Disruption: The Impetus for Change

January 2001

The cycle of change often begins with disruption. New information, players, relationships, or objectives disrupt the status quo. This article looks at how business management responds to disruption – reactive to the bombardment of changes or proactive, using disruption to initiate change – and how this can affect the organization.

by Laura Markos, Ph.D.
Consulting in the Process of Change

What causes or initiates change? The cycle of change begins with some sort of disruption—with new data, participants, or goals that alter the status quo. New information, players, relationships, or objectives disrupt the existing way of being, and thus change begins. This article looks at how disruption causes organizations to change, and how leaders create the impetus for change.

The Bombardment of Disruptions

The concept of disruption helps in understanding why change is occurring so quickly and constantly. New discoveries, new products and services, new businesses and industries, even new countries are rapidly developing and entering the global marketplace. The real-time pace of communications—the influx of new information—compounds both the frequency and speed of change. This bombardment of disruptions makes status quo more of a concept, and less of a reality, than ever before.

Think of the myriad forces that might cause disruption and thus initiate change:

Outside the organization:

• New markets, forces, trends, forecasts, or opportunities
• New products, players, or relationships
• New environments, dynamics, laws, politics, economics, or systems

Inside the organization:

• New strategy, vision, mission, or objectives
• New people entering or leaving the organization
• New structures
• New needs, problems, or crises

The extent and degree to which individuals and organizations sense and monitor disruptions impact the effectiveness of their interaction with change and whether that interaction is proactive or reactive.

Reactive versus Proactive Approaches to Change

The reactive organization may be whipsawed by disruptions and may not survive. Large changes that are unanticipated, unintentional, unplanned, uncontrollable, or insurmountable may become the nemesis of the enterprise, leading an organization to a reactionary response and perhaps to its decline and ultimate failure. On a smaller scale, such forces can affect a segment of an organization, such as a service or product line, an individual facility, a business unit, or a particular market. On an individual level, employees or managers who do not anticipate or cope well with change may have difficulties, feel overwhelmed or inundated, misunderstand the causes or reasons for change, or refuse to cooperate with change efforts as needed.

At all levels, anticipating and being able to quickly grasp and adapt to disruption and change are crucial survival tactics. Proactive individuals, units, or organizations will scan for and monitor such developments, and build them into strategy and process. Yet, in today's environment, even the most strategic persons and organizations encounter surprises. Thus, effective individuals and firms work to not only anticipate external changes and align systems to adapt to change, but also to maintain flexibility—to enable nimble response to both planned and unplanned change.

Crisis as the Impetus for Change

Ironically, surprise problems or even crises can be the most powerful forces for change, forces with which risk managers are often all too familiar. Without such a problem or crisis situation, it is often difficult for managers to create a sense of urgency to initiate and implement needed changes in an organization. Yet, once a problem or crisis occurs, its seriousness may create the exact type of disruption required to get management's attention and to marshal the forces needed for change.

In risk management, crisis situations affecting major organizations have become classic cases on how incidents can disrupt an organization, how the organization and the marketplace reacts, and ultimately what early warning and adaptation systems are appropriate to prevent and/or cope with similar incidents. Case studies, such as the Ford Pinto and GM truck gas tank explosions, the space shuttle Challenger O-ring disaster, or most recently the Firestone tire situation, demonstrate the value of early warning systems. They also show how organizational efforts are needed to monitor and act on disruptions that may signal the imminence of more serious events.

Such disastrous events also lead to sweeping organizational changes, not only in the organizations in which they occurred, if they survive them, but also in proactive organizations monitoring the environment, learning from others' experience, which may benefit their own enterprises before a crisis occurs.

Early Warning Systems

Scanning for and anticipating potential developments, to enable readiness and adaptability for change, mean that an organization senses both its internal and external environment. This scanning can be implemented in a number of ways. Such methods often include one or more of the following:

• Periodic market research and analysis
• Strategic planning
• Futuring exercises
• Career planning

But even more important than these planned, periodic, and deliberate efforts at anticipating change, as many risk managers know, are the systems an organization establishes and maintains to monitor, sense, and highlight changes as they occur.

Such early warning systems, which provide notice of leading indicators of change in a particular facet of the enterprise, are critical to an organization's awareness of its environment and provide a timely "heads up" when shifts begin to occur. As risk control professionals realize, early warning systems are key to successful loss prevention and control. Monitoring systems—such as inspections, gauges, tolerance levels, redundancies in protection, alarms, frequency analyses, incident reports, customer complaints, and the like—provide management with early indicators of trends: changes in activity or direction that may be harbingers of likely future events.

The Earlier the Warning, the Better the System

Interestingly, in order to build and improve such systems for anticipating future events, scanning for disruptions often means moving further and further backward in a potential or actual chain of events. Such scanning systems uncover the incidents and events beneath the tip of the proverbial iceberg. Classic examples of early warning systems in risk management include the following.

• Workers Compensation: Looking not only at deaths or lost-time injuries, but also monitoring the frequency and causality of medical-only injuries, first-aid cases, near-miss incidents, and safety violations.
• Liability: Looking not only at litigation, but also monitoring non-litigated claims, customer complaints, product or service quality, variations from specifications, process controls, supplier performance against tolerances, etc.
• Property and Income: Looking not only at incidents of damage or business interruption, but also at maintenance systems, inspection reports, supply chains, process controls, changes in operations, training, and so forth.

Examining progressive layers in a chain of events enables the organization to see the trends in and relationships between various levels of severity of incidents and to deconstruct the behaviors that can lead to more serious events. Moving along this progression may also require qualitative as well as quantitative measures, processes, controls, and systems to be effective. In short, the earlier a disruption in the system is detected, the sooner management can determine the appropriate action and prevent or anticipate unwanted outcomes.

This knowledge can assist managers, and risk managers in particular, in building support for proactive, rather than reactive, change. By using tools such as scenario planning to demonstrate not only the likelihood of potential incidents, but also their likely impact on the organization, risk managers can build support for early warning systems. By prospectively scanning for and monitoring potential and actual disruptions in the environment, managers can highlight the visibility of the first stage in the cycle of change and use this information proactively for planning, risk prevention, and control.

Conclusion

The concept of disruption helps in understanding our interactions with change. We are either reactive to the bombardment of changes already in progress or proactive, using disruption to initiate change. Our ability to envision a future incorporating and adapting to change, and our energies around and emotional reactions to the changes we are experiencing and coping with, will be addressed in future articles in this series.

Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. This article does not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.