Getting Resilient

    May 13, 2016 8:51 AM by Dr. Scott M. Shemwell

    Volume 5 Number 9—May 9, 2016

    Prologue
    This is the second in a three-part series.  The last part will be published later this month.  These three editions of the blog will address critical issues the energy sector must address in the current market environment—how to develop organizational Agility, Resilience and Sustainability.  At the conclusion of this series readers will have access to our online Economic Value Proposition Matrix® model to assess the impact Organizational Agility, Resilience and Sustainability (OARS) can have on their business.

    Part Two
    A major aspect of a High Reliability Organization is the ability to rebound after unexpected events.  In today’s dynamic economy a high level of resilience is critical to both public and private organizations.

    We like to think of resilience as the ability to respond to incidents and limit their damage.  The concept of the Bow Tie Risk Model is well defined.  Essentially, a set of prevention processes (including sense and respond controls) are “barriers” to a business disruption or safety incident, etc.  In the event of a disruption, the system (organization) responds to return the process to its stable state.

    The following version of the Bow Tie Risk Management Model addresses this process from the R B C construct. This model was discussed in the previous blog regarding agility.  Additionally, the temporal component is one of the Condition variables. This is less of an engineering approach to a risk management in the process industries but a broader business process risk management model.

    It is important to note that there are three different yet perhaps overlapping time periods.  First, the Ongoing effort to prevent a disruption or Event Horizon in this model.  Second, the time the incident takes place.
    It is tempting to think that the Event Horizon may be a single short period event such as a fire in a plant.  Other scenarios can include disruptions that take place over a longer period of time.  For instance, actions of some individuals over time that led to the demise of Enron.

    Last, even at a high level of resilience the organization’s recovery may take some time.  Examples include western North American forest fires that can take considerable professional expertise, equipment, materials and time.
    These time periods are often overlapping.  During a forest fire, the Event Horizon most like will continue to unfold even as Resiliency Processes begin.

    A holistic Bow Tie Risk Management R B C Process Model suggests that Prevention Processes are largely governed as a set of Behaviors.  Various processes and controls to prevent an incident are behavioral driven although Conditions and Relationships exist therein.

    Likewise, it is convenient to see the Event Horizon from the perspective of a number of Conditions, i.e., fire, governance failure, etc.  Complex situations may have multiple Conditions interacting.  Often a Black Swan event is a collection of small but systemic issues that unfold uncontrollably.

    Finally, the response component in a Bow Tie model is often referred to as “consequences.”  In other words, a new set of Relationships is born out of the organizational resiliency.  This information is provided as feedback to a new enhanced Prevention and Resiliency processes.

    The Resilient Line
    Clearly prevention of an Event Horizon is the Ongoing goal of any organization.  However, if the worst happens, there are two dimensions to resiliency or crisis management:

    •    Time—to the extent Resiliency Process can limit the time of the Event Horizon, i.e., quickly putting a fire or addressing shareholder transparency failure,
    •    Damages—can be reduced (including injuries) and Mean Time to recovery can be accelerated

    Rapid return to production, reduce or no injuries and minimized equipment damage are Key Performance Indicators that add direct value to an organization and the reputation of a sector.

    This author had previously noted that the Public Health sector was able to “get ahead” of the US Ebola virus outbreak originating in Dallas.  Hyped public fear could have resulting in a terrible human and economic situation.  However, to the point raised here the Event Horizon unfolded over time with several infected individuals surfacing but the outbreak was contained and trust restored.

    As of this writing that sector is faced with a growing Zika virus outbreak.  That Event Horizon is still unfolding; however, the Resiliency Process is well underway as is the feedback to the Prevention Processes.  Once again, at stake is the Relationship between society and the Public Health Sector—more importantly lives may be at stake.

    As with Agility, Leadership is the most important quality for a high level of resiliency.  Operational Excellence with its direct impact on the bottom line is at stake, not to mention the risk of human injury or worse.
    What is the Value of Resiliency to Your Organization?

    About the Author
    Dr. Scott M. Shemwell has over 30 years technical and executive management experience primarily in the energy sector.  He is the author of six books and has written extensively about the field of Operations Excellence.  Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management.  He has studied cultural interactions for more than 30 years—his dissertation; Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study) is an early peer reviewed manuscript addressing the systemic structure of social relationships.

    Going Agile

    April 26, 2016 11:47 AM by Dr. Scott M. Shemwell

    Volume 5 Number 8—April 25, 2016

    Prologue

    This is the first in a three-part series. The remaining two parts will be published in May. These three editions of the blog will address critical issues the energy sector must address in the current market environment—how to develop Organizational Agility, Resilience and Sustainability. At the conclusion of this series readers will have access to our online Economic Value Proposition Matrix® model to assess the impact Organizational Agility, Resilience and Sustainability (OARS) can have on their business.

    Part One

    The construct of organizational agility has been around for over a decade.[i] Enabled by Information Technology by now all organizations should have achieved substantial agility. So what happened on the way to achieving agility?

    Leadership! Leadership! Leadership!

    Organizations are seen as agile if they can respond to conditions and behaviors, make decisions and capitalize/respond to opportunities/incidents more rapidly than others. Demonstrating this ability is often the subject of IT enabled case studies and the focus of software sales initiatives.[ii]

    However, becoming agile is not a function of the software license a firm chooses. Rather, it is a function of the organizational mindset or its Culture.

    An organization cannot simply will itself to be agile, it must invest in the transformational process to change its culture. Before this investment is made, management must answer two questions. What is an agile organization? How will agility impact our bottom line and add stakeholder value?

    We have already partially answered the first question. Conditions, whether market, technology, regulatory or other can change very rapidly. As of this writing, the recent earthquake in Japan is affecting various automotive global supply chains.[iii]

    This incident was beyond control of that sector, or was it? Japan is a well-known earthquake prone geographic area. Preparation for the inevitable is critical.

    The Behaviors of the automotive companies affected can make difference not just in the short-term but sustained into the future.[iv] Supply chain disruptions are commonplace. How the firm responds is often a function of the Relationship it has with its vendors, government agencies and other sector constituents including customers and the public.

    The agileness of an organization is a function of its R B C model.[v] Strong linkages between the three elements indicate a high degree of agility. Conversely poor linkages or even broken linkages suggests poor or no communication amongst economic actors involved and lack of agility.

    No IT system can overcome the above problem. Rather the R B C processes must be identified, understood and documented before IT can become an enabling effort.

    Moreover, much of an organization’s agility is outside its so called IT Firewall. Information systems that do not tightly couple those third party linkages weaken responsiveness.

    The Agile Line

    The “what’s in it for me” question must also be adequately answered. Transforming to an agile organization is not without costs in time, opportunity and cash flow. The economic value must be understood beforehand as well as sustained going forward.

    Industry and non-sector “good practices” can be a good anecdotal starting point; however, each firm must undergo an in-depth analysis of its particular situation. Questions must be asked across all departments.

    How would your department benefit if …? The answers to these type questions must be codified in economic terms.

    Simply saying, “adopting this agile process will save you 20%” is not satisfactory and often not demonstrable; hence it is unbelievable. The impact on cash flow, missed opportunities, etc. needs to be documented in understandable terms.

    The financial numbers must speak to the decision-maker or Leader. There is only one decision-maker. It may be the CEO, or it may be a Board of Directors issue but only one entity is the economic buyer. Once Leadership internalizes the value of agility, the transformational process begins.

    What is the Value of Agility to Your Organization?

    About the Author

    Dr. Scott M. Shemwell has over 30 years technical and executive management experience primarily in the energy sector. He is the author of six books and has written extensively about the field of Operations Excellence. Shemwell is the Managing Director of The Rapid Response Institute, a firm that focuses on providing its customers with solutions enabling operations excellence and regulatory compliance management. He has studied cultural interactions for more than 30 years—his dissertation; Cross Cultural Negotiations Between Japanese and American Businessmen: A Systems Analysis (Exploratory Study) is an early peer reviewed manuscript addressing the systemic structure of social relationships.

    End Notes

    [i]  http://www.amazon.com/The-Agile-Enterprise-Reinventing-Organization/dp/0387243739

    [ii]  http://www-01.ibm.com/software/rational/agile/casestudies/

    [iii]  http://fortune.com/2016/04/17/toyota-earthquake-disruptions/

    [iv]  http://www.forbes.com/sites/ciocentral/2012/03/13/japan-one-year-later-the-long-view-on-tech-supply-chains/#1f6d2777751a

    [v]  Shemwell, Scott M. (1996). Cross Cultural Negotiations between Japanese and American Businessmen: A Systems Analysis, (Exploratory Study). Unpublished doctoral dissertation, Nova Southeastern University, Ft. Lauderdale.

    Sharing

    April 7, 2016 3:58 PM by Dr. Scott Shemwell

    Volume 5 Number 7—April 7, 2016

    Almost all online communities have a focus on Sharing. Software, service and other providers seek to increase their visibility and ultimately generate more subscribers and revenue.  Others see this as a marketing tool.

    Network Economics can generate exponential growth rapidly.[i] Organizations recognize this and seek to capitalize on it to growth stakeholder value.  Others may see this as another kind of opportunity.

    In the Wild West of the Internet, ownership laws are routinely violated. Copyright materials are frequently copied, incorporated into blogs et al and not cited or acknowledged in any way. Plagiarism is rampant and unashamed.[ii]

    Non-disclosure agreements, Insider trading regulations and other instruments designed to assure the confidentiality of organizational information and knowledge have proliferated in our Knowledge Economy. Perhaps unwittingly violating these agreements, individuals often do not think when Retweeting, Sharing, Liking or Favoring certain social content.

    For example, responding to a Tweet, individuals with sensitive information may leak it in his or her response to an emotional statement by others. Human nature is such that we respond to threats, attacks or other statements to which we emotionally disagree.[iii]  This phenomenon is very visible in the current U.S. Presidential election process.

    In an era of Big Data, if X number of individuals from a specific organization respond to a Post regarding a merger or acquisition on a social media site such as LinkedIn, from Analytics one might infer a certain stance or position on the subject. Perhaps innocent, this inadvertent leak may impact on the equity markets.

    If a social media based rumor turns out to be true (and there are often many rumors regarding impending actions) does the organization face any blowback or legal action? Perhaps not as there is usually a rumor mill about these types of issues.

    However, in the olden days rumors were usually not in writing. When they were, the results can be disastrous. Leaki