It is devoted to my favourite daughter

… - Some cases practises to supply employees
with domestic computers and to ensure access to a web
the Internet from a house for a company account.
- Yes, but at us a policy of economies. And we reduce all costs.
Is because we speak only about economies, by no means
not discussing aspects of increase of efficiency of transactionses …
(From my conversation with the colleague)

Before we shall talk about essence of crisis management, about strategy and tactics of an output from a complicated position, for the beginning it is necessary for us to understand, and that such crisis condition and as it can be characterized. As without understanding of an essence of the crisis phenomenon, it will be difficult for us to understand, why management in times of trouble should include not only (and not so much) one economies of means, but also still some component a complex of efficient control, and why them.
 
In the article « Settlement criteria of definition of the purposes and problems » I already wrote about behaviour in time of such factor as probability of reaching of the purpose. In the same place, I have reduced the initial supposition about a condition of a crisis situation. The represented plot of the function of probability of reaching of the purpose at crisis management in the mentioned article at me was rolled in a negative range of values that is a little bit absurd. In this article I shall result the valid state of affairs (and the schedule) in complicated historical periods of any human community (see figure).
 
I want to apologize for the kind of my diagram complicated and overloaded with terms at once. But without the detailed submission of all picture of decline of a human system it will be difficult for us to understand an essence of administrative processes and responses, characteristic for crisis management. So that, I ask you to be accumulated by patience and step by step together with me to understand my logic of reflections.
 
As an example I shall consider the crisis situation developed at invented automobile factory « my name ». We shall assume, that from the invention by Ford the conveyor has passed a lot of time and pioneers of motor industry become already meters. Our factory successfully made during the well-being of 10 million automobiles annually. Competitors at its especially were not, and all was simply wonderful. So the fairy tale starts to affect.
 
Not the essence of an affair, what external processes provoke a crisis condition. It is important for us to understand, that both external, and internal crises have one and the same nature - a modification of mechanisms of shaping of managing commands, eventually, inside the company. And it is necessary to take into account, that internal crises can take place and in case of favorable external modifications. For example, growth of average wages in the state as the corollary of magnification of labour productivity as a whole, can initiate the internal personnel crisis expressing in outflow of functionally important employees of our factory. And as a corollary, decrease of a level of competence of management. Hereinafter, as this term we shall understand a boundary condition of a managing level of hierarchy at which the outcome adequate to formed commands with a high degree of probability as a whole for all company is reached.
 
In the circumscribed case, as well as in case of economic global crises, there is a magnification of indeterminacy of reaching of the purpose by workers of the enterprises. That is, that was a typical and easily decided problem earlier, starts "to move" aside difficultly accessible purpose (transition from a zone 1 to a zone 2). Logically here all is simple. We shall assume, there is some employee which problem is maintaining an optimum warehouse stock of details for assembly of automobile drives at factory « my name ». It should decide formalized enough problem constantly: evaluates warehouse stocks, analyzes constantly growing needs of production, makes out orders at subcontractors and inspects deliveries. The simple circuit of administrative solutions.
 
However the situation varies for factory as a whole. Competitors have constructed many factories on production of automobiles, on quality and the price of competitive our production. Accordingly, sales of finish products starts to be reduced, and our employee already should analyze trend (temporary) rates of consumption of details (once more, and sometimes and it it is less for a period of time). It already constantly becoming complicated problem (taking into account correlation of remaining functional responsibilities and their modifications in time). However the person can and not cope with these factors of thickening, than can plot a material loss of the company not at the will. As, shortage of details can result in faults in production, and their surplus - to magnification of superimposed warehouse costs. From this example it is visible, that the employee fairly executing the official duties, nevertheless, by virtue of developed external circumstances, can harm production.
 
The similar phenomenon can be observed and at devaluation of experience of the administrative staff. If we shall reduce a level of competence of employees there will be a situation circumscribed in the previous paragraph. From all told important to draw the following conclusion that there are many reasons of decrease of economic stability of the company, and a corollary one, our company hits in a condition of weak crisis "2" (unsufficient production or overproduction).
 
Now we understand, how the crisis situation can start to originate. Let's trace its development, and we shall analyse a condition stable (or progressing) crisis. As the condition of warehouse stocks of details of a drive on a logic line-up it can reduce in failures in production of automobiles as a whole is in a fever. What for to me, as to the buyer, the automobile without a drive. It is not necessary to forget, that the complicated situation with a level of competence can begin and at the other functional level of assembly of a finished product. And small slump in production results our company in magnification of burden costs, faults in issue of finished products, and as a corollary, to recovery of price on production that reduces its competitiveness. Than competitors will not be slow to take advantage.
 
The further, the it is more and more and more than personnel employees (managers), start to appear in a situation when solutions required of them already are higher than their level of competence. And not at their will, and not because, they become to work poorly. For all our factory « my name » the averaged rod of competence of a decision making sufficient even for deduction of production at a level of 10 million automobiles annually is lifted. Production falls, workers are nervous, the most experimental and professional abandon walls of factory. The situation is more and more and more failures in production and sales are confused, amplify. And, eventually, the company is able to chaos. How to struggle with the similar phenomena, I explicitly shall write in the following article.
 
It is now important for us to understand, how we hit in crisis situations as they develop and in what result. The interesting fact, our factory not only has reduced production, but thus, has reduced quality of automobiles, risen in their price, having made less attractive to potential buyers. Nonsense. Yes is not present. In a condition of chaos we any more do not inspect neither productions, nor shaping of burden costs, we can not conduct effective economies of any resources and so forth.
 
The understanding is very important, that for factory « my name », production of 10 million automobiles annually was a problem in the best times, and in a crisis situation becomes the purpose, and can "grow" generally up to a problem of preservation of production. It is Bobrovnikov's logic « a problem-> the purpose-> a task », only untwisted upside-down. If we shall look at the figure indicated in the article about stable conditions of a system the circumscribed situation is precisely recourse from a satisfactory condition in a condition of crisis. What path results in this, it is necessary to analyze a concrete situation. It can be as through external effect (external crisis), and internal destruction of management (internal crisis).
 
It is necessary to realize, that even if in any state recession of economy and the crisis phenomena concrete production can be destroyed not only under the consignment of external problems, but also only as a corollary of internal destructive processes is observed. For an example it is possible to reduce tens companies which have successfully overcome consequences of great depression in the USA in 30th years of the last century.
 
So, a condition 4 or nearly so chaos. There are two outputs. Using a system of crisis management to save the company and business, or ineptly to reduce the business in complete dying. Certainly, the earlier to begin the actions connected to anti-recessionary management, the it is more than chances to save business. I have named the fourth condition as "accumulation" of knowledge not simply so. Really, to struggle with negative processes, we should know, what measures should be undertaken and in what they can result.
 
Eventually, I as the company executive on production of automobiles « my name », for a conclusion of own business from a condition of chaos, should develop the anti-recessionary program. For the beginning it is necessary to classify the created situation, having answered some simple problems that will help me completely to understand in effect the occurred changes (both internal, and external) and to develop the effective plan of a conclusion from crisis and developments of production.
 
Questions:
 
1-st, what particularly external circumstances cause crisis.
2-nd, on what from the outside we can affect, and on what is not present.
3-rd, what processes inside the company accompany with the crisis phenomena.
4-th, what level of competence of employees of the company.
5-th, what average level of competence of the company.
6-th, what level of competence of employees is required for overcoming crisis.
7-th, what anti-recessionary reserves.
8-th, what depth of crisis.
9-th as far as personnel selection is effective.
10-th as far as the policy of economies is effective.
11-th as far as strategy and tactics of business is effective.
12-th, what resources and terms are accessible for re-structuring management and reorganization of production.
 
In the article about catastrophes of management, I already wrote, that any crisis of management can pirate some parameter which would characterize its force (similarly to a scale of earthquakes). Accordingly, in case of firm, it is possible to evaluate some kind of its « crisis stability ». And, knowing both these of parameter, it is possible to predict safely the future of the company expecting it in this or that crisis situation. If to assume as a basis for definition of a scale « crisis stabilities » my diagram we receive … twelve ball scale. Look, how it is interestingly received, four conditions across and three on the verticals, total twelve steps from prosperity up to complete chaos, but about it already in other article.

Last modified: 08.04.2004
Translation by computer