So far, our short series on the subject of scenario planning has focused on the planning and decision making stages of the process as organizations seek to mitigate potentially negative outcomes from a series of plausible futures. However, we haven’t yet looked at how scenario planning can help organizations recover from difficulty when they find themselves embroiled in crisis.
As the Covid-19 pandemic plunges the global economy into a deep recession, many organizations – not least sports teams – are being confronted with a profound existential threat. Scenario planning may not seem like an obvious priority for organizations that are facing a daily fight for survival, but new research in the area is demonstrating how the process can play an important role in recovery from such trauma.
Dr. John Oliver, Associate Professor of Media Management at Bournemouth University, is currently leading work to transpose the concept of transgenerational response from medical science into the corporate world. If validated, the work being done by Oliver looks set to become an essential element of the scenario planning process.
In simple terms, transgenerational response is the process by which severe trauma can create an inherited response in an organism that influences the development and health of future generations. Working with the corollary that all systems – both biological and organizational – share many common characteristics, Oliver’s suggestion is that transgenerational response may also help to explain why Corporate Crisis Incidents (CCI) such as the one we are currently living through can be observed to have residual effects across future generations of organizations.
For an example of this concept in action, we can look at the fate of AIG following the fraud scandal of 2005, a CCI that resulted in a $1.64 billion fine, the firing of CEO Maurice Greenberg, and an $85 billion government bailout. In the years since the scandal, AIG’s share price has fallen by 96% during a time of relatively steady growth for the S&P 500 Index.
Yahoo is another organization that has seemingly succumbed to transgenerational response. In the case of the web services provider, a failed takeover by Microsoft in 2008 left it struggling to compete in an increasingly aggressive market. Yahoo’s performance has been poor ever since, and in 2017 it ceased to be an independent operating company.
In the case of Yahoo, Oliver asks whether,
The fallout from this hostile bid has affected subsequent generations of Yahoo managers who saw six CEOs take the helm. The average CEO tenure for Yahoo since the CCI was just 1.83 years. While Yahoo was hiring and firing CEOs, changing strategy, restructuring operations and cost-cutting, Google was innovating, dominating market share, and expanding the strategic scope of its activities.
Breaking the Chain
Oliver’s hypothesis is that the contagion of a CCI is retained in the DNA of an organization, just as a virus is retained in the body and can be transmitted across generations. Consciously or unconsciously, the culture that has produced the CCI is effectively inherited by future leaders of the business.
By knowing this, Oliver argues, it will be easier to assess, unpick and manage the attitudes and behaviors that combine to set in motion and maintain the chronic underperformance of traumatized organizations. If those factors can be identified and excised, then it should be possible to break the chain of organizational trauma and begin a gradual recovery from the CCI, using scenario planning as a means of preventing – or at least reduce the impact of – similar traumas in the future.
For scenario planning to be truly effective, it is essential that organizations maintain an accommodating, understanding and inquisitive culture, something that can be supported by the acknowledgement and mitigation of transgenerational response. If Oliver is correct about the concept, then the work being done in this area would be a significant addition to the toolkit for organizations looking to respond to crisis events in a manner that is simultaneously curative in the present and preventative in the future.
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