How Businesses Survive How Businesses Survive after a Disaster - - PowerPoint PPT Presentation

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How Businesses Survive How Businesses Survive after a Disaster after a Disaster EPI CC EPI CC – – April 28, 2009 April 28, 2009

Fredric Kropp, PhD Fredric Kropp, PhD Monterey Institute of International Monterey Institute of International Studies, Monterey, CA, USA Studies, Monterey, CA, USA

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Based on work with Based on work with Roxanne Zolin (QUT) Roxanne Zolin (QUT)

• How surviving businesses respond during

How surviving businesses respond during and after a major disaster. and after a major disaster. Journal of Journal of Business Continuity & Emergency Planning Business Continuity & Emergency Planning, , (2007) 1(2), 1 (2007) 1(2), 1-

• 17.

17.

• How governments can help businesses

How governments can help businesses weather a cataclysmic disaster. I weather a cataclysmic disaster. I n n Deborah Deborah Gibbons (Ed.), Gibbons (Ed.), Communicable Crises: Communicable Crises: Prevention, Management, and Recovery in Prevention, Management, and Recovery in the Global Arena. the Global Arena. Charlotte, NC, Charlotte, NC, Information Age Publishing, 239 Information Age Publishing, 239-

• 262.

262.

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Motivation Motivation

• Presentation at USASBE by faculty from a

Presentation at USASBE by faculty from a university in New Orleans university in New Orleans

• Roxanne worked at the NPS on a project

Roxanne worked at the NPS on a project with the Center for Stability and with the Center for Stability and Reconstruction Reconstruction

• Also colleague of Brian Steckler, NPS,

Also colleague of Brian Steckler, NPS, Hastily Formed Networks Group Hastily Formed Networks Group

• r.zolin@qut.edu.au

r.zolin@qut.edu.au

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The setting The setting – – part 1 part 1

• Post Hurricane Katrina

Post Hurricane Katrina -

• interviews:

interviews:

– – “ “Engineering Software, Engineering Software,” ” small firm, 80 small firm, 80 people in one location people in one location – – “ “City University, City University,” ” 17,000 students & 17,000 students & 1,200 faculty 1,200 faculty – – “ “Department of Information Processing, Department of Information Processing,” ” large IT service provider, 1,500 large IT service provider, 1,500 employees, with counterparts elsewhere employees, with counterparts elsewhere

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The setting The setting – – part 2 part 2

• In our minds/grounded in

In our minds/grounded in entrepreneurship theory entrepreneurship theory

– – Different types of entrepreneurs: Different types of entrepreneurs:

• pportunity
• pportunity-
• based entrepreneurs and

based entrepreneurs and entrepreneurs by necessity entrepreneurs by necessity – – Entrepreneurial Orientation (EO) and Entrepreneurial Orientation (EO) and Lumpkin and Dess (1996) model Lumpkin and Dess (1996) model

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Entrepreneurial orientation Entrepreneurial orientation (EO), Lumpkin & Dess, 1996 (EO), Lumpkin & Dess, 1996

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But first, the story But first, the story… …. . Hurricane Katrina Hurricane Katrina

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The story continued The story continued

• 1325

1325-

• 2500 dead

2500 dead

• Over 1 million people displaced

Over 1 million people displaced

• Untold suffering

Untold suffering

• US$80

US$80-

• 130 billion damage

130 billion damage

• Thousands of businesses destroyed

Thousands of businesses destroyed

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I mpacts on Businesses I mpacts on Businesses

• Loss of people

Loss of people

• Inability to communicate

Inability to communicate

• Loss of or damage to physical property

Loss of or damage to physical property

• Broken supply chain

Broken supply chain

• Radical shifts in demand

Radical shifts in demand

• Potential severe cash flow problems

Potential severe cash flow problems

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Loss of People Loss of People

• Death or injury

Death or injury

• Other priorities

Other priorities

• Unable to physically get to or

Unable to physically get to or communicate with work communicate with work

• In first hours, personal situation

In first hours, personal situation awareness critical awareness critical

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Personal situation Personal situation awareness awareness

• Assessment of physical well

Assessment of physical well-

• being of

being of

– – Individuals: self, employees, families, Individuals: self, employees, families,

• ther key people in life
• ther key people in life

– – Home and other personal property Home and other personal property

• Though started in first hours may take

Though started in first hours may take weeks weeks

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I nability to Communicate I nability to Communicate

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I nability to communicate I nability to communicate

• Hastily Formed Networks group at NPS

Hastily Formed Networks group at NPS dispatched to Mississippi to reestablish dispatched to Mississippi to reestablish contact with military installations. contact with military installations.

• HFN mission is

HFN mission is “ “to improve the effectiveness to improve the effectiveness and the efficiency of U.S. and International and the efficiency of U.S. and International Disaster Relief Operations, especially where Disaster Relief Operations, especially where the U.S. is working in collaboration with the U.S. is working in collaboration with NGO, IO, and Foreign Governments. NGO, IO, and Foreign Governments.” ”

• www.hfncenter.org

www.hfncenter.org; ; http:// http:// dkms.resiliencesystem.net dkms.resiliencesystem.net/ /

Resilience Resilience

• the physical property of a material that

the physical property of a material that can return to its original shape or can return to its original shape or position after deformation that does position after deformation that does not exceed its elastic limit not exceed its elastic limit

• an occurrence of rebounding or

an occurrence of rebounding or springing back springing back

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Resilience Resilience

• In computer networking:

In computer networking: “ “Resilience is Resilience is the ability to provide and maintain an the ability to provide and maintain an acceptable level of service in the face acceptable level of service in the face

• f faults and challenges to normal
• f faults and challenges to normal
• peration.
• peration.”

”

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Department of Defense Department of Defense SSTR SSTR

• Stability

Stability

• Security

Security

• Transition

Transition

• Reconstruction

Reconstruction

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Hancock Medical Center Hancock Medical Center

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Ability to communicate Ability to communicate

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Ability to communicate Ability to communicate

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Loss or Damage to Loss or Damage to Physical Property Physical Property

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Disaster Contingency Disaster Contingency Plans Plans

• Many businesses have them but they

Many businesses have them but they

• ften are ineffective as they can
• ften are ineffective as they can’

’t t anticipate the scope of the disaster anticipate the scope of the disaster

• Never practiced or don

Never practiced or don’ ’t have one t have one

• Can

Can’ ’t find key decision makers t find key decision makers

• They are not resiliency plans

They are not resiliency plans

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Engineering Software Engineering Software

• No formal disaster plan

No formal disaster plan

• Partners operated independently

Partners operated independently

– – One on reestablishing infrastructure One on reestablishing infrastructure – – One on maintaining client contact One on maintaining client contact

• Maintaining identity key

Maintaining identity key – – keeping keeping website operational website operational

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City University City University

• Had a disaster plan , however

Had a disaster plan , however

– – People were unfamiliar with it People were unfamiliar with it – – Didn Didn’ ’t know what to do t know what to do – – Plan did not cover situation (that they Plan did not cover situation (that they were undamaged but inaccessible) were undamaged but inaccessible)

• Top management and volunteers

Top management and volunteers banded together banded together

• Relied on out

Relied on out-

• of
• f-
• area help

area help

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Department of Department of I nformation Processing I nformation Processing

• Had an effective plan that was

Had an effective plan that was practiced regularly practiced regularly

• Relocated in Pennsylvania and

Relocated in Pennsylvania and conducted operations from there conducted operations from there

• The plan worked

The plan worked

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Broken supply chain Broken supply chain

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Radical shifts in demand Radical shifts in demand

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Cash flow problems Cash flow problems

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Stages of business Stages of business response response

• First hours: personal situation

First hours: personal situation awareness awareness

• First day: Business situational

First day: Business situational awareness awareness

• First week: finding people

First week: finding people

• First two weeks: reconstructing

First two weeks: reconstructing management management

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Stages of business Stages of business response response

• First month: reconstructing strategy

First month: reconstructing strategy

• First quarter: back to the (new)

First quarter: back to the (new) business business

• Learn from business successes and

Learn from business successes and from failures from failures

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And now And now … …. .

• A short

A short interlude to interlude to avoid death by avoid death by PowerPoint PowerPoint

Fredric Kropp Fredric Kropp -

• fredric.kropp@miis.edu,

fredric.kropp@miis.edu, fk 16/5/08 fk 16/5/08

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Entrepreneurial orientation Entrepreneurial orientation (EO), Lumpkin & Dess, 1996 (EO), Lumpkin & Dess, 1996

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Big I deas Big I deas

• Immediately following a disaster, the

Immediately following a disaster, the short short-

• term goal of the firm is survival

term goal of the firm is survival

• Firms with a higher EO will be more

Firms with a higher EO will be more likely to survive a cataclysmic disaster likely to survive a cataclysmic disaster

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Gets a little confusing Gets a little confusing

• Sometimes an entrepreneur is a person,

Sometimes an entrepreneur is a person, sometimes a business sometimes a business

• As a person, two types

As a person, two types

– – Opportunity based Opportunity based – – Necessity based Necessity based

• Then, there are social entrepreneurs

Then, there are social entrepreneurs

• Next slides look at the business level (much

Next slides look at the business level (much

• f which applies to the individual)
• f which applies to the individual)

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Entrepreneurial Orientation Entrepreneurial Orientation

• Autonomy

Autonomy -

• “

“independent action by an independent action by an individual or team aimed at bringing individual or team aimed at bringing forth a business concept or vision and forth a business concept or vision and carrying it through to completion. carrying it through to completion.” ” Lumpkin and Dess (2001) Lumpkin and Dess (2001)

– – Greater autonomy Greater autonomy

higher probability of

higher probability of survival survival

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Entrepreneurial Orientation Entrepreneurial Orientation

• Innovativeness

Innovativeness -

• “

“reflects a firm reflects a firm’ ’s s tendency to engage in and support tendency to engage in and support new ideas, novelty, experimentation, new ideas, novelty, experimentation, and creative processes that may result and creative processes that may result in new products, services, or in new products, services, or technological processes technological processes” ” Schumpeter Schumpeter (1954). (1954).

Greater innovativeness Greater innovativeness

higher probability

higher probability

• f survival
• f survival

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Entrepreneurial Orientation Entrepreneurial Orientation

• Proactiveness

Proactiveness -

• the opportunity

the opportunity-

• seeking, forward

seeking, forward-

• looking perspective

looking perspective that involves introducing new that involves introducing new products/services and acting in products/services and acting in anticipation of future demand. anticipation of future demand.

– – Greater proactiveness Greater proactiveness

higher

higher probability of survival probability of survival

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Entrepreneurial Orientation Entrepreneurial Orientation

• Risk

Risk-

• taking

taking -

• “

“uncertainty and uncertainty and potential losses associated with the potential losses associated with the

• utcomes which may follow from a
• utcomes which may follow from a

given set of behaviors given set of behaviors” ” Folani Folani and and Mullins (2000). Mullins (2000).

– – Reasonable risk Reasonable risk-

• taking

taking

higher

higher probability of survival probability of survival – – Unreasonable Unreasonable

lower probability

lower probability

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Entrepreneurial Orientation Entrepreneurial Orientation

• Competitive Aggressiveness

Competitive Aggressiveness -

• “

“refers refers to a firm to a firm’ ’s propensity to directly and s propensity to directly and intensely challenge its competitors to intensely challenge its competitors to achieve entry or improve position, that achieve entry or improve position, that is, to outperform industry rivals in the is, to outperform industry rivals in the marketplace marketplace” ” (Lumpkin and Dess (Lumpkin and Dess 1996). 1996).

– – Appropriate CA Appropriate CA

higher probability of

higher probability of survival survival

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Environment Environment

• Munificence ~ abundance (compare

Munificence ~ abundance (compare with scarcity) with scarcity)

– – Greater munificence Greater munificence

higher probability

higher probability

• f survival
• f survival
• Dynamism and complexity could work

Dynamism and complexity could work in many different ways in many different ways

Dynamism/ Complexity Dynamism/ Complexity

• Dynamism

Dynamism – – the rate of the rate of unpredictability of environmental unpredictability of environmental change surrounding a firm change surrounding a firm

• Complexity relates to the range,

Complexity relates to the range, variety, and heterogeneity of variety, and heterogeneity of environmental factors involved in environmental factors involved in strategic decision making strategic decision making

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Organizational Factors Organizational Factors

• Larger

Larger

higher probability of survival

higher probability of survival

• More resources

More resources

higher probability

higher probability

• Less destroyed

Less destroyed

higher probability

higher probability

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Take Take-

• aways

aways

• Plan, plan, plan

Plan, plan, plan

• Practice, practice, practice

Practice, practice, practice

• Understand the businesses you serve

Understand the businesses you serve

• Encourage, foster EO

Encourage, foster EO

• Recognize importance of speedy help

Recognize importance of speedy help

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Almost done Almost done

• Top 10 list of creativity

Top 10 list of creativity

Questions Questions

• Questions?

Questions?

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