The Adaptive Cycle Of Resilience

Published Date: 02 Nov 2017

1. Introduction

Nowadays, organizations face dynamic environments characterized by substantial and often unpredictable technological, political and economic changes. The key to survival and succeeding is adaptation which is often an only option is to literally "do or die" with regard to change. Tyagi & Gupta (2005) indicates that the central point of personal and organizational effectiveness is a sense of being able to make contributions and make somewhat of a difference in any way possible. This situation is very well described by Adaptive Cycle of Resilience model (Abcouwer et al. 2011), which has been developed from Panarchy bundle (Gunderson et al. 2002). The adaptive cycle describes cyclic development of systems giving an insight into understanding the nature of cycles and keeping the process under control. In different stages of the cycle organizations must undertake various actions to react to changes efficiently. These include not only organizational, structural or procedural changes, but also reforms in information systems, which should be supporting the rest of organization’s processes. In this work several requirements to organization and its information system in different stages of adaptive cycle will be proposed.

The framework will be proposed on the theoretical basis of linking risk models, such as Swiss Cheese Model (Reason 1997, 2000), information needs of the organization (Ciborra, 1993; Dyer, 2008) and roles of manager (Mintzberg, 1990; Heifetz, 2009) to Adaptive Cycle of Resilience in order to conclude the requirements towards the organization in every part of the Adaptive Cycle of Resilience. Which in turn may evaluate possibilities for organizations to survive and develop more effectively in changing environment.

1.1. The Adaptive Cycle of Resilience

In order to understand organization live cycle in present environment, scientists turn attention to global processes – and any of them seems to share properties of cyclic development. From social perspective, Van Praag (1986) described revolution phases and concluded, that after ending of previous revolution – the latter arises. Abcouwer (Abcouwer et al., 2006) mentioned that if any organization wishes to live and develop, the only possible way is to initiate a new introduction phase as early as the decline phase, during which chaos and crisis are already occurring.

Suggesting that the complexity of living systems emerges not from a large number of random interacting factors composition but from a smaller number of controlling processes, a new Resilience Theory (Holling 2000; Gunderson and Holling 2001, Abcouwer 2011) was developed. It is based on Panarchy theory and stands on position that mentioned systems are self-organized, and a small set of critical processes create and maintain this self-organization.

This theoretical framework started by Simon (1974), who was the first describing the adaptive significance of all hierarchical structures. His term "hierarchies" meant not a top-down sequence of authoritative control, but semi-autonomous levels formed from the interactions among a set of variables that share similar speed characteristics. The transfer from one level to another can transform interactions between levels without losing integrity of the whole system. Main argument of this framework is that each of the levels of a dynamic hierarchy serves two functions: to conserve and stabilize conditions for the faster and smaller levels and to generate and test innovations by experiments occurring within a level. The dynamic function is called an "adaptive cycle". Figure 1 illustrates the Adaptive Cycle by Holling (Holling, 2001).

Figure 1: The Adaptive Cycle by Holling

For each system dynamics four distinct phases of adaptive cycle have been identified:

Growth or exploitation (r)

Conservation (K)

Collapse or release (omega)

Reorganization (alpha)

The cycle owns two phases. First - the fore loop (from r to K) means slow incremental phase of growth and accumulation of energy. The second – back loop (from Omega to Alpha) is the rapid phase of reorganization leading to renewal.

During the slow sequence from exploitation to conservation (step 1-2), connectedness and stability increase and a capital of energy is slowly accumulated and sequestered. While the accumulated energy is sequestered for the growing, maturing system, it also represents a gradual increase in the potential for other kinds of systems and futures. The phase from Omega to Alpha is a period of rapid reorganization during which new recombinations can unexpectedly seed experiments that lead to innovations in the next cycle.

Front loop of the trajectory (from r to K) becomes progressively more predictable as it develops. Back loop is inherently unpredictable and highly uncertain. At that step all previously accumulated mutations, inventions external influence factors can become recombined. Some of them bring new opportunities to life.

Another dimension - the resilience. As the phases of the adaptive cycle proceed, a system's ecological resilience expands and contracts. The conditions that occasionally foster novelty and experiment occur during periods in the back loop of the cycle, when connectedness, or controllability, is low and resilience is high. Low connectedness permits new element combinations that were previously tightly connected to others in isolated sets of interactions. The high resilience allows tests of those novel combinations because the system-wide costs of failure are low. This results is the condition needed for creative experimentation (Holling, 2001).To adapt the cycle for organizations, Abcouwer (2011) gave the following cycle representation adding new dimensions of certainty-uncertainty and want-can (see Figure 2).

In general, the model represents organization movement from equilibrium (position 1, certain about what organization wants and what can, the goals and targets are clear, customers are happy etc.) to crisis (position 2, total uncertainty about future – or about what organization wants and can) – either by Black Swan, or external influences. Between stages 2 and 3 (and in the 3 stage) organizations make analysis, run pilot studies and make experiments, which can be described as a high resilience phase in a classical cycle theory. Next stage New Combinations (if organization survives) – is a result of management and inspirational strategies – when company starts to search for a solution and sees all range of alternatives from which one must be chosen. On this step company does not know what it wants for sure (it decides, analyses opportunities etc.), but knows what it can. The moment of final choice will lead to stage 4 Business. Here organization already has the knowledge about demands (yet does not know about opportunities), because the choice often leads to uncertain results and time is needed to reorganize and get to another phase of Equilibrium. Then the whole cycle starts again. Abcouwer (2011) also mentioned that different parts of organizations may be at the different phases of the cycle, which might be important for a common status of the organization.

Figure 2: The Adaptive Cycle of Resilience

Not every organization will survive after crisis, and thus crisis management is needed. Yet there is a strong need of different styles and strategies of crisis management on each stage of organizational development. It should be also mentioned that a move from one to another phase of the cycle does not necessarily involve "physical" changes. Sometimes it involves changes in a manner of observation, paradigms and conceptions in the minds of people. Some things could acquire new meanings, but they always mark core changes in the organization itself, because it consists of people. So the level of abstraction and psychological environment must not be misunderstood or underestimated.

It is clear, that every part of a cycle requires a different way of thinking, strategies and management styles.

1.2. Current situation regarding organization as a dynamic environment

Nowadays organizations operate in a dynamic environment with frequent unpredictable events which have an impact on their performance. Companies struggle when the rate of change in their environment outpaces their own capacity to keep up (Foster & Kaplan, 2001).

Due to the globalized competition, and the advancement of the new technologies, organizations are currently embedded in less predictable environments. From an open system’s view, it can be argued that organizations need to deal with the environmental factors in order to survive. Flexibility is an important method for organizations to survive in this uncertain environment. It helps to meet dynamic market demands in a timely manner (Milliman, Von Glinow, & Nathan, 1991; Sanchez, 1997; Volberda, 1998). Different ways for organizations to increase flexibility have been proposed, such as adopting flexible production methods and broadly-defined work rules (Valverde et al., 2000), yet many initiatives undertaken by organizations have been less than successful.

Researchers stated that is no longer possible for organizations to get better: they need to get different (Hamel, 2000). Environmental dynamic leads to a focus on organizational capabilities as the principle source of competitive advantage (Grant, 1996). Dyer and Shafer discuss a "growing interest in an entirely new organizational paradigm – one that views organizational adaption not as a one-time or even periodic event, but as a continuous process." (1998: 6). Organizational Agility is considered a necessary dynamic capability for organizations operating in a dynamic environment. Eisenhardt and Martin (2000) expand the concept of dynamic capabilities by stating that the effective patterns of dynamic capabilities vary with market dynamics. Concluding current situation it can be stated that external environment becomes more unpredictable due to the growth of changes' speed. In the context of Adaptive Cycle – phases replace each other more rapidly.

2. Risk management

2.1. About risk management

Risk management can be described as a synthetic scientific discipline, which studies the influence of occasions and random events which can cause harm on various fields of human activity. Also risk management finds paths and strategies to acquire company stability and enhance its adaptive mechanisms. It does not only prevent risks, but also makes effective risk avoidance as a result of a structured and organized approach. The environment is characterized by uncertainty which is often large, not well structured and irreducible. Development can be viewed as a continuous process of evolution of the available risk management operators broadly classified into control, new alternatives, worst-case plans and precautions (Kostov P., 2001). Risk management refers to the transposition of all possible scenarios. It is about a cautious attitude and about the belief in the materialization possibility of a risk. Starting from this attitude, a constructive decision is taken to eliminate or reduce the damage that may arise as a consequence of the respective risk.

The Turnbull Report (1999) lists the following series of events that need to take place to embed risk management into the culture or an organization:

• Identification of risks that face an organization on a regular basis.

• Risk assessment stage. Once risks have been identified, it is important to gain an understanding of their size and nature.

• Understanding how risks are currently being managed.

• Reporting the risks.

• Monitoring the risks.

• Maintaining the risk profile.

The complexity and pervasiveness of risk make it critical for executives to be aware of it and to have ways to identify and control it. Risk management involves constructing a genuine culture of risk warning for a specific organization, implementing the risk elimination techniques.

Several research mentioned today’s society has dramatically changed the types of models needed to understand the structure and behavior of high-risk socio-technical systems (Rasmussen, 1997). Factors such as the rapid pace of technological change, the high degree of coupling enabled by computerization and communication technologies and the volatility of economic and political climates each contribute to an environment in which the pressures and constraints that shape work practices are constantly shifting. Traditional modeling methods such as task analysis are inadequate as referents for understanding actual work practices because they depend on the assumption of a stable, tightly constrained environment (Vicente 1999).

8.2. "Swiss cheese" model and SOFS

One of the key steps in advancing risk management theories was made by Perrow (1999, p.260), who found that safety redundant mechanisms do little to reduce human errors. As mentioned in his work, the more redundancy is used to promote safety, the greater is the chance of spurious actuation. While instrumentation is being improved to enable operators to run their operations more efficiently, and certainly with greater ease, the risk would seem to remain about the same. This conclusion led to search for new methodological approaches.

All defense mechanisms and schemes share a key position in the system approach. Highly organized systems have many layers of defense: some are engineered, like physical barriers, automatics, etc.; others rely on people (surgeons, pilots, control room operators, etc.), and others depend on procedures and administrative controls. Main function of such defense is to protect potential victims and assets from local hazards. Mostly they cope with it very effectively, but there are always weaknesses.

James Reason proposed the "Swiss cheese" model to explain the occurrence of system failures (Reason J., 2000). According to this metaphor, in a complex system, hazards are prevented from causing human losses by a series of barriers. Each barrier has unintended weaknesses, or holes – hence the similarity with Swiss cheese. These weaknesses are inconstant – i.e., the holes open and close at random. When by chance all holes are aligned, the hazard reaches the organization and causes harm. By Reason (Reason J., 2000), there are two general approaches to the problem of human fallibility: the person and the system approaches.

First approach focuses on the errors of men, focusing on their inattention, moral weakness and forgetfulness. System approach concentrates on the conditions under which individuals work and tries to build defenses to avert errors or mitigate their effects. Swiss Cheese model opens a different perspective.

The "Swiss Cheese" model includes, in the causal sequence of failures that leads to an accident or an error, both active failures and latent failures. The former concept of active failures encompasses the unsafe acts that can be directly linked to an accident, such as pilot errors.

The latter concept of latent failures speaks about resident pathogens within the system, which may arise as a result of strategic decisions, made earlier. Latent conditions have two kinds of adverse effect: they can translate into error provoking conditions within the local workplace (such as time pressure, understaffing, inadequate equipment, fatigue, and inexperience) and they can create long lasting holes or weaknesses in the defenses. They may lie dormant within the system for many years before they combine with active failures and local triggers to create an accident opportunity. Unlike active failures, whose specific forms are often hard to foresee, latent conditions can be identified and remedied before an adverse event occurs. Understanding this leads to proactive rather than reactive risk management.

According to a well known Heinrich’s law (Heinrich et al, 1989) in the background of serious injury there are many minor ones and many troubles. That in turn means that there are enough signs prior to a severe system mistake or a serious failure. As explanations of system failures in reductionist manner (like an event chain of actions and errors) are not very useful (Rasmussen, 1997), search for new methodologies led to dynamic models holistically examining system failures, for the purpose of preventing further failure occurrence.

Most commonly used methodologies of failure analysis are failure mode effect analysis and fault-tree analysis. First is used to identify potential failures that could have consequences affecting the functioning of a system within the limits of its application. It provides a framework for selecting appropriate maintenance actions. Failure modes are the possible ways, or modes, in which an asset can fail. Effects analysis involves predicting the effects of each failure mode (Dieter 2000).

Fault tree analysis (FTA) is a method for quantitative risk analysis (QRA) that develops a logical relationship among the events leading to an accident and estimates the risk associated with it. FTA analyzes combinations of failures in a top-down manner, and the results are visually presented as a logic diagram (Ferdouse et al, 2011).

Yet there is some gap in understanding system failures mainly because of the lack of a common language and wide methodology for preventing them in future. Some disagreements between individuals and groups are in our days as much a threat to as a failure to predict and control risks itself. To conclude several approaches to some compromise, some researchers propose to use the "system of system failures", or SOSF (Nakamura T., 2010), which is in turn a meta-methodology which seeks to unite and coordinate the existing approaches. SOSF classifies the world of objects into two dimensions: systems and participants. First dimension have domains of simplicity and complexity. The participant dimension has three domains: unitary, plural, and coercive. Errors are described as three failure classes: failure of deviance, failure of interface and failure of foresight. First class failure is within the system boundary, and conventional troubleshooting techniques are applicable and effective. Second class accidents are outside the system boundary, but are predictable in the design phase. Third class errors are outside the system boundary and are unpredictable in the design phase.

The 4 phases of system failure prevention using SOFS are following:

Phase 1 is becoming aware of system failure, which is too complicated to understand from one perspective, and too complex for quick fixes. Phase 2 identifies stakeholders relating to the mentioned problems. Phase 3 is a creativity phase. In this phase, many different possible views of organizations and their problems should be recognized, managers are encouraged to use metaphors, like Swiss Cheese model, mentioned above. The aim is to take the broadest possible critical look at the problem, but gradually to focus on those aspects currently most crucial to the organization (Jackson, 2006).

It should be mentioned, that each metaphor has its own corresponding methodologies. The linear deterministic "domino metaphor" (Heinrich et al., 1980) representative methodologies are FTA (IEC 61025, 2006) and failure mode and effects analysis (FMEA) (IEC 60812, 2006). "Swiss cheese" metaphor represents FFSM (failure factor structuring methodology) (Nakamura & Kijima, 2008a, 2009b) as searching for latent factors to suppress deviations leading to system failures.

Phase 4 or Choice phase is mapping metaphors from Phase 3 to SOFS, which in turn help to choose correct methodology to concrete problem situation.

In addition it should be mentioned, that authors of SOSF (Nakamura & Kijima, 2009a) point that the SOSF meta-methodology is used not to deterministically prescribe which methodology to choose but to illuminate and inform that choice.

2.3. "Black Swans" and disrupter analysis test

Within the context of risk management very special type of risk must be mentioned. There is a concept and a metaphor of a "Black Swan", underlying specific event, which share several key properties:

1. It lies outside all regular expectations, because nothing in the past can point on its possibility. 2. It has extreme impact on the system where it occurs.

3. It can be explainable and even predictable after the fact of its occurance.

Some solutions to deal with a black swans like disrupter analysis stress test (Merle, 2011) were proposed. Yet disrupter analysis stress test can not predict the black swan accident, because of the swans key properties and very nature, but it is designed to administer stress tests to big companies, which can be a good move, not only to improve their flexibility, but to asses their ability to withstand black swans.

Disrupter analysis test consists of a four-step process, including enterprise mapping (including geographical, physical and supply data and even third-order relationships), disrupter list designing (which means a list of potential black swans by cataloging possible catastrophic events – as much as possible), combination of probabilities (asking "what if?" and analyzing the probable outcomes of unpleasant events or their combinations) and implementing contingency plans (Merle, 2011).

2.4. Linking with the Adaptive Cycle

To gain clarity in required moves, the Adaptive Cycle of Resilience can be combined and viewed from the Swiss Cheese model perspective. Knowing the risks influencing the organization it should be possible to find ways to manage them and conclude the requirements towards the organization in every part of the Adaptive Cycle of Resilience.

Within mentioned theoretical framework and its recent updates (Abcouwer, 2011), several instructions for organization (and Risk Management in particular) performance on each stage of a cycle can be proposed:

1. Each organization must realize and cope with want-must-can dilemma (Heene, 2002). This area of tension must be led to conclusion. Figure 3 illustrates the dilemma.

It can be pointed out that different people understand the optimum of organization functioning in different manner. Each organization has to make a strategic choice what is "correct" functioning. The area of tension must be brought to balance. Common situation is when organization clearly understands not all of three aspects: some organizations may know what they want and need, but doubt about what they can. In the dynamical world each organization face new tensions and challenges - so as the balance, which must not only be maintained but overlooked and developed every time the equilibrium point (new combinations of needs, possibilities and wishes) moves (Abcouwer 2011, Moore 1996).

Figure 3: Want-must-can dilemma

In short, every strategic movement serves two general functions: to maintain equilibrium in the phases of connectedness, rigidness and resources accumulation or search for a new one during crisis. The ideal situation is continuous overlooking of want-must-can properties. Yet in real conditions attention should be turned often.

2. Phase 1 of Adaptive Cycle

According to Adaptive Cycle paradigm this phase seems to own extra stability and connectedness and also accumulation of energy for further development. According to Swiss Cheese model in this phase system accumulates many latent mistakes. The critical and unaware active mistakes are yet to come.

I suggest runnig many disrupter analysis tests during this period is a good idea. As already mentioned, it wouldn’t help preventing a Black Swan, but will strengthen the entire organization. It can also find some latent mistakes and fix some of them earlier then they emerge in some critical situations.

During phase 1 organization waits external influences, but becomes more rigid. Thinking that organization can cope with problems and is well-prepared causes inflexibility and low change potential (Abcouwer, 2011). In this case a sort of solution can give systems with extra-high responsibility (like military-defense systems, aircraft carriers, nuclear silos etc.) mentioned by Reasons (2007). These systems have not only multiple levels of shields of all kinds (Swiss Cheese model surely demonstrates how vulnerable they may become) but they also possess special psychological environment to prevent people forgetting to be afraid. Something from this paradigm can be used by organizations: during phase 1 stress and crash tests will be good idea to increase flexibility to some extent.

Psychical environment is essential. Because solutions to hypothetical future disruptions are typically searched and found within the paradigm which is now applied by company (corresponding to its experience), carefully and correctly designed stress tests are necessary: they can make some little changes in thinking styles and manner which may result in company adaptive behavior increment or at least prolong phase 1.

3. Moving from Phase 1 of Adaptive Cycle to Phase 2

This move may be rapid (in case of Black Swans for example) but can also have moderate speed (in case of accumulating system failures). During this move company is not stable anymore, but yet not falls into the crisis – it is now in the process of falling. In this moment company becomes aware of system failure, which is too complicated to understand from one perspective, and too complex for quick fixes. This condition corresponds to SOFS phase 1.

Here SOFS can be used as a tool to choose appropriate methodology. The choice must be made by organization, yet level of result uncertainty begins to grow.

4. Phase 2

Phase two is most catastrophic. It is a phase of ultimate uncertainty and unpredictability. Failure occurs and barriers are avoided. Yet even now company owns its potential and energy of all kinds accumulated during times of prosper and stability. The only way is reinvention, search for a new paradigm, organizational lifestyle etc. First strategy and step which have to be done is rejecting "yesterday truth", which means that company should not use old strategies. They would not work because they do not work right now.

During this phase company should seek innovations and once again turn its attention to want-must-can dilemma, firstly focusing on want. In case of inevitable transformation organization need to choose what kind of transformation it wants. It must be realized that the Cycle is irreversible and can’t be stopped. Leader and inspirational strategies, innovations and analysis must be applied. The main idea for management during this phase – is to find as many opportunities and visions of future as possible. Then the company should choose which one to follow.

One important notion should be added. In some cases, company may return to phase 1 from phase 2 (Abcouwer, 2011) by getting back to core activities, starting from the existing. This step is also a variant of transformation and can be chosen. As Abcouwer mentioned – it may be a better solution for companies with low resources and energy to cope with crisis and maintain innovation development.

5. Phase 3

Named phase is a situation where organization starts to know its opportunities, yet doesn’t know its desires. Phase 3 is reorganization phase which main property is an amount of opportunities from which one (or several) must be chosen. On this step many groups within organization standing for different ideas can compete with each other and many initiatives will be rejected in case of limited resources. For organizations in this case compromise strategies should be applied. Main idea: to decrease an amount of opportunities leading to simpler choice of the one.

For company it is essential to choose which ideas needed to be supported by researches and pilot studies. It can be proposed that whether new standard is not yet chosen – there is no strict concept of failure properties.

On this stage risk management is suggested to test each alternative proposed (from those which are already in the "short list") on possible risks. As a method it may be a disruptor analysis modification which main aim is to discover latent failures which may occur is the company chooses the alternative. Then the alternative can be fixed or thrown out.

6. Phase 4

In this phase organization had chosen one of the alternative ways of developing and begins to consolidate its resources and again starts to find an equilibrium in want-must-can dilemma. During mentioned phase organizations know what they want, yet knowledge about their abilities are not enough. In this phase fast development plays a key role in improving the knowledge of cause and result and turning again to ‘business-as-usual’, but a modified one with a new equilibrium. Main properties of this phase are growth and improvement. According to Swiss Cheese model in this time latent failures may be created but active failures (if occur) have little impact.

On this stage it is critically important to maintain the taken course of action and not to turn back to support another alternatives. For this phase judgmental strategies and standardization may be proposed.

2.5. Practical case

In this chapter I introduce a specialists opinion on linking risk management to Adaptive Cycle. Joachim Blömeke (IT Project Manager, IT Risk Management Consultant at Accenture ). He has a 13 years of experience in this field and work as a consultant in highly stressful projects which are in crisis.

Blömke pointed that mentioned framework is strategically correct, yet miss several aspects.

Firstly, expert mentioned about the resources. He also advices not to keep resources tight and always have them for plan B. If it is impossible to expect the unknown, organization can be more prepared if it has some spare resources (people, budget, time etc.) in case if something unexpected comes up again. On expert’s own experience he convinces project management to use this principle and there has almost never been a project in my experience where these resources stayed unused.

Another statement was that a company should avoid thinking that there will be only one Black Swan or critical event.

Blömke also spoke about paying attention to "lessons learned" sessions. On his experience there were "lessons learned" sessions within each team conducted on a regular basis (every 3 months). Mentioned method is a mind mapping session where each team member gets to give his opinion and proposal during the brainstorm. All the thoughts are placed on thematically separated boards where everyone can see them. These boards can later on be looked at by management to see if something is considered wrong by several teams. This way larger person related mistakes and smaller changes can be identified by management and mitigated before these cause a crisis. This is one example and process can be made differently.

Expert underlined the core idea of framework about rechecking and propositon to be always active and suspicious in every cycle phase. In his opinion in case when environment of organization is changing it is helpful to be afraid. Manager should never be too sure about what he, his colleagues or the whole organization does and recheck regularly whether the organization still does what it should and whether it is going the right way.

2.6. Intermediate conclusion about Risk Management

Risk management plays a key function in pathfinding of organizational stability and its adaptive mechanisms enhancement. The environmental uncertainties can be classified in terms of Adaptive Cycle of Resilience and risks can be described in terms of a Swiss Cheese model. Combination of these theories gives a systematic information about ongoing events which helps manager to find a suitable strategical behaviour for organization survival and prosperity. It is essential to notice that each phase of a cyclic development possesses its own properties and effective strategies correspond with each phase in a "key-lock" manner.

Using specialist commentary and our theoretical framework intermediate conclusion of this chapter can be presented in a phase-strategy style:

0.

Keeping in mind or making a strategic choice of what is "correct" functioning, solving want-must-can dilemma, finding a balance and maintaining its equilibrium. Mind mapping, saving some extra resources.

1.

First phase: many disrupter analysis tests application, stress and crash tests, making changes in psychological environment, collecting resources, preserving critical point of view.

2.

Second phase: finding as many opportunities and visions of future as possible, encouraging innovations and creativity, inspirational tactics. Keeping some resources for plan B.

3.

Third phase: testing possible risks of alternatives, compromise strategies, running pilot studies, mind mapping.

4.

Fourth phase: maintaining the taken course of action, judgmental strategies and standardization.

3. Roles of manager

3.1. About roles of manager

The mission of manager is to ensure that his organization serves its basic purpose and maintains efficient work pace. For this purpose a specific set of predetermined but differently performed behaviors is applied, which can be described as manager roles (Mintzberg, 1973).

One of important moments is that managers need to be both organizational generalists and specialists. The role of a manager is quite varied and contradictory in its demands, and that it is therefore not always the lack of managerial prowess. It is essential which role to choose in the precise situation with the precise problems. The connection to Adaptive Cycle can bring order in the complexity of individual situations and show a certain role which is demanded by organizational condition.

According to Mintzberg, there is a set of reasons why manager is necessary for organization. Manager must design and maintain the stability of all organizational operations. He/she must also take charge of organization’s strategy making systems and adapt the organization to changing environment in a controlled and preferable manner. Manager should ensure that his/her employer organization serves the aims of those persons who control it. He/she should serve as the key informational figure between the organization and its environment. Being a formal authority, manager is also responsible for organization’s system functioning.

Mintzberg (1973) describes a set of manager roles that fall into three categories:

Interpersonal, which involve human interaction.

Informational, which involve information analysis and representation

Decisional, which involve decision making.

According to proposed roles of manager by Mintzberg these can be described in a following table:

Category

Role

Activity

Informational

Monitor

Searching for information and maintaining personal contact with stakeholders. Acquiring knowledge about internal operations, external events, analyses, ideas, trends and pressures.

Disseminator

Forward factual and value information to organization members.

Spokesperson

Information transmission to organizations environment.

Interpersonal

Figurehead

Perform ceremonial and symbolic duties, such as greeting visitors and signing legal documents.

Leader

Subordinates direction and motivation, communication and counseling.

Liaison

Maintaining information links inside and outside the organization.

Decisional

Entrepreneur

Initiation of projects improvement, identification of new ideas, responsibility delegation and supervision.

Disturbance handler

Taking corrective actions and dealing with involuntary situations of crises, conflict resolving among subordinates, adaptation to environments.

Resource allocator

Decision of resource distribution, preparing budgets, setting schedules and priorities determination.

Negotiator

Representation of organization during all sort of negotiations.

Table 1: Mintzberg's Set of Ten Roles

In this approach author also proposes key skills required to be a good manager. The main conception is to translate knowledge into action (Mintzberg, 1973) that results in desired performance. These are technical, human and conceptual skills, which are ability to use a special proficiency or expertise to perform particular tasks, good cooperation with others and analytic thinking.

Heifetz (2009) has pointed out that in recent environment levels of uncertainty are high even when crisis ends. He also described the nature of crisis in two phases. First is the emergency phase, when manager needs to stabilize the situation. Second is the adaptive phase, when manager tackles the underlying causes of the crisis and builds the capacity to thrive in a new reality. The adaptive phase is complex for manager: often it is necessary to convince people to make necessary but uncomfortable adaptive changes in their behavior or work. Therefore the second phase is long-lasting and requires special leadership skills of manager.

One of the core notions which has to be remembered by professionals is that risk increases when company makes wrong conclusions about its elusive and premature recovery from some dangerous situation. In fact, by reducing the sense of urgency, the very success can create false illusion of a return to "normal" state.

Adaptation framework

Main idea of this move is finding and eliminating procedures and structures which do not fit with the environmental changes. At first the distinction between the essential and expendable must be made, or in other words what should be preserved and what must be left for moving forward. This point is again connected to equilibrium in want-must-can dilemma, which can be used as an orientation. To achieve success in adaptation many experiments and pilot studies must be ran because many of the proposed ideas can fail.

Stress Tests

Stress testing became an integral part of the risk management function. Without urgency, difficult changes are less likely. But if people feel distress, they will act differently. Heifetz (2009) mentioned core principles of induced stresses: conflict depersonalization which means maintaining a suitable level of disequilibrium, a culture of courageous conversations which support discussions on crucial topics and keeping the process under control.

3.2 Link with the Adaptive Cycle

As in the previous chapter each part of Adaptive Cycle of Resilience can be combined with the roles of a manager. Within mentioned theoretical framework and its recent updates (Abcouwer, 2011), some recommendations for manager performances on each stage of a cycle can be proposed:

1. Phase 1 of the Adaptive Cycle

During phase 1 organization becomes more rigid. Thinking that organization can cope with problems is common. As mentioned, psychological environment is essential. On this stage, interpersonal and informational roles are most essential. Stress tests and disruptor analysis must be made to maintain flexibility on one hand and gain information on the other. In phase 1 manager should pay attention to monitor, spokesperson, disseminator, negotiator and liaison role in his/her daily work. He/she should also make mind-mapping sessions, rechecks and encourage thinking in many different ways.

2. Phase 2

In phase 2 company seeks innovations and turns attention to searching for a new equilibrium. Managers need to find as many opportunities and visions of future as possible. Decisional and interpersonal roles are required the most. Roles of leader, entrepreneur, disseminator, spokesperson, disturbance handler and resource allocator are important during this phase. Manager should now pay attention to resources, be a leader and inspire people in times of crisis, speak with them and initiate projects and creativity which could save organization.

3. Phase 3

Phase 3 is a phase of decision, which main property is decrement of opportunities for further decision. In this phase roles of disseminator, monitor, entrepreneur and negotiator seem to be logical. Informational and decisional roles are especially important. Manager has to negotiate in case of choosing alternatives, yet initiate pilot studies and ideas and inform all parts of organizations about relevant results.

4. Phase 4

During phase 4 the organization has to maintain the taken course of action not to turning to any other alternatives. In order to stimulate organization in following the "right" route manager can improve the effectiveness of processes with the help of standardization. In the standardization period manager should turn again to leader, liaison and disseminator roles. So there is need in informational and interpersonal roles in this phase.

It should be added that manager has to play all roles in his daily life, but mentioned ones are more corresponded to phases and strategies, which means that manager needs to pay extra attention on mentioned behaviors. Table 2 represents which role categories are most important to which phase.

Table 2: Manager roles in the Adaptive Cycle

3.3. Practical case

In this chapter I introduce a specialists opinion on linking roles of manager to Adaptive Cycle. An expert, Tom Schulpen, General Manager for the Province of Noord-Brabant – a government agency with about 1000-5000 employees.

At first Schlupen spoke about non-profit governmental organizations and that the pattern in which changes influence them is very different in case of non-profit business. Government organizations are stable because of their nature: they exist in order to serve all citizens, and on the other hand citizens simply cannot avoid dealing with them and to go to a competitor. However, if governmental organizations do not adapt, usefulness and the perceived quality of services may go down, but the organization itself may yet survive. But from the experts point of view in this case the crisis will occur eventually.

Schlupen also noticed that trainings for management and normal employees that teach employees new ways of working and thinking must be organized on regular basis, because they are meant to increase the change readiness, stimulate pro-activeness and creativity. Schlupen also pointed that good way to reduce rigidness for organization is to hire new people or offer internship.

Speaking about management, Schlupen added that good manager must modify the style of communication inside the organization to more open interactions with the team, cooperation to find solutions. The main point which managers should not forget to recieve feedback from team members, not only give it to them.

Expert also mentioned a crisis situation. He pointed that strict protocols in order to engage the matters at hand, however, do not suite to deal with a crisis. In his opinion a decision of decentralization and to exclude protocols, forming a task force to negiotated with the leaders of the company may be the best idea when black swans occur.

Schlupen stated that Adaptive Cycle concept is a recognizable conception and concluded that this would be applicable to many organizations. He also pointed that due to the transparency that comes forward from the many networking technologies the duration of each cycle is forced to be shorter, which may requirer extra attention on the topic.

3.4. Intermediate conclusion about Roles of Manager

In their book "Managing the Unexpected: Assuring High Performance in an Age of Compexity" By Karl E. Weick and Kathleen M. Sutcliffe (2001) pointed that nearly half time of manager activities related to planning. Yet environmental changes show that planning is not enough and in some situations not key function of manager. The roles of manager can be linked with the Adaptive Cycle of Resilience to evaluate effective types of behavior in every phase of organizational development.

Phase 1 requires interpersonal and informational roles. In this phase manager should pay attention to monitor, spokesperson, disseminator, negotiator and liaison role in his daily work. Stress tests and disruptor analysis must be made.

Phase 2 requires many roles: leader, entrepreneur, disseminator, spokesperson, disturbance handler and resource allocator. But mostly: a leader and disturbance handler. In phase 2 manager should pay attention to resources, be a strong leader, inspire people and initiate creativity to save organization. In this phase some of the earlier protocols used by managers to handle situations should be thrown out or changed and instead of them: a special task force should be created.

Phase 3 requires roles of disseminator, monitor, entrepreneur and negotiator. A manager has to negotiate in case of choosing alternatives, initiate analysis and inform organization about relevant results.

Phase 4, in which maintaining the taken course of action is most important, requires manager to play leader, liaison and disseminator roles. As mentioned by expert, there must always be a feedback from the team members, not only providing it to them.

4. Informational needs

4.1. About informational needs

In present times there is outstanding increase of available information. This in turns enhance the diffusion of information and communication technology (ICT). Should be noticed that it is not only increase of information amount required in an ever increasing range of human activities, but also the growth of sources number from which information is taken. One of the challenges which face societies, organizations and even human beings is the growth of unwanted unsolicited information, so improving internal and external informational currents is one of the main tasks for organizations. More information is necessary to deal with emergent complexity. A highly important resource for survival in this new environment is the ability to obtain access to more information and to be able to manage this information flow (Lewis, 1996; Chan, Reich, 2007).

There are at least two theoretical positions about ICT. First is based on the transaction cost approach (Ciborra, 1993; Wigand et al., 1997). Briefly, this approach stands on providing more efficient information flow and reducing transaction costs. Another approach addressing the problem of ‘information overload’ and underlines the negative effects of ICT due to a greater level of complexity being faced as a consequence of the increased quantity of information made available by the technology (Schultze and Vandenbosch, 1998).

Transaction costs model describes the exchange process with reference to the resources that are required to execute this exchange. While in the optimal case these costs are near to zero, when imperfections occur, these costs increase. Inefficiencies may be results of informational and behavioral-related problems which underline the complexity of the transaction (Ciborra, 1993). Transaction costs are investments in minimization of these imperfections. Transactions costs are described as the consequence of the asymmetrical and incomplete distribution of information among the sides involved in transaction.

Every transaction life cycle may be characterized by different cost phases, with specific information related costs in each of them:

1. Search costs (related to information location)

2. Negotiation costs (related to negotiation about terms of the exchange)

3. Enforcement costs (related to the contract enforcement)

Core idea of transactional cost theory (TCT) is that in situation when costs reach very high level, it may be more convenient to reorganize the process of exchange itself. Ciborra (1993) argues that information must rather be purely objective, but be convincing and adequate to the situation at hand and proposes three models of organization: market, bureaucracy or hierarchy and clan.

In the market cooperative specialization is achieved through buying and selling products and services among large number of agents. Existence and full development of competition fully assures transactors about equitability of the trade. There are no barriers in the marketplace and everyone can gain access to information and price needed to carry out the exchange. Market works as a decentralized system where the output of each agent is directly measured. Bureaucracy is proposed as a hierarchical arrangement of transactions based on legitimate authority. Hierarchy of decision-making sets up goals and rules prescribing behavior, meters and apportions rewards. Legitimate authority is implemented in contractual form of employment relationship. Such contract is in some ways more efficient than a spot contract on a market because of its higher adaptability to varying circumstances which may alter the trades and change transactional costs. Bureaucracies prevail when measurement of individual performance is more difficult, transactions are not instantaneous, nor take place among the large number of agents. A clan (or team) relies on high identification among members, mutual sharing of goals and internalization of values and traditions. Control applied at the entrance and careful selection guarantees high level of homogeneity and trust. Clan forms prevail when transactions are idiosyncratic and measuring individual performance is very difficult.

Mentioned forms are interchangeable and a company may choose between them in concrete situation. When transactions are well patterned the services or products to be well exchanged and fairly standardized, all participants possess the relevant information, then market is the most efficient way to organize labor. In case of product/service complexity and transactional uncertainty a bureaucracy model can be applied rather than trusting market mechanisms.

A clan model is thus ideal in situation of extreme complexity and uncertainty of transactions.

From the informational perspective - main argument of transactional cost model is to use different information processing protocols/information systems during different environmental conditions. Ciborra has also divided information systems (databases) into types:

C-form; centralized system

DC-form; decentralized systems

DS-form; distributed systems

CDB-form; centralized databases

DDB-form; distributed databases

C-form represents centralized systems supported by large computers which are hierarchically integrated and functioned. DC-form is a decentralized concept of systems where programs and files run on separate office computers, thus are scattered around organization. DS-form systems are distributed systems, where local computers support local programs and files but are connected to a network through which data control instructions and files are exchanged. CDB are centralized databases and their core properties are file separation from application, which means that data is consolidated in a large file independently (where can be found and used). DDB-form represents distributed databases on local machines with a local data. Distributed databases are connected by network with a central database with general management system to access local bases.

Each of mentioned informational systems has its own advantages and weaknesses. Table 3 shows the theoretical connections between forms of organization and informational systems which may lower transactional costs and be most effective in information processing.

System

Organization

C-form

DC-form

DS-form

CDB-form

DDB-form

Market

No match

Feasible

Feasible

Good match

Good match

Bureaucracy

Unitary

Good match

Feasible

Feasible

No match

No match

Bureaucracy

Multidivisional

No match

Feasible

Good match

No match

Good match

Clan

No match

Feasible

Feasible

No match

Good match

Table 3: Organization models and informational systems match

In market model of organization all information is fully available and no special memorizing function is required. Although in real life situations where informational distribution is imperfect and transactors consume resources for searching, databases such as CDB and DDB can improve organizational performance by giving access to each seller and buyer and lower the cost of using market mechanisms. Another argument for CDB or DDB is that market models do not require program-oriented procedural system. The theory also proposes usage of DC-type in terms of improving informational process capability of a single agent. Adaptive decision making process of bureaucracy model with many control loops requires procedural information systems such as C-forms, but in case of multidivisional hierarchies distribution databases and decentralized systems are more effective. In clans information exchange take place through transmission of traditions and values, which represent the memory of a company. Transactional costs theory proposes that DDB-types may be an efficient way for informational distribution in teams and clans.

4.2. Linking with the Adaptive Cycle

According to the chosen informational processing framework there are several types of computer systems which fit the type of organizational structure, which in turn can be dynamic and modified in response to environmental changes. The goal of a computer system is to provide the most effective data processing which may lower the transactional costs.

Linking with the adaptive cycle of resilience may evaluate which form of organization is effective at which phase of a cycle and which information system should be chosen.

During phase 1 organization waits external influences, becomes rigid and more structured. It is obvious that structuration means hierarchy. Yet prosperity and wealth can afford market model for organizations on this phase. It could be argued that market model may be more efficient because of approaching second phase, crisis, yet more special studies are required. Depending on organizations profile bureaucracy or market model could be applied. DS-form of information system may be a consensus for both models. First: it allows local operations to be done fast and without interference. Second: it allows organizations to have flexible control of their operations.

Phase 2 is a crisis in which company requires extra information, yet extra control and inspiration. The clan model should be used to handle crisis and inspire colleagues. So, distributed databases are most convenient and effective for mentioned phase. First: there must be fast access for team members to local and global data without procedural interference. Second: management must have fast access to all data, which DDB-type also provides.

Phase 3 is a phase, where company seeks to choose one of the ideas found in phase 2 and to find out its new development paradigm. Because of the paradigm is not yet chosen- there can’t be formal procedure for information processing. CDB-form may be proposed

Phase 4 is a phase which core properties are maintaining the taken course of action, judgmental strategies and standardization. For these tasks C-form of information system seems to be effective. First: course of action has been chosen. Second: there is a significant need of control during mentioned phase.

4.3. Practical case

In this chapter I introduce a specialists opinion on linking informational needs of a company to Adaptive Cycle. An expert, Anton Vedeshin, who is a founder of ITBS company since 2005y, which works with IT solutions for businesses and Innovative Technologies & Business Systems. Vedeshin is also an initiator of several technological startups, such as "MyDriveStyle Startup", which gives him advanced knowledge of the topic.

At first Vedeshin spoke generally about databases. Expert pointed attention on the fact, that at first, there must be good understanding among the personal of how databases work and how to use them correctly. When changing a type of database occurs, you must always provide courses and some training to all team members who will use it. If not – all changes will be maladaptive. Small mandatory courses to all new workers, who will use databases – will also lead to great results, because the way how we use technology may influence the outcome more than technological change itself.

Vedeshin also noticed that choice of DDB-type databases for crisis stage is good indeed, but debatable. They are indeed fast and well-controlled, but in some forms of a crisis, where strict direction is more necessary then speed, centralized databases are the best choice for company. Yet this moment must depend on organizational structure, crisis and relationship among team members, concrete situation, so here the correct database type must be chosen individually.

Also Vedeshin proposed one idea about database changing: a company should not necessary do it after the next phase of a Cycle occurs. Rather a company may already apply a parallel database, being on the "previous" phase, if there is enough resources for such development. In our days applying a new database do not require long time, but, as Vedeshin stated, it may be connected to some difficulties.

In conclusion, Vedeshin added that a concept of Adaptive Cycle is interesting and may be widely used in informational management further. An expert also pointed that companies should always look for news and updates in informational systems sector to go with the times and be successful and competitive.

4.4. Intermediate conclusion about informational needs

Smaczny (2001) pointed that reliance on IT has increased to the level where a lack of IT agility and responsiveness can create a competitive disadvantages and business must be simultaneously developed and implemented with IT strategies. Several researches agree that organizational effectiveness is a function of information systems alignment, which serve as a function of coevolutionary dynamics (Benbya, McKelvey, 2006). With the transaction cost theory linked to Adaptive Cycles of Resilience one can propose the effective informational system to each step of organizational development.

During phase 1 distributed systems (DS-form databases) are the most balanced choice for a company: they either allow fast local operations without interference and provide organizations with flexible control of their operations. Also the company may easily change the degree of such control. Distributed systems are effective within market model, which proposed to be effective in phase 1, which underlines prosperity, wealth and development.

In a crisis phase 2 when company requires extra information, yet extra control and inspiration, a clan model and thus distributed databases (DDB-type) may be chosen. The main reason is fast access for team members to local and global data without procedural interference and yet a fast access to all data for management. Yet another type of solution may be (C-form) centralized databases in situations where strict direction is more necessary then speed.

In phase 3 centralized databases (CDB-type) are most effective, where company seeks to choose its new paradigm of development, from several founded during phase 2, and there can’t be formal procedure for information processing.

In phase 4, when maintaining the taken course of action and standardization is a general task, C-form centralized databases may be proposed, because of significant need of control during mentioned phase.

5. Framework

5.1. Usability of the intermediate conclusions

This framework is proposed on the theoretical basis of this work, which presents linking risk models, such as Swiss Cheese Model (Reason 1997, 2000), information needs of the organization (Ciborra, 1993; Dyer, 2008) and roles of manager (Mintzberg, 1990; Heifetz, 2009) to Adaptive Cycle of Resilience in order to conclude the requirements towards the organization in every part of the Adaptive Cycle of Resilience. The framework is an integration of intermediate conclusions into instructions for organizations in every phase of Adaptive Cycle, which may help companies to become more flexible and competetive in changing environment. Which in turn is the main aim of mentioned framework.

It is well known that not many organizations will survive after crisis, and thus strong and competent crisis management is needed. There is also a strong necessity of different styles and strategies of crisis management on each stage of organizational development. Because of the nature of changing it can be not only physical, but psychological, which involves changes in a manner of observation, paradigms and conceptions in the minds of people. New meanings can result in core changes in the organization, because it entirely consists of people.

So, the framework is a model, which can help organization to make key-decisions in every stage of its development, depending on scientific view of the topic.

5.2. Connecting conclusions into a framework.

Summarizing intermediate conclusions, a framework can be proposed, which will describe a phase of an Adaptive Cycle and recommendations to company from risk management, manager roles and informational needs perspective.

The Basis

As it was mentioned before, every organization must realize and cope with want-must-can dilemma (Heene, 2002), which is a core property of stable development. To cope with this dilemma means that each organization has to make a strategic choice what is "correct" functioning, so the area of tension must be brought to balance. Thus every organization must clearly understand all of three aspects. In the dynamical world each organization face new tensions and challenges - so as the balance, which must not only be maintained but overlooked and developed every time the equilibrium point (new combinations of needs, possibilities and wishes) moves (Abcouwer 2011, Moore 1996).

Phase 1

According to Adaptive Cycle paradigm, phase 1 is a time of extra stability and connectedness and also accumulation of energy for further development. According to Swiss Cheese risks model during this phase system accumulates many latent mistakes, but critical and unaware active mistakes, such as Black Swans, will come later.

Risk Management

Good idea is to run many disrupter analysis tests during this period. As already mentioned, it wouldn’t help preventing a Black Swan, but will strengthen the entire organization. It can also find some latent mistakes and fix some of them earlier then they emerge in some critical situations.

During phase 1 organization waits external influences, but becomes more rigid which causes inflexibility and low change potential (Abcouwer, 2011). So, during phase 1 stress and crash tests will increase flexibility to tangible extent.

First phase: many disrupter analysis tests application, stress and crash tests, making changes in psychological environment, collecting resources, preserving critical point of view.

Roles of Manager

Phase1 require interpersonal and informational roles of a manager. In this phase manager should pay attention to monitor, spokesperson, disseminator, negotiator and liaison role in his daily work. Stress tests and disruptor analysis must be made.

Informational needs

Choosing a distributed systems (DS-form) of information system may be a consensus for both market and bureaucracy models, which organization may take during the 1 phase. The reasons are next: it allows local operations to be done fast and without interference. Second: it allows organizations to have flexible control of their operations.

Phase 2

Phase two is a phase of approaching crisis. It is a phase of ultimate