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DYNAMIC CAPABILITIES
in Disaster Management Exercises




                                   1
About us

      • Ass.-Prof. MMag. Dr. Katharina Anna
        Kaltenbrunner
        Researcher at the department of social and busi-
        ness sciences at Paris Lodron University Salzburg



       • Ralf J.J. Beerens, MSc.
         Researcher/Dean of the Master of Crisis and Public
         Order Management (MCPM) at the Netherlands
         Institute for Safety (NIFV)
         PhD. Candidate at Lund University


                                                            2
Contents

1.   Initial Situation: Changes and challenges in Disaster
     Management (Exercises)

2.   Introduction to the concept of Dynamic Capabilities (DC)

3.   Outline of the Dynamic Capabilities Concept in Disaster
     Management Exercises (DME)

4.   Conclusion and prospects




                                                                3
Changes in Disaster Management

• The risk landscape is rapidly changing:

   - ‚Modern‘ threats such as cyber attacks
     or solar storms are causing new
     challenges
   - ‚Domino‘ effects/cascading events:
     Disaster types are becoming
     interlinked e.g. a natural disasters that
     triggers technological disaster events
     (NaTech disasters) such as happened
     in Japan
   - Boundaries (geographical, functional
     and time) are dissolving as the
     financial crisis illustrates
                                                 4
Challenges for Disaster management

• The aforementioned changes lead to challenges such as:

   – Dealing with uncertainty
   – Organizational challenges for responders and coordinating
     agencies
   – Communication with the public (e.g. social media)
   – The design and preparedness of the current ‚emergency
     response systems‘.




                                                                 5
Dealing with these Challenges

• Disaster Management Exercises (DME) can be used to handle
  these challenges and offer organizations an opportunity to
  observe, test, evaluate and where required, re-design existing
  skills, behavior and capabilities.

• A way to deal with these changes and challenges is to create a
  more holistic, systemic and flexible response capacity.

• One element of this flexible response capacity would be the
  Dynamic Capability Approach.




                                                                   6
Dynamic Capabilities (DC)
Dynamic Capabilities =
processes which have an impact on resources

• DC ≠ resources
• DC ≠ internal and external determinants such as leadership,
  perceptions, organization´s characteristics, environmental
  complexity etc. but shape DC significantly

• “dynamic“ refers to the way the resource base is modified

• DC evolve from the interaction of
   – tacit experience accumulation processes
   – explicit knowledge articulation
   – codification activities
                                                                7
Dynamic Capabilities (DC)
•Examples

   – Consolidation of central functions, e.g. restructuring of
     support functions
   – Development and use of complementary assets, e.g. applying
     an existing brand to an innovation
   – New resource configuration, e.g. in form of new quality
     control measurements based on experience/routines and an
     innovative technical information system




                                                              8
Relevance of Dynamic Capabilities

Value of Dynamic capabilities = new set of valuable resources



•They can contribute to

   – advance the flexibility of the organization
   – lead to an economic advantage
   – improve to organization´s technological as well as to the
     evolutionary fitness




                                                                 9
DC creation



Conceptualization
               Preparation
      Exercise Exercise Conduct
                     Exercise Evaluat
     Exercise




                                            s   s
                                       o ce
                                  pr                   l
                                                  idua
                                     es Indiv
                                                v l
                                              lepe
                                              u
                                                    interactions




                                         Groorgani
                                            a
                                           e l
                                       Intlr ve nal l.
                                              io
                                         -zat rga
                                             o
                                                                   Cycle of DME as framework for




                                     I nter c
                             systems,
                             structures




                                          i r
                                        ns-ou nal l.
                                     rezatio
                                          es
 10
      © Kaltenbrunner 2012
11
  © Kaltenbrunner 2012
                        p roce




                                   Exercise
                       es     ss
          s, Gs Ind
                                                                           Exercise Conduct
     I
      em Inl e roulev ivid




                              Conceptualization
         tu ao                                                                                Exercise Evaluation
    stn -zarterve p el ualtio




                                                    Exercise Preparation
  l. r
       uc
sy i-zateror tion lrgan rac
                       i



                                                                                                                      ?
                                                                                                                    for DC
   st tion gan al l. inte
s ourc al
         e               ns
                                                                                                                    Creation Modes
                                                  Learning
                               Leveraging
                         Integration
                  Reconfiguration
                                                                              DC concept in DME
Reconfiguration in DME
       resource B                             resource B

 resource A   Resource D               resource A   Resource D

       Resource C                             Resource F

                                                      resource C

• Reconfiguration = transformation and recombination of existing
  assets and/or resources

• Examples in DME
   – (re-)shaping of core processes and routines of volunteer
     management
   – outsourcing of certain DME processes
                                                                   12
Leveraging in DME

  Unit A, parent   Unit B, parent               Unit of DME
  company          company
      process A        process B                   process A


     standard A        standard B                standard B


     resource A       resource B                  resource B



• Leveraging = Replication or extension of processes, systems
  assets and resources into other units of the organization

• Examples in DME
   – The takeover of the organizational chains of command onto
     the exercise
   – replication of planning and/or operational standards
                                                                 13
Creative Integration in DME

              resource A
 resource B           resource C        Resource
                                             X
          resource D


• Creative integration = to combine assets and resources
  constituting completely new resource configurations.

• Examples in DME:
   – EU rapid response capabilities such as EU Modules and EU
     Civil Protection teams.
   – Interaction and cooperation between EU Member States


                                                                14
Learning in DME
•   Learning = processes designed to increase
    the effectiveness and efficiency of the
    organization‘s performance
•   Learning    =     the    foundation     of   an
    organization‘s systematic methods for a range
    of innovation as well as for the modification of
    processes and routines.


•   Examples in DME
     – Structured evaluation processes of EU
       Exercises    using   specially  trained
       evaluators (MCE) in order to provide
       feedback information and a better
       understanding of any gaps or problem
       observed and analyzed during the
       exercise mission.
                                                       15
Conclusions and Prospects
• General conclusive remarks
   – DC can contribute to an effective and efficient ‘future proof’
     (emergency) response capacity by focusing on the flexible potential
     of organizations;
   – They contribute to:
       • anticipate environmental changes
       • develop respectively advance the flexibility of the organization
       • increase the competitiveness

• Further research is needed regarding the:
   – comprehensiveness and the (practice) adequacy of the DC
     framework
   – identification of parameters for measurement of DC
   – effects of DC to the success of DME.


                                                                        16
Contact details:
Ralf.Beerens@nifv.nl
Katharina.Kaltenbrunner@sbg.ac.at



THANK YOU!


                                    17
References
Ambrosini, V.; Bowman, C. (2009). What are dynamic capabilities and are they a useful construct in strategic
management? International Journal of Management Reviews, Vol. 11 (1), 29-49.
Ansell, C.; Boin, A.; Keller, A. (2010). Managing Transboundary Crises: Identifying the building blocks of an effective
response system. Journal of Contingencies and Crisis Management, Vol. 18 (4), p. 195-207.
Eisenhart, K. M.; Martin, J.A. (2000). Dynamic Capabilities: What are they? Strategic Management Journal, Vol. 21, 1105-
1121
Esterby-Smith, M.; Lyles, M.A.; Peteral, M.A. (2009): Dynamic Capabilities: Current Debates and Future Directions. British
Journal of Management, Vol. 20, 1-8.
European Commission Humanitarian Aid and Civil Protection (ECHO) (2012). Disaster response modules, viewed July 2012,
http://ec.europa.eu/echo/policies/disaster_response/modules_en.htm
Helfat, C.E.; Finkelstein, S.; Mitchell, W.; Peteraf, M.; Singh, H.; Teece, D.; Winter, S. (2007): Dynamic Capabilities:
Understanding Strategic Change in Organizations, Blackwell, London.
Hevner, R.A.; March, S.T.; Park, J.; Ram, S. (2004). Design Science in Information Systems Research in MIS Quarterly,
Vol. 28 (1), pp. 75-105.
Kaltenbrunner, K. (2012): A framework for dynamic capabilities. In Renzl, B./Hinterhuber, H. (ed.): Dynamic Capabilities
(to appear in print).
Renzl, B.; Müller, J. (2012). Dynamic Capabilities im interdisziplinären Spannungsfeld. In Kaltenbrunner, K.; Urnik, S. (ed.):
Unternehmensführung – State of the art und Entwicklungsperspektiven, Oldenbourg-Verlag, München.
Statler, M.; Bürgi, P.; Raisch, B (2008). Mobilising corporate resources to disasters: A comparative analysis of majour
initiatives. International Journal of Technology, Policy and Management, Vol 8 (4), 359-382.
Teece, D.J. (2007): Explicating Dynamic Capabilities: The Nature and Microfoundations of (sustainable) Enterprise
Performance. Strategic Management Journal. Vol 28, 1319-1350.
SwissRe (2012). Integrative risk management: advanced disaster recovery, viewed 5 July 2012,
http://www.swissre.com/rethinking/crm/Integrative_Risk_Management.html
Zollo, M.; Winter, S. G. (2002): Special Issue: Knowledge, Knowing, and Organizations: Deliberate Learning and the
Evolution of Dynamic Capabilities. Organization Science. Vol. 13, 339-351.1




                                                                                                                           18

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Dynamic potential in disaster exercises: identifcation – development – evaluation

  • 1. DYNAMIC CAPABILITIES in Disaster Management Exercises 1
  • 2. About us • Ass.-Prof. MMag. Dr. Katharina Anna Kaltenbrunner Researcher at the department of social and busi- ness sciences at Paris Lodron University Salzburg • Ralf J.J. Beerens, MSc. Researcher/Dean of the Master of Crisis and Public Order Management (MCPM) at the Netherlands Institute for Safety (NIFV) PhD. Candidate at Lund University 2
  • 3. Contents 1. Initial Situation: Changes and challenges in Disaster Management (Exercises) 2. Introduction to the concept of Dynamic Capabilities (DC) 3. Outline of the Dynamic Capabilities Concept in Disaster Management Exercises (DME) 4. Conclusion and prospects 3
  • 4. Changes in Disaster Management • The risk landscape is rapidly changing: - ‚Modern‘ threats such as cyber attacks or solar storms are causing new challenges - ‚Domino‘ effects/cascading events: Disaster types are becoming interlinked e.g. a natural disasters that triggers technological disaster events (NaTech disasters) such as happened in Japan - Boundaries (geographical, functional and time) are dissolving as the financial crisis illustrates 4
  • 5. Challenges for Disaster management • The aforementioned changes lead to challenges such as: – Dealing with uncertainty – Organizational challenges for responders and coordinating agencies – Communication with the public (e.g. social media) – The design and preparedness of the current ‚emergency response systems‘. 5
  • 6. Dealing with these Challenges • Disaster Management Exercises (DME) can be used to handle these challenges and offer organizations an opportunity to observe, test, evaluate and where required, re-design existing skills, behavior and capabilities. • A way to deal with these changes and challenges is to create a more holistic, systemic and flexible response capacity. • One element of this flexible response capacity would be the Dynamic Capability Approach. 6
  • 7. Dynamic Capabilities (DC) Dynamic Capabilities = processes which have an impact on resources • DC ≠ resources • DC ≠ internal and external determinants such as leadership, perceptions, organization´s characteristics, environmental complexity etc. but shape DC significantly • “dynamic“ refers to the way the resource base is modified • DC evolve from the interaction of – tacit experience accumulation processes – explicit knowledge articulation – codification activities 7
  • 8. Dynamic Capabilities (DC) •Examples – Consolidation of central functions, e.g. restructuring of support functions – Development and use of complementary assets, e.g. applying an existing brand to an innovation – New resource configuration, e.g. in form of new quality control measurements based on experience/routines and an innovative technical information system 8
  • 9. Relevance of Dynamic Capabilities Value of Dynamic capabilities = new set of valuable resources •They can contribute to – advance the flexibility of the organization – lead to an economic advantage – improve to organization´s technological as well as to the evolutionary fitness 9
  • 10. DC creation Conceptualization Preparation Exercise Exercise Conduct Exercise Evaluat Exercise s s o ce pr l idua es Indiv v l lepe u interactions Groorgani a e l Intlr ve nal l. io -zat rga o Cycle of DME as framework for I nter c systems, structures i r ns-ou nal l. rezatio es 10 © Kaltenbrunner 2012
  • 11. 11 © Kaltenbrunner 2012 p roce Exercise es ss s, Gs Ind Exercise Conduct I em Inl e roulev ivid Conceptualization tu ao Exercise Evaluation stn -zarterve p el ualtio Exercise Preparation l. r uc sy i-zateror tion lrgan rac i ? for DC st tion gan al l. inte s ourc al e ns Creation Modes Learning Leveraging Integration Reconfiguration DC concept in DME
  • 12. Reconfiguration in DME resource B resource B resource A Resource D  resource A Resource D Resource C Resource F resource C • Reconfiguration = transformation and recombination of existing assets and/or resources • Examples in DME – (re-)shaping of core processes and routines of volunteer management – outsourcing of certain DME processes 12
  • 13. Leveraging in DME Unit A, parent Unit B, parent Unit of DME company company process A process B process A standard A standard B  standard B resource A resource B resource B • Leveraging = Replication or extension of processes, systems assets and resources into other units of the organization • Examples in DME – The takeover of the organizational chains of command onto the exercise – replication of planning and/or operational standards 13
  • 14. Creative Integration in DME resource A resource B resource C  Resource X resource D • Creative integration = to combine assets and resources constituting completely new resource configurations. • Examples in DME: – EU rapid response capabilities such as EU Modules and EU Civil Protection teams. – Interaction and cooperation between EU Member States 14
  • 15. Learning in DME • Learning = processes designed to increase the effectiveness and efficiency of the organization‘s performance • Learning = the foundation of an organization‘s systematic methods for a range of innovation as well as for the modification of processes and routines. • Examples in DME – Structured evaluation processes of EU Exercises using specially trained evaluators (MCE) in order to provide feedback information and a better understanding of any gaps or problem observed and analyzed during the exercise mission. 15
  • 16. Conclusions and Prospects • General conclusive remarks – DC can contribute to an effective and efficient ‘future proof’ (emergency) response capacity by focusing on the flexible potential of organizations; – They contribute to: • anticipate environmental changes • develop respectively advance the flexibility of the organization • increase the competitiveness • Further research is needed regarding the: – comprehensiveness and the (practice) adequacy of the DC framework – identification of parameters for measurement of DC – effects of DC to the success of DME. 16
  • 18. References Ambrosini, V.; Bowman, C. (2009). What are dynamic capabilities and are they a useful construct in strategic management? International Journal of Management Reviews, Vol. 11 (1), 29-49. Ansell, C.; Boin, A.; Keller, A. (2010). Managing Transboundary Crises: Identifying the building blocks of an effective response system. Journal of Contingencies and Crisis Management, Vol. 18 (4), p. 195-207. Eisenhart, K. M.; Martin, J.A. (2000). Dynamic Capabilities: What are they? Strategic Management Journal, Vol. 21, 1105- 1121 Esterby-Smith, M.; Lyles, M.A.; Peteral, M.A. (2009): Dynamic Capabilities: Current Debates and Future Directions. British Journal of Management, Vol. 20, 1-8. European Commission Humanitarian Aid and Civil Protection (ECHO) (2012). Disaster response modules, viewed July 2012, http://ec.europa.eu/echo/policies/disaster_response/modules_en.htm Helfat, C.E.; Finkelstein, S.; Mitchell, W.; Peteraf, M.; Singh, H.; Teece, D.; Winter, S. (2007): Dynamic Capabilities: Understanding Strategic Change in Organizations, Blackwell, London. Hevner, R.A.; March, S.T.; Park, J.; Ram, S. (2004). Design Science in Information Systems Research in MIS Quarterly, Vol. 28 (1), pp. 75-105. Kaltenbrunner, K. (2012): A framework for dynamic capabilities. In Renzl, B./Hinterhuber, H. (ed.): Dynamic Capabilities (to appear in print). Renzl, B.; Müller, J. (2012). Dynamic Capabilities im interdisziplinären Spannungsfeld. In Kaltenbrunner, K.; Urnik, S. (ed.): Unternehmensführung – State of the art und Entwicklungsperspektiven, Oldenbourg-Verlag, München. Statler, M.; Bürgi, P.; Raisch, B (2008). Mobilising corporate resources to disasters: A comparative analysis of majour initiatives. International Journal of Technology, Policy and Management, Vol 8 (4), 359-382. Teece, D.J. (2007): Explicating Dynamic Capabilities: The Nature and Microfoundations of (sustainable) Enterprise Performance. Strategic Management Journal. Vol 28, 1319-1350. SwissRe (2012). Integrative risk management: advanced disaster recovery, viewed 5 July 2012, http://www.swissre.com/rethinking/crm/Integrative_Risk_Management.html Zollo, M.; Winter, S. G. (2002): Special Issue: Knowledge, Knowing, and Organizations: Deliberate Learning and the Evolution of Dynamic Capabilities. Organization Science. Vol. 13, 339-351.1 18

Editor's Notes

  1. Recent disasters and crises such as the earthquake and tsunami in Japan (2011), pandemics, forest fires or flooding and also ‘modern’ threats such as cyber attacks or solar storms show us that the profile and dynamics of crises and disasters are widely varied. The interconnectedness and the complexity of the crisis´ and disasters´ consequences are causing particular challenges for those who are responsible for organizing and co-ordinating disaster management. According to Ansell, Boin and Keller (2010) a new (theoretical) ideal type of the modern crisis defined as a ‘transboundary crisis’ is emerging. This type of crisis not only crosses geographical or exceeds political boundaries but also functional and time boundaries.
  2. The transboundary nature poses four significant management challenges: coping with uncertainty, providing surge capacity, organizing a response and communicating with the public (Ansell, Boin and Keller, 2010). Currently, traditional government agencies and emergency and/or disaster response organizations’ which are an integral element of the broader ‘emergency response system’, are mostly weakly designed and insufficiently prepared to deal with the described dynamics and escalating effects of transboundary crises (Ansell, Boin and Keller, 2010). In order to operate in these challenging and dynamic crisis, these agencies and responders are consequently asked to adopt their intra- as well as their interorganizational ‘emergency response system’. A more holistic, systemic, and especially, more flexible response capacity is needed. disaster management exercises (DME) represent a proven means for improving the response capacity and/or system in general. Exercises, or more precisely exercise scenarios or situations, offer the organizations an essential opportunity to observe, test, evaluate and where required, re-design existing skills, behaviour and capabilities. The effectiveness and efficiency of exercises and thus their effects on the response capacity will depend on the degree of involvement of the full range of disaster management capabilities.
  3. An improved flexibility of response capacity can be reached through dynamic capabilities because in their nature as organizational processes they aim at developing an organizational re source base appropriate to handle challenges resulting from a dynamic environment . As processes, DC have an impact on resources, but it is to emphasize that they are not resources neither human, technical nor knowledge resources. The term ‘dynamic‘ refers to the way the resource base is modified; put it differently the dynamism results from the ‘interaction of the dynamic capability and the resource base‘. The value of DC consists in the ‘creation of a new set of valuable resources‘ with the limitation that the impact of DC is hard to predict (Ambrosini/Bowman, 2009, 33 ff.). Concerning the research subject – disaster management exercises – which offer through their design a quite safe and moderate dynamic environment, DC can be considered more detailed, analytic, stable processes with predicted outcome” (Eisenhardt/Martin 2000, 1105). In general it can be stated that DC evolve from the ‘co-evolution of tacit experience accumulation processes with explicit knowledge articulation and codification activities‘ (Zollo/Winter 2002, 344). Thus DC can also be also defined as the outcome of learning processes and experience (Ambrosini/Bowman 2009, 43). Moreover it is important to add that DC are not necessarily organization specific (Eisenhardt/Martin 2000, 1106) because (general) resource configurations and relatively stable phenomena mainly encompassing repeated processes represent the basis for DC (Ambrosini/Bowman, 2009, 34 f.). As regards the classification of the DC-concept with other management-approaches, the DC-approach can be assigned to the Resourced Based View (RBV). They share several basic assumptions, mainly regarding the organization as bundle of heterogeneous and path-dependent resources which finally result in the achievement of sustainable competitive advantages. Ambrosini et al. (2009, 46) state that the DC approach can be regarded as an extension or rather ‘ offshoot ‘ of the RBV approach because it delivers options how a ‘ current stock of valuable, rare, in-imitable and non-substitutable resources […] can be regenerated ‘ . Furthermore this paper is influenced by the contingency view as several factors, path and positions – internal ones such as managerial behaviour, perceptions, leadership, social capital, complementary organisational knowledge and external ones such as uncertainty, complexity, dynamism, home country or historically characteristics – influence respectively shape DC significantly. Teece et al. (1997) as well as Helfat et al. (2007) argue in this context that these are the ‘ mechanisms by which the dynamic capabilities are put in use ‘ . Teece 2007, S. 1138: Co-specialized assets are particular complementary assets where the value of an asset is a function of its use in conjunction with other particular assets. Co-spec. assets are idiosyncratic and can not be readily bought and sold in markets. Cospecialization allows differentiated product offerings and unique cost savings, e.g. lightweight diesel technology for marines which was then used in locomotives. In short both innovation and reconfiguration may necessitate co-specialized assets beeing combined by the managers Co-specialization exist when technologies and other assets need to be part of a thightly integrated system to achieve the performance the customer wants