion firms from shortages of funds as well as it is potentially liable to foster innovation. Geiger and Cashen in their literature acknowledge that there is a curvilinear relationship between innovation and slack. This implies that with an increase in slack, there is a significant increase in innovation strategies in an organizational. Although it is a challenge to the organization to maintain the slack level that is essential to stimulate innovation in a firm (Geiger & Cashen, 2002) Therefore, an organization which is managing optimally is actually addressing the short term situations but for long term benefits related to innovations, slacks serve well. Slack organizations might be bale to innovate and adapt to the long term changes. Bandwagoning and Rational Efficiency Theory Abrahamson in his theoretical literature has enlightened broadly on the theories of bandwagon and Rational Efficiency. The author emphasizes that bandwagon is one of the essential ways of innovation in an organization. It is the process that occurs when a company realizes that a competitor is adopting a new strategy, and in order to maintain the competitive advantage, the company pursues a similar strategy which causes bandwagon pressure. On the other hand, rational efficiency theory is the assumption that firms not participating in the innovation become aware of the benefits and efficiencies of that new innovation may produce and adapting to it. It is also notified by the author that, with a significant enhancement in innovation procedures, cost decreases which results in better adaptation (Abrahamson & Rosenkopf, 1993).Hence rational thinking at the appropriate timeframe should always work effectively. Innovation Champions and Organizations Shane in his article acknowledges that every organization despite of the fact that in which society they belong, are inherited with two universal characteristics, specialization of labour and a system of authority. These two become the prime obstacles in creating innovation strategies in an organization. Therefore it is very essential for “innovation champions” to exist in an organization, as they are the individuals who are significantly responsible to overcome these organizational obstacles (Shane, 1992). So it is firstly important to make each employee aware of additional responsibilities which might come at times of crises instead of focussing on specialisation only. The subordinates should be involved in decision making process of the management. Market and Technology Advances Innovation in an organization is essentially dependent on technological advancement of the market. With enforcement of updated technologies, a company is potentially viable to develop enhanced innovation strategies. A U-shaped relationship exists between product innovativeness and two key measures of profitability, success rate and return on investment (Kleinshmidt & Cooper, 1991). It is crucial for an organization to adapt to the changing technologies and adopt them instead of waiting for the crises to come across. What Inhibits Innovation Managerial Ownership The author, Latham and Braun, in their literature acknowledges that managers degree of risk when analyzing the relationship between organizational decline and innovation. Threat rigidity theory and prospect theory are used to examine how managerial ownership affects manager’s innovation decisions (Latham and Braun, 2008). Government Intervention and Innovation Lenway emphasizes on the fact that collision of advanced technologies and market innovation, will result in the formation of new industries (Lenway et. al. 2005). In the present era, it is being witnessed that the idea of innovation has shifted from an emphasis on individual innovators to the significant development in technological innovations within inter-firm networks, technological communities, and industries. Intra-firm Conflict Innovation strategies in a firm result into a failure when employees in the organization fail to implement the innovation frequently, less frequently, less consistently, or less efficiently than required. Due to this failure, the organization is unable to extract the potential benefits that could have been extracted if the innovation strategies were properly implemented (Klein and Sorra, 1996). An organization’s failure to achieve the anticipated benefits is a reflection of the failure in the implementation process or the innovation itself. Types of Innovation affected by Human Capital The author stresses on the fact that an organizations ability to implement innovation strategies is significantly proportional to its intellectual capital (Subramanian and Youndt, 2005). Intellectual capital is being defined as the accumulation of all knowledge that an organization acquires in order to gain competitive advantage (Subramanian and Youndt, 2005, p.451). How does innovation help a manager? In the present era of advancement, it is essential for a manager to enforce innovation strategies. Innovation strategies are the way to ensure growth of an organization in this present competitive market. As a manager in a technology sector, it is essential to be updated with the technological advances in the market, to attain competitive advantage in the market. It is evident from the above literatures that strategic innovation is deemed to be beneficial to the growth of an organization and works on improving its performances. Although as a manager one should eb conscious enough in choosing whether to pursue product innovation or process innovation, according to its implications towards the growth of the organization. Although in some cases, innovations should also be ignored completely if the current product or management process is potentially capable enough to ensure the growth of an organization. As a manager, one must be aware of the factors and conditions that enhance in better implementation of the innovation in an organization. The most essential point that is highlighted in the literature is the idea of gaining competitive advantage in the market, through collaborations, rather than competition. References Abrahamson, E., & Rosenkopf, L. (1993). “Institutional and competitive bandwagons: Using mathematical modeling as a tool to explore innovation diffusion.” The Academy of Management Review, 18(3), 487-487 Andrews, W. C. (1990). "Contingency Planning For Physical Disasters." Journal of Systems Management 41(7), 28-32. Print Castillo, C (2004). Disaster preparedness and Business Continuity Planning at Boeing: An integrated model. Journal of Facilities Management; 3, 1-8. Eriksson, K., and A.McConnell (2011). "Contingency planning for crisis management: Recipe for success or political fantasy?." Policy and Society 30, 89-99. Print Geiger, S. W., & Cashen, L. H. (2002). “A multidimensional examination of slack and its impact on innovation.” Journal of Managerial Issues, 14(1), 68-84 Lenway, S.A., Jennifer S., and T. Murtha. (2005). “How Governments Matter to New Industry Creation.” Academy of Management Review, 3(2), 312 – 337. Makridakis, S., Hogarth, R.M. and A. Gaba (2010). "Why Forecasts Fail. What to Do Instead." MITSloan Management Review 51(2): 83-90. Print. Nikolic, V., Savic, S and M. Stankovic (2007). "Designing a multimedia platform for emergency management." Management of Environmental Quality: An International Journal 18(2) 198-210. Print Nohira, N., & Gulati, R. (1996). “Is slack good or bad for innovation?” Academy of Management Journal, 39(5), 1245-1264. Nunamaker, J. F., Weber Jr., E.S. and M. Chen (1989), "Organizational Crisis Management Systems: Planning for Intelligent Action." Journal of Management Information Systems 5(4): 7-32. Print Shane, S. A. (1992). “Cultural differences in innovation championing strategies.” University of Pennsylvania). ProQuest Dissertations and Theses, p.183 Tang, J. (2006) "Competition and Innovation Behaviour." Research Policy 35.1: 68-82 Read More