When a Black Swan Comes

01/08/2012 The Second Line of Defense team have been involved in crises management situations throughout their careers.  And crises management is a key issue in which the team is both interested and has published several inputs.

During a trip to Europe in November 2011, SLD’s Robbin Laird sat down with Paul Theron of the Thales Group to discuss his work on the challenge of crafting resilient organizations.  Theron is head of a working group within Thales, which addressed the key challenges surrounding collapse and response in crisis situations.  The group has focused on the challenge, in general, and within telecommunications infrastructures in particular.

Shaping resilient organizations as societies face Black Swan events. Credit Image: Bigstock

Black Swans and Gray Swans are a regular occurrence in the 21st century.  Building organizations which can deal with their dynamics are crucial.  At the heart of coping and recovering is the core capability of resilience.

The briefing, which anchored the conversation, can be seen below at the conclusion of the article.

The Theron briefing provides an overview to the approach being developed at Thales.  The brief provides seven findings on critical infrastructures resilience and we encourage our readers to go through the brief itself to get a sense of the core foundational work, which Theron and his team are doing with regard to this crucial challenge facing 21st century organizations and societies.

In this piece, we are going to provide an overview of some of the key dynamics of change associated with the need to provide flexible and agility capabilities to manage 21st century complexity.  In other words, we are going to harvest some of the findings and points during the discussion and craft a narrative regarding the challenge of crafting a resilient organization.

The brief is based on several real world events from which some core propositions about resiliency were developed.  Among these events are the impact and response to Katrina, the challenge of trauma faced by Paris firemen, and the Mann Gulch incident in Montana in August 1949.

At the heart of the challenge is recognizing that 21st century societies and organizations have an inherent complexity within which system or sub-system collapse can be expected.  The need is to prepare for the unexpected because that is the expected.

A Theron noted: “we live in such complex world, that we cannot forecast what’s going to happen next.”

Crises are largely started by incidents but as an incident unfolds there are multiple dynamics in which simply responding to the initial incident will not be sufficient.  Indeed, by focusing simply on a single incident and following the procedures for “normal” response to a single incident will lead to system or sub-system failure.

Theron underscored that “events which started in relatively limited way start impacting the whole world because the phenomenon propagates to other spheres which themselves are going to affect other spheres and from one sphere to the next, the phenomenon amplifies, becomes bigger, but in a way that you can hardly predict because in fact you’re going to have so many interactions between those spheres that the way each interaction will work is completely unpredictable.”

This means that as collapse is generated by events, the response team and its leaders needs to not only multi-task but also look for a core thread around which recovery can be built.  To do so will require not simply mobilizing internal resources but seeking outside resources as well.

A key element is to NOT focus on the proximate cause of the collapse but to weave together a more comprehensive response and narrative which would allow recovery.

Theron cautioned that you can’t plan for everything for every single disaster and the more so as you move up to the stage where phenomenon are going to combine with each other into something completely new and so you have to have that capability to create solutions to react dynamically to whatever emerges in the time of crisis.

And that’s, that’s a big change that most companies think they are going to resolve all issues.  But that way of thinking is wrong because we are not talking about a basic flood or a basic fire that ruins your computer department, we are talking about something that is going to be complex, which is going to mix, maybe a fire ruining your computer department combined with the financial crisis plus the arrest of your manager because he committed financial fraud and so on.  And these incidents create an event of such a magnitude and complexity that your business continuity plans are useless.  You have to re-think, re-position, and re-focus in shaping a recovery strategy.

Collapse is about system recovery and re-direction.  The two elements are highly correlated.  Indeed, Theron emphasized that crisis is an experience of collapse.  To navigate through a collapse is the attribute of resilience.  Resilience is the aptitude of a socio-technical system to surmount a crisis.

Resilience is demonstrated by several behavioral elements: getting by, resisting, resuming and rebounding from a crisis.A number of key elements can be highlighted about the nature of the challenge of dealing with crises and ways to shape resilient organizations.

  • • Crises are an inherent part of interdependent and complex 21st century societies.
  • • Crises are multifunctional and interactive.
  • • If you prepare for single incident crises, you are putting yourself in harm’s way.
  • • Complex crisis management requires robust and resilient solutions.
  • • Resilience is based on tactical and strategic agility.
  • • Leadership and response teams can operate beyond the near term focal point.
  • • Leveraging outside resources towards a clear end is crucial in situations of collapse and recovery.
  • • Agility requires bundling internal and external resources to create a growth after a disaster outcome.
  • • Resilience for organizations and societies is agile robustness.

Credit: Second Line of Defense

According to Theron:  Resilience is the aptitude to face a crisis and to surmount a crisis.  To do that you need four aptitudes, three of which are drawn upon in the dynamics of dealing with collapse.

The first is the capability to get by.  You have a core mission, e.g., it is to rescue people in buildings and fire if you are a fireman, if you are a telecommunication provider it’s to deliver a communication service, if you are an army in the battlefield, it is to fight according to the plans set for you and you are not supposed to give up your mission just because you are facing even death.

The second is resisting the destructive pressure of the circumstances.  That means that you don’t allow yourself to be drawn down to the point you’re going to die.

Three, you have to find ways to resume your normal activity.

And four, you have to rebound.  That means that once the crisis is over, when you are finally in the past crisis stage, you have to think about what happened, to draw the lessons from what happened.  You have to look at how at the world around you, maybe it has changed to a point significant enough to imply that you should adapt to that new world around you and get rid the old structures, the old plans, and the old ways of life.

And that’s rebounding.  And if the first three help you through the collapse stage, the fourth one is going to make you more robust, but probably more resilient because you will have learned that in certain extreme situations, what matters is the way you manage to navigate through the circumstances at hand.

Resilience is generated in part by tactical and strategic agility.  The ability to re-combine elements and to introduce new ones in shaping a post collapse system is central.  As Theron put it: You have to have that capability to break boundaries, to go beyond your boundaries and think completely differently.

We ended the conversation with Theron emphasizing the centrality of understanding where your organization fit within its matrix of interdependencies.  And he highlighted the need to spend time understanding those interdependencies PRIOR to crises in order to understand how to shape an agile response once a crisis hit.

For example, telecommunication depends on energy, electricity, but any electricity depends on telecommunication and electricity serves also gas and water distribution and so and water helps the telecommunication sector because you have to cool down big computer centers and so on.

So if you really want to assure the resiliency of a sector like telecommunications, and only focus narrowly on your facility, you will miss the point.  Because you are in that network of interdependencies and you can’t achieve resilience on your own.  Your sector is analogous to a social group, which depends on the social groups around it. And therefore that means that you have to can have resiliency not only at your own level, but at a higher level, at a coordinated, collaborative level that is going to help you discuss the problems and prepare upstream for possible unknown devastating events.

And if you don’t have this collaboration upstream, in times of crisis, you won’t even know who’s the guy at the electricity company whom you should know and who could solve your problem.  You won’t have that possibility.  You won’t have coordinated plans.  You won’t have coordinated systems or alternative means to resolve situations.

"If everyone is thinking alike, someone isn’t thinking."

—General George Patton Jr.

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