Not even having had time to shake off the effects of the 2008 financial crisis do we find ourselves submerged in the crisis of COVID-19. Whilst we may be unprepared, we must try to do our best to deal with the current situation – one which will essentially turn out to be a corporate crisis!

Is it really possible to prepare for a corporate crisis?

When these disasters occur, analysts always try to provide an explanation for what is happening by investigating the specific causes.

We have tried to do this as well, but with a different focus:

  • Looking for patterns:Can we prepare for crises, or are they so diverse and devastating that we should only hope to survive?
  • Future outlook:Can we use crises to our advantage? If yes, how?

Our research has shown that, although crises may all seem different, there are some constants: every crisis passes from a period of relative stability to a period of chaos and then back to a new period of stability. In this transition, also known as a catastrophic bifurcation, there are 5 phases which, in the model that we have developed -the Twister Model- are represented as follows:

Crisi di impresa Crisis management ASAP Italia

  • Phase of alert: the scholars Bak and Chen have shown that very often, the few extraordinary events that succeed in turning an entire system upside down, are in fact preceded by a series of smaller events which most of the time are written off as insignificant
  • Phase of acceleration: when the critical threshold is exceeded, the entire system falters and disorder and uncertainty ensues. The level of confusion is unparalleled – typical of a situation of chaos
  • Eye of the storm: As the emergency passes, a period of relative calm follows. We breathe a sigh of relief and are deluded that things will now go back to normal 
  • Phase of rupture: As the storm passes, the true extent of the destruction is gradually revealed:
      1. a return to the previous status quo is no longer possible
      2. a continuum occurs; whilst elements of the past situation still continue to exist, a new model begins to emerge

It is in this phase that the companies which have been flexible and quick to adapt to the new situation will not only survive, but some will even take on the function of attractors to which the dissipative structure is attracted.

  • Phase of stabilisation: the new system gradually becomes recognisable and the characteristics by which it is defined take on a increasingly stable form. Only the companies which were capable of making a technical-technological leap, of realising a social change – namely, to develop a more streamlined organisation which is better suited to a faster pace of life - will be the companies to flourish

Around 1/3 of companies do not survive a catastrophic bifurcation because they do not know how to manage these 5 phases. This is why organisations and senior management have to be capable of thinking beyond the here and now.

But what happens when the first people to implement defence mechanisms (mechanisms which do not allow the company to adequately manage a crisis) are those who must also be leaders to get through the storm?

Written by: Gertraud Bacher 

 

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