Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

Strategic Integration: A Knowledge Management Approach to Crisis Management

Wei-Tsong Wang* and Salvatore Belardo** *School of Information Science & Policy, University at Albany, State University of New York **School of Business, University at Albany, State University of New York ww8256@albany.edu; belardo@albany.edu Abstract
Every day, businesses are threatened by crises that could have been prevented or their impact lessened if only knowledge of causal and influencing factors were known and better managed. Better knowledge management, we contend, can help firms anticipate these factors and design thoughtful policies to lessen the impact of such events. In this paper we show how alignment of knowledge based strategies with crisis management strategies can lead to better crisis management. Knowledge based strategies are used to determine and locate the kinds of knowledge a firm needs. We demonstrate through case analysis how better alignment of knowledge based strategies with crisis management strategies can help firms become less vulnerable to business crises. Mitroffs crisis management model is employed to help focus on the critical aspects of crisis management and to help identify knowledge appropriate to each stage of Mitroffs model. Keywords: knowledge management; crisis management; strategic integration. Many crisis management models and frameworks have been proposed for helping organizations deal with crises [5, 7, 9, 15, 16, 17, 20, 22, 24, 25, 27]. While these frameworks offer organizations valuable guidelines for preparing for crises, they typically not employ knowledgebased resources, such as the crisis management expertise of employees. In this paper we explore the utilization of knowledge management strategies as well as knowledge strategies in crisis management settings, and examine the role that knowledge management plays in improving a firms crisis management efforts. We show how alignment of knowledge strategies (the kinds of knowledge a firm needs to survive) and knowledge management strategies (locating the knowledge a firm needs) with crisis management strategies can lead to better crisis management. We present a knowledge-based crisis management framework that can help firms apply knowledge management concepts in a crisis management context. To do this we employ Mitroffs crisis management model [15, 16, 20]. We demonstrate through case studies how this framework can help firms become less vulnerable to business crises. In section two we discuss a number of the crisis management strategies found in the literature and in practice. In section three we examine ways in which crises are classified. In section four we discuss the features of knowledge based strategies and the differences among these strategies. In section five we describe the development of strategic alignment and discuss the importance of the alignment of crisis management strategies with knowledge-based strategies to organizations. In section six we present a knowledge-based crisis management framework constructed by aligning crisis management strategies with knowledge-based strategies. Section seven presents a case study of the application of this knowledge-based crisis management framework to a crisis experienced by Lucent [6]. Finally, we present our conclusions in section eight.

1. Introduction
Although management methodologies and technologies that support business managers faced with crisis events are continuously being improved, organizations are still quite vulnerable to both man-made and natural crises. Examples of business crises include the well-documented fire crisis at Toyota [19], the process of phasing out chlorofluorocarbon (CFC) crisis at DuPont Corporation [18], and Coca-Colas health crisis that resulted from flawed production processes [12]. While crises do not occur all that frequently, their impacts can be devastating. In order to prevent crises from adversely affecting the firm, organizations need effective plans and procedures in place to prevent crises if possible or to mitigate their effects when they do occur. Key to effective plans and procedures is knowing what needs to be known and where this knowledge can be found.

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Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

2. Crisis Management Strategies

For the purpose of simplicity, crisis management strategies can be categorized according to those that focus on why crises happen, and those that focus on how crises impact organizations and the tasks that need to be performed in order to lessen their impact. The first category of strategies we have termed operation-oriented strategies, while the latter category is termed processoriented strategies.

2.1. Operation-oriented Crisis Management Strategy

Operation-oriented crisis management strategies can be thought as those that focus on crises that result from the regular operations of organizations [7, 24, 27]. Dutton [7] claimed that some things are more likely to lead to crises than the others. She argues that for an automobile manufacturer, a possible shortage of an important component, such as proportioning valves, is more likely to become a crisis than the lack of experienced employees needed to improve productivity. This is because a component shortage has a higher probability of forcing an automobile manufacturer to close its production line than does the lack of experienced personnel. This in turn is more likely to cause financial losses. Dutton [7] recommends that organizations evaluate the crisis potential of organizational issues in terms of immediacy, uncertainty, and importance. Decision-makers should then expect to expend more resources on actions to alleviate a crisis than a non-crisis issue. In the automobile manufacturer example, the possibility of component shortage deserves more attentions because its impact is felt more immediately than the lack of experienced employees for improving productivity. As a result, the organization might pay more attention to searching alternative component suppliers. In a similar fashion, Salter [27] stressed the importance of analyzing the organizations vulnerability to crises. Salter defines vulnerability as the degree of susceptibility and resilience of the community and environment to hazards [27]. The author proposes nine information sets that he contends could mitigate organizational vulnerabilities. These sets are Physical, Emergency Management, Demographic, Health, Economic, Communication, Societal/Cultural, and Organizational. For example, if a company has employees from relatively diverse backgrounds, (i.e., of nationality, ethnicity, etc), managers must recognize that there exists a relatively high probability of encountering coordination difficulties. Quarantelli [24] suggests that organizations, when confronted with crises, suffer from three kinds of management problems. They are problems regarding the communication process and information flow, problems concerning the exercise of authority and decision-making,

and those that stem from the development of co-ordination and loosening of the command structure. For example, management problems regarding the communication process and information flow refer to the difficulties involved in acquiring necessary information due, for example, to the inefficient and incomplete information flows, either internal or external, that result from ineffective communication processes. Operation-oriented frameworks provide recommendations to organizations as to how to improve, alter, or modify the operational factors that could result in business crises in order to decrease or even eliminate an organizations vulnerability to business crises. In order to manage crises well, organizations need to do more than identify contributing factors. Since factors under different conditions might cause extremely different types of crises. As a result, organizations will need to have different strategies that correspond to characteristics such as, controllability and predictability of the crises. Unfortunately, operation-oriented frameworks inevitably overlook the importance of crisis characteristics in developing a crisis management strategy.

2.2. Process-oriented Crisis Management Strategies

Process-oriented crisis management strategies, on the other hand, focus on how organizations can eliminate vulnerabilities to a crisis that they encounter at different stages of a crisis life cycle [5,9, 15, 16, 17, 20, 22, 25]. Richardson [25] identified three phases associated with a crisis, the pre-crisis/disaster phase, the crisis impact/rescue phase, and the recovery/demise phase. He argues that organizations should focus on, isolating the warning signals of a potential crisis, identifying potential threats that might cause these crises to happen, and then eliminating these threats in the pre-crisis/disaster phase. He goes on to say that in the crisis impact/rescue phase, organizations should seek to prevent the situations from getting worse by providing support to individuals who are involved in the crisis. Finally, in the recovery/demise phase, he proposes that organizations emphasize efforts designed to restore stakeholders confidence in the managerial structure and the operating systems of the organizations [25]. Fink [9] proposed an anatomy of crises that divided each crisis into four stages, the prodromal crisis stage, the acute crisis stage, the chronic crisis stage, and the crisis resolution stage. Darling [5] applied this crisis management model to international business and concluded that while a crisis at an international firm could be decomposed into these four identical phrases, a crisis might not always involve all four stages. Darling [5] contends that the prodromal crisis stage is the stage in which the warning signals of crises are

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Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

revealed to organizations. In the acute crisis stage some damage has occurred to the organization and the organization implements procedures designed to prevent the damages from escalating. The chronic crisis stage (the clean-up stage) is a period of recovery, of self-analysis or self-doubt, and of healing [5]. The final stage, the crisis resolution stage, can be thought of the goal of the previous three stages. Darling argues that if an organization fails to prevent a crisis from happening at the end of the prodromal stage, it should act to accelerate the acute and the chronic stages in order to reach the crisis resolution stage as soon as possible. He argues that managers in organizations have to have the capability to recognize the warning signals of crises so that they can act proactively. Miroffs [15, 16, 17, 20, 22] crisis management model consists of five main crisis phrases, Signal Detection, Prevention/Preparation, Containment/Damage Limitation, Recovery, and Learning. In the Signal Detection phase, organizations focus on seeking signals that might warn of a crisis, and isolate these from other more normal signals that occur in the daily operations of organizations. In the Prevention/Preparation phase, the main task of organizations is to eliminate or minimize their weaknesses based on the warning signals from the previous phase so as to prevent a crisis from happening or to be well prepared. The third phase is called Containment/Damage Limitation phrase, which occurs when a crisis is unavoidable. In this phase, organizations aim to control the damage resulting from the crisis. Having well-prepared plans is crucial to preventing the damages that can result when the crisis begins to spiral out of control, since organizations usually have limited time to make an intensive crisis management plan for damage control while a crisis is unfolding. The fourth phase is Recovery. In this phase organizations mostly focus on fixing the damage caused by the crisis. Two important issues must be considered here. The first is to determine the most crucial procedures and operations needed to ensure that the organization will survive. The second concerns what the organization should do in order to serve its most important customers well after the crises. The final phase is Learning. Organizations should examine what happened before, during, and after the crisis, and then identify what lessons have been learned. In this way, organizations can use the experience of a crisis to enhance the organizations capabilities to prevent and mitigate the effects of a similar crisis. While both operation-oriented and process-oriented crisis management strategies are the implicit need for learning and feedback, Mitroffs model explicitly identifies the need for learning and hints at the need for knowledge management and knowledge strategies. As such we will focus on the process-oriented strategy proposed by Mitroff. We believe it lends itself best to test our proposition that alignment of knowledge management

strategies and crisis management strategies can dramatically improve crisis management. There are several reasons for this. First, Mitroffs framework segments a crisis into five phases based on what are the most crucial tasks to be performed by the organization at a particular phase of a crisis, and the major tasks appropriate to each stage. This provides the organization with clues as to what knowledge they need in order to perform these tasks successfully. Second, Mitroffs framework incorporates the concept of Learning, which is crucial if organizations are to improve their chances of surviving the next crisis. Learning from previous experiences would help organizations minimize uncertainty about similar business crises and help familiarize crisis managers with the difficulties they may face and need to address. In addition, the learning process is critical in regards to the utilization of the knowledge of experienced crisis managers. Through learning, organizations can enrich their knowledge, and better employ it so as to enhance their capabilities. By learning from previous crisis events, organizations can create, among other knowledge assets, repositories of best practices that will be valuable in helping them manage their business crises [21].

3. Crises Classifications
Since not all crises are the same, different crisis management strategies and different knowledge related strategies will depend on the unique characteristics of the specific event. For this reason we must be able to distinguish crises according to characteristics that distinguish them. Shaluf, Ahmadum, and Said [28] summarized crisis classification frameworks proposed by various scholars [17, 24, 29] and have proposed a hierarchical classification of crises in terms of the social contexts of the crises. These social contexts are community-associated, industrialassociated, economic-associated, and political-associated factors of individual crises. Shrivastava and Mitroff [29] proposed a crisis typology that categorizes crises into four types. The framework consists of two dimensions, an internal-external dimension and a technical-social dimension. The internal-external dimension determines the sources of the factors that result in a crisis, which can result from either the failures of internal organizational systems or the failures of the external environment of organizations. The technicalsocial dimension is employed to investigate the characteristic of the factors that cause a crisis. These can be either technical/economic failures, or matters associated with human, organizational, and social concerns. The four types of crisis as well as some sample crises are presented in Figure 1. Belardo, Chengalur-Smith, and Pazer [3] proposed a framework of information technology-based strategies

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Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

Technical/ Economic

Human/ Organizational/ Social

Internal Cell 1 Major industrial accidents Product injuries Computer breakdown Cell 3 Failure to adapt/change Sabotage by insiders Organizational breakdown

External Cell 2 Widespread environmental destruction Natural disasters Hostile takeover Cell 4 Symbolic projection Sabotage by outsiders Terrorism, executive kidnapping

Figure 1: Different types of corporate crises triggering events [29] based on crisis types. In this model, the type of a business crisis can be determined by evaluating its degree of similarity to each of five major natural and man-made disasters, Earthquakes, Floods, Hurricanes, Nuclear Accidents, and Oil Spills. Such an evaluation is done by examining eight crisis characteristics, Exposure, Destructive Potential, Scope of Impact, Duration, Predictability, Controllability, Speed of Onset, and Length of Forewarning, of the crisis. The authors have classified a number of business crises according to five parallel categories, Earthquake Parallel, Flood Parallel, Hurricane Parallel, Nuclear Accident Parallel, and Oil Spill Parallel. Business strategies for each type of business crisis were then presented. Business crises characterized by low predictability, low controllability, short forewarning, and fast onset are seen as parallel to Earthquakes. For such crises, the recommended strategy is to mitigate the impact of crises by hardening the business environment. For example, firms that employ just-in-time concepts to manage their inventories are vulnerable to sudden cuts in the supply line of a particular part of their product because the supplier accidentally goes out of business. It is suggested that firms faced with these crises loosen their commitment to the just-in-time principle contributing to the problem by have more inventories on hand in order to eliminate the vulnerability to the cut in supply of the part. Crises that correspond to characteristics of high predictability, medium controllability, slow speed of onset, and long forewarning parallel Floods. The recommended strategy is to establish a permanent ad hoc forecasting group. An example of such a strategy is for a product oriented company to constantly forecast the impact of various changes in product mix for its marketing department in order to help it prevent the potential risks in the business environment For crises with characteristics that correspond to medium predictability, low controllability, medium speed of onset, and long forewarning, the recommended strategy

is similar to those necessary for dealing with a Hurricane, namely to monitor the environment constantly and selectively activate localized contingency plans. When a firm encounters a business crisis parallel to Hurricane, the firm should constantly monitor the development of the crisis event and select appropriate contingency plans for different departments, different production lines, or business units in different geographic locations based on the information acquired by monitoring the crisis event. The characteristics high controllability, medium speed of onset, and medium forewarning parallel those of a Nuclear Accident. For such events the recommended strategy is to develop incremental intervention strategies supported by feedback/feed-forward control systems. These systems can help an organization perform early and incremental intervention in order to control the damage and mitigate the impact that results from the crisis. An example of the application of this strategy is the employment of project monitoring systems. An organization can employ project monitoring systems that correlate project activities with their basic elements. This allows the organization to recognize undesirable variations in its project activities in the early stage of project activities and then to make necessary adjustments. Finally, crises that correspond to characteristics of low predictability, low destructive potential, and small scope of impact parallel Oil Spills. For these crises the recommended strategy is to create a data/knowledge repository to provide information sources and to identify individuals with key knowledge in order to support the deployment of an in-house consulting group. By deploying an in-house consulting group, an organization is able to respond to critical issues that might result in certain crises on a real-time basis. The crisis typology proposed by Shrivastava and Mitroff [29] relies on an internal-external dimension and a technical-social dimension to categorize crises, while the crisis classification model proposed by Shaluf, Ahmadum, and Said [28] relies on the social contexts of crises to classify them. Both crisis typologies are constructed by focusing on why crises happen. This means that both models use a root-cause approach to classify crises, just as scholars who construct operation-oriented crisis management frameworks do. These crisis classification methods fail to show an organization how a particular crisis is going to occur and what effects it is going to have on the organization. As such they provide little in the way of helping the organization decide what to do in order to deal with the crisis. The crisis classification framework proposed by Belardo et al. [3] classifies crises based on the crisis characteristics, such as scope of impact, speed of onset, and controllability. This framework can help organizations better clarify how a crisis is going to affect its business and what it can do to handle the crisis. For this reason, we have chosen to employ this crisis

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Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

classification framework as the most appropriate one for the purpose of strategic alignment of knowledge management and crisis management.

4. Knowledge-based Strategies
4.1. Difference between Knowledge Strategies and Knowledge Management Strategies
Asoh, Belardo, and Duchessi [2] contend that there is considerable confusion in the knowledge literature concerning the meanings of key knowledge management related terms such as knowledge strategies and knowledge management strategies. As such, we believe it is necessary to distinguish between these key terms. Every organization has its own set of unique goals it wishes to accomplish. In order to achieve these goals and enhance overall performance, organizations need to identify knowledge they will need. Given their current strategy they should identify knowledge needed to accomplish their goals. But as strategies change the knowledge needed will change as well. The difference between the knowledge that an organization needs and the knowledge that the organization has is called the knowledge gap [31, 32]. The purpose of knowledge strategies is to close or minimize these knowledge gaps [2, 31, 32]. Asoh et al. [2] argue that knowledge strategies are used to help organizations determine what to do with their knowledge. Knowledge management strategies, on the other hand, are used to address the how to do it question.

knowledge users can gain access to the knowledge they need whenever they need it [8]. For example, a firm can build a database that stores information about potential problems its factory might encounter and possible solutions for these problems so that factory managers can access this database anytime to retrieve the knowledge they need. The cartographic school focuses on mapping organizational knowledge by creating yellow pages or directories of knowledge owners within an organization. When people need certain kinds of knowledge, they look up in the yellow pages where they can find who in the organization has this knowledge and how they can be reached. The engineering school seeks to utilize knowledge management techniques to provide people not only with the knowledge they request but also with the most useful knowledge that is relevant to their current tasks. HewlettParkards Electronic Sales Partner system is an example of this school. This system provides Hewlett-Parkards field sales personnel all kinds of knowledge that might benefit them in the sales process, such as technical product information, sales tactics, etc. 4.2.2. Economic school. The second category contains only one knowledge management strategy, the commercial school. The aim of knowledge management strategies in the commercial school is to protect and exploit an organizations knowledge as a precious intellectual asset and to explore ways to utilize this intellectual asset to generate revenue streams for the organization [8]. For example, a firm can utilize its knowledge to apply for patents for its products and in turn earn profits by selling these unique products in the market. 4.2.3. Behavior school. Strategies in this category are intended to transform the behaviors of both knowledge users and the organization so as to facilitate knowledge activities, such as sharing, creation, transfer, and utilization. There are three schools in this category, organizational school, spatial school, and strategic school. The purpose of organizational school strategies is to facilitate knowledge management activities by designing organizational structures or inter-organizational networks that help connect knowledge owners together for sharing or pooling knowledge. Establishing knowledge communities is an example of this kind of knowledge management strategy. Spatial school strategies take advantage of the use of space or spatial design to facilitate knowledge exchange [8]. For example, if managers figure that their employees tend to share knowledge in a causal and comfortable place, a dining area for instance, managers should think of allocating more space to create a dining

4.2. Knowledge Management Strategies

Earl [8] proposed a taxonomy of knowledge management strategies that he contends provides organizations a systematic way of deciding what they can do with their knowledge in order to achieve organizational goals corresponding to their business environments and organizational characteristics. Earls Taxonomy classifies knowledge management strategies according to seven schools, which in turn are divided into three categories. The schools are not mutually exclusive, and an organization might use several of these strategies simultaneously [8]. These schools are introduced as follows. 4.2.1. Technocratic school. Knowledge management strategies in this category focus on using information or management technologies to support knowledge workers. The category contains three knowledge management strategies, systems school, cartographic school, and engineering school [8]. The main purpose of the systems school strategies is to store the knowledge of knowledge owners (experts) in knowledge repositories. In this way, perspective

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Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

area for employees in order to facilitate knowledge sharing among employees. The strategic school sees knowledge management as a competitive strategy [8]. The purpose of strategic school strategies is to assess and examine the knowledge preserved by an organization in order to figure out what competitive advantages the organization can achieve by utilizing its knowledge. The organization can then choose appropriate strategies to help it achieve competitive advantages. Here knowledge is viewed as the key resource that can be used to generate, rather than just support, certain competitive strategies.

5. Strategic Alignment
5.1. The Development of Strategic Alignment
Many scholars have investigated the effects of strategic alignment on organizations [1, 2, 4, 10, 11, 14, 23, 26]. Henderson & Venkatraman [11] propose a strategic alignment model that aligns business strategies with information technology (IT) strategies to help organizations continuously adapt to their changing business environments. They contend that the power of strategic alignment comes from two fundamental characteristics of strategic management, strategic fit (the interrelationships between external and internal components) and functional integration (integration between business and functional domains). Alavi and Leidner [1] contend, coincidentally, that there will be an emerging trend whereby large global firms integrate their IT with their organizational knowledge management strategies and processes in order to survive in their highly competitive business environments. Pollalis [23] claims that the strategic alignment of business and IT strategies can result in positive impacts for organizations if they view IT as a strategic component, rather than simply as a support tool, of the operations of the organizations. Burgelman and Doz [4] propose that proper strategic integration can help organizations examine the potential for growth by combining their resources and competencies, which will enable them to create new business opportunities. Fuchs, Mifflin, Miller, and Whitney [10] focus on strategic integration and what the organizations can do to fit together their prospective directions, product market focus, and execution capabilities in order to effectively respond to threatening and urgent business challenges in their industries. Sabherwal and Chan [26] explore the impact of the strategic alignment on business performance by employing the well known classification of Defender, Analyzer, and Prospector business strategies proposed by Miles, Snow, Meyer, and Coleman [14]. They claim that IS strategies are concerned with what organizations can do with their information systems and divide IS strategies into four types, operational support systems, market information systems, strategic decisionsupport systems, and interorganizational systems. They believe that the alignment of business strategies and IS strategies can result in better organizational performance. By employing the framework of knowledge strategies proposed by Zack [31, 32], the classification of business strategies proposed by Miles et al. [14], and the conceptual model of strategic alignment proposed by Sabherwal and Chan [26], Asoh, Belardo, and Duchessi [2] argued that organizations can improve organizational performance by strategically aligning business strategies with knowledge strategies.

4.3. Knowledge Strategies

Zack [31] proposed a framework of knowledge strategies that he contends should be aligned with the organizations business strategies. Zacks framework consists of two dimensions (See Figure 2). One dimension is a measure of the extent to which an organization is considered a knowledge creator (an explorer), a knowledge user (an exploiter), or a combination of both, which is referred as an innovator. The other dimension refers to the source of knowledge, which is classified according to sources of knowledge.
Unbounded External Internal Aggressive Conservative Exploiter Explorer

Innovator

Figure 2: Framework of knowledge strategy [31] Zack [31] argues that organizations that primarily focus on exploiting internal knowledge employ the most conservative knowledge strategies. These organizations, (internal exploiters) have sufficient knowledge resources to keep themselves competitive in their industries. They mainly focus on exploiting their internal knowledge bases in order to identify or create even more competitive advantages. Organizations that focus on both exploring external knowledge resources to develop new knowledge bases and exploiting internal knowledge bases to seek business opportunities can be thought of as employing the most aggressive knowledge strategies. These organizations (unbounded innovators) focus on both acquiring knowledge capitals from their external environment and creating benefits by utilizing it. Zack contends that organizations in knowledge-intensive industries would have better performance compared to their competitors if they use relatively aggressive knowledge strategies.

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Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

5.2. The Importance of the Alignment of Knowledge-based Strategies with Crisis Management Strategies
While it is generally believed that aligning IS strategies with business strategies improves organizational performance, it needs to be determined whether aligning knowledge strategies and crisis management strategies will also improve organizational performance. The fire crisis of the Toyota Group, for instance, forced Toyota to shut down all of its production lines for three days and a part of its production lines for another six days because of the shortage of certain important parts of the engines. This resulted in unavoidable financial loss of approximately 20 to 30 billion Yen, or about 183 million to 275 million US dollars [19]. Since business crises have the potential to destroy or significantly reduce the capacity of the organizations to achieve their goals, crisis management strategies are crucial to their survival. The fact that business crises are low frequency events means that organizations will have very limited knowledge about them since they do not have sufficient opportunities to study them, and to learn how to deal with them. This means that there most likely exist certain knowledge gaps in organizations in their understanding of how to plan for and respond to crises. In order to close these knowledge gaps and ensure successful crisis management, organizations need to learn what they dont know. Employing different knowledge strategies and knowledge management strategies at the different stages of crises is essential since organizations have different knowledge needs at different stage of crises. As such, the alignment of crisis management strategies with knowledge strategies and knowledge management strategies can help eliminate the difficulty of learning and lead to better organizational performance. The need to apply knowledge management in organizational plans for managing crises has been raised, although not explicitly, in the existing crisis management literature [5, 13, 24, 30]. Quarantelli [24] contends that there exists a gap between what people have planned for and what they really encounter in a crisis. This implies the need for organizations to figure out what knowledge they really need to know in order to be better prepared for dealing with potential crises. Darling [5] argues that organizations should capitalize on the expertise of individuals from various operational areas in order to use their expertise to plan for and manage the crisis. This argument implies the need to create a certain kind of knowledge repository to store knowledge of employees. Lagadec [13] argues that one of the major challenges in crisis management is to rapidly identify experts who have particular kinds of knowledge and present this knowledge to employees who directly deal with crises before it is too late. Simon and Pauchant [30] argue that organizations

should increase their knowledge bases by creating knowledge about potential crises by learning from the experience gained from crises, which in turn can enhance organizations capability of coping with similar crises. Managing knowledge well is key to enhance an organizations ability to deal with business crises. However, little research has focused on this important topic and especially that of alignment of knowledge management and crisis management. Our study aims to fill this void by proposing an alignment model that can help organizations better manage business crises by taking advantage of knowledge management concepts.

6. A Framework of Crisis Management

As discussed earlier, the crisis management model of Belardo et al. [3] provides a systematic method of categorizing business crises that organizations may encounter, while Mitroffs process-oriented crisis management model provides guidelines on what an organization should do at a specific stage of a crisis [15, 16, 17, 20, 22]. Both Earls [8] taxonomy of knowledge management strategies and Zacks [31] framework of knowledge strategies provide methods that organizations can utilize to manage their knowledge in order to achieve their business goals. By integrating the perspectives of crisis types, process-oriented crisis management strategies, knowledge strategies, and knowledge management strategies, we have developed a crisis management framework that can provide guidance to organizations concerning the knowledge or knowledge management strategies they should use at various stages of a particular type of business crisis. This framework is presented in Figure 3.

Figure 3: A Crisis Management Framework

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As can be seen from this framework, knowledge management strategies are best employed during the first three phases of crises, namely Signal Detection, Prevention/Preparation, and Containment/Damage Limitation. Knowledge strategies on the other hand are best employed in the Recovery and Learning phases of crises. This is because an organization should aim at speeding up the first three phases of crises in order to eliminate or mitigate the effects of a crisis so that the organization can get back to its regular business as soon as possible. Therefore, during the first three phases of a crisis it is best to utilize as efficiently and effectively as possible the knowledge on hand. Exploring and exploiting knowledge from any knowledge source takes considerable time and effort, and during these first three stages of a crisis time is precious. By the time a crisis has advanced to the Recovery and Learning phases, organizations have already been through the most critical period and have handled the most critical situations without going out of the business. These organizations then have relatively more resources to conduct activities that are very time consuming and require considerable support to be successful. Examining organizational knowledge to identify the knowledge gaps between the available knowledge of organizations and the knowledge required in order to immunize organizations from future business crises is an example of such activities. As such, we propose that the utilization of knowledge management strategies in the first three phases of crises is preferable. The knowledge management strategies that fit with these three phases would help organizations by showing them how they can utilize the knowledge on hand as efficiently and effectively as they can so that they can gain the greatest possible benefits. We also believe that knowledge strategies should be employed in the Recovery and Learning phases of crises to help improve the organizations ability to close their knowledge gap and help transform the organization into a more crisis-resistant one.

Lucent since they needed to restore their customers telecommunications networks in a minimum period of time if the hoped to retain them and maintain good relationships with them.

7.2. Assessing Crisis Characteristics Using the Alignment Model

The first step in using this model is to assess the features of the crisis in terms of the eight crisis characteristics proposed by Belardo et al. [3]. The results of such an assessment are as follows. The Lucents crisis was considered as having low exposure because such devastating events happened rarely. It was considered to have high destructive potential since the crisis could result in losing a large number of key customers if it was not handled properly, and in turn could cause severe damage to the profitability of Lucent. It was considered as having wide scope of impact because it affected the operations of numerous departments, such as human resource department, technical support department, etc. The duration of the crisis was considered as long because Lucent would have to spend a considerable amount of time to recover the telecommunication networks if the company did not handle the situation properly. This might in turn negatively affect Lucents relationships with its customers if the customers were not satisfied with Lucents performance in restoring the telecommunication networks. The crisis was considered as having low predictability because there was no way for Lucent to anticipate this incident. It was judged to be of low controllability because Lucent could have done little to mitigate the damages caused by the terrorist attacks, damages that could not be totally avoided. The speed of onset was considered fast because the attacks immediately destroyed the telecommunication networks that Lucent built for its customers. The length of forewarning was considered short because the crisis happened unexpectedly without any signs. The second step involves determining the type of the crisis. Based on the characteristics of the Lucent crisis, we can determine the crisis type of using the scaling matrix proposed by Belardo et al. [3]. The scores of a crisis corresponding to each type of crisis are calculated on the basis of a deviation concept. The lower the score a business crisis gets in comparison with a particular type of natural/technological crisis, the higher the similarities the crisis to that particular type of natural/technological crisis. The comparison scores of Lucents crisis are presented in Figure 4. Based on the evaluation scores the Lucent crisis is classified as an Earthquake-Parallel crisis. In the following section we discuss the alignment of knowledge

7. Case Analysis Lucent Technologies Inc.s crisis that derived from 911 terrorist attacks
7.1. Background
The terrorist attacks at the World Trade Center in New York City and the Pentagon in D.C. on September 11, 2001 were tragedies that no one will ever forget. Although Lucent was not directly impacted by the 911 terrorist attacks, some of their customers located in New York City and Washington D.C. were [6]. The terrorist attacks destroyed the telecommunication networks that Lucent built for a number of its major telecommunication customers users in areas near the locations of the attacks. The 911 tragedies led in effect to a business crisis at

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the most unexpected places and for the most unanticipated reasons. However, the operations of a company are very complex and there is no way for an individual to remember all the details. In order to support the work of this team, the "System School" strategy, dictates the capture of specialist knowledge in knowledge bases, so that members of this team can have convenient access to all kinds of internal knowledge whenever they need it, find out the potential problems the company faces and hopefully detect imminent signals as early as possible. 7.3.2. Preparation/prevention. An organization should concentrate on making the best use of its internal knowledge as well as creating new knowledge by means of external knowledge resources. Since earthquake parallel crises have low predictability and low controllability, the purpose here is to harden the environment by utilizing both internal and external knowledge and experiences. Lucent should have assigned a team that was capable of utilizing all available knowledge from all kinds of resources to eliminate the organizational vulnerabilities, and should have developed proper reaction plans for handling potential crises. In order to do this well, the team must have very strong support from the management. This is because an organization needs to spend considerable resources to perform these kinds of tasks, and the benefits from such tasks might not be visible to the public for a long period of time. Besides, in order to perform such tasks well, members of the team may have to challenge customs and traditions, and even the current structure the organization. As such, support from management is important for maintaining internal coordination. In addition, the team must have access to members from outside the organization. The purpose of this is to utilize the different viewpoints and expertise of "outsiders" to eliminate the "blind spots" of the current employees about the organization so that comprehensive plans can be made. Furthermore, crisis prevention and preparation should not be treated as certain routine jobs. They should be performed dynamically and actively in order to keep the crisis management plans up to date with the pace of the changes taking place in the business environment. For this phase, the knowledge management strategies of the "System School", which is designed to capture specialist knowledge in knowledge bases, and the "Cartographic School", which is designed to create yellow pages of experts of all sets of knowledge, are crucial strategies for the organization. To develop proper procedures for crisis preparation and prevention, the members of the team must have unlimited access to all kinds of knowledge that are relevant to the tasks. In addition, since some kinds of knowledge cannot be completely transformed into explicit form, knowing where

Figure 4: Analysis of Lucents crisis strategies and knowledge management strategies with crisis management strategies for a business crisis that parallels an Earthquake.

7.3. Alignment of Knowledge-based Strategies with Crisis Management Strategies

In this section we discuss what knowledge management strategies can best be employed at the initial three phases of a crisis and the knowledge strategies that are best employed during the last two phases of Lucents Earthquake Parallel crisis. 7.3.1. Signal detection. An earthquake parallel crisis is hard to predict. An organization needs to monitor its organizational environment constantly and to be cautious when it detects some unusual events. In addition, an organization also has to create new knowledge from internal knowledge resources in order to know what the warning signals of the potential crises are, and to develop practical methods to detect the warning signals of the potential crisis. For the Lucent crisis, the most important thing for the company to do is to have a monitoring team. The responsibilities of this team should include monitoring the operations of the company to detect unusual events in order to take prompt actions when necessary, as well as to creatively challenge all the operational procedures of the company in order to discover potential risks. To achieve this, it is important for members of the team to have a good understanding of the existing internal knowledge in the organization and then to combine the internal knowledge with their own expertise to create new internal knowledge. This is relatively more important for handling earthquake parallel crises since this kind of crisis usually occurs from

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Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

to find individuals who have certain knowledge related to the task is also critical in this phase. 7.3.3. Containment/damage limitation. Since an earthquake type crisis has relatively fast speed of onset and short duration [3], an organization might not have time to create new knowledge to handle the situation when the crisis hits. In such a short period of time, the best thing to do is to exploit knowledge from all sources to find the most appropriate methods needed to eliminate the damages as soon as possible. The establishment of knowledge communities and inter-organizational coordination are particularly important for an organization in this phase. Since an organization faced with an earthquake like crisis has very limited time to react to an earthquake parallel crisis once it is inevitable, it is very important for the organization to have the capability to provide people who are dealing with the crisis the best and most relevant knowledge about their tasks at the moment. To achieve this goal, the employment of the "Process School" strategy is very helpful. For Lucents crisis, the company should have formed a team whose members had professional knowledge to immediately handle the crisis and let them focus completely on creating possible solutions and strategies to control the damage. The company should also have had a supporting network that could deliver the best and the most relevant knowledge to fulfill the knowledge needs of the team members. In this way, the members of the team would have been able to make timely and critical decisions to deal with the crisis as fast as possible before the situation gets worse. However, the effort of the company itself was not sufficient, since the company might not have sufficient knowledge and resources to handle all the tasks that need to be done when facing an earthquake parallel crisis. It is recommended that the organization faced with this type of crises to employ the "Organizational School strategy, which aims to establish knowledge communities. The company should join or establish certain knowledge communities and maintain stable communication channels with members of the knowledge communities. In this way, the company can get assistance from others. In Lucents case, building knowledge communities with cooperative organizations and customers allows it to have clear ideas on its customers environment and the kinds of support it could acquire once the crises do occur. The advantage of knowledge communities can help Lucent to perform better jobs on resource allocations and on customizing its crisis reaction plans for individuals customers when dealing with crises. 7.3.4. Recovery. In the Recovery phrase, the organization has to know what minimal tasks it needs to perform in order to enable it to successfully get back to normal business operations. The organization has to identify and

utilize both internal and external knowledge that can help achieve this goal. Thus, the proposed knowledge strategy for this phase is Unbounded Exploiter. 7.3.5. Learning. In the Learning phrase, we assume that all the external knowledge an organization has acquired from previous crisis phases should have been transformed into its internal knowledge. The organization then needs to utilize this internal knowledge to evaluate the pros and cons of its operations, to identify the tasks needed to be performed, and to determine the priorities of these tasks regarding this crisis. In other words, the organization needs to learn from its previous experiences to create more thorough plans and strategies to eliminate its flaws on its operations. Thus, the proposed knowledge strategy for this phase is Internal Innovator.

8. Conclusion
In this paper we have examined crisis management strategies and knowledge based strategies, and have shown how alignment of knowledge based strategies with crisis management strategies can lead to better crisis management for organizations. We presented a knowledge-based crisis management framework that can help organizations apply knowledge management concepts in a crisis management context. Based on the discussions and a case analysis, we have shown that proper alignment of knowledge based strategies with crisis management strategies can help organizations identify the key tasks they need to perform and the knowledge they need to support these tasks. We have applied the model to two other cases Toyota [19] and Coca-Cola [12]. While it is beyond the page limitation of this paper to report on the results, we believe that the results provide us with confidence to begin the next phase of our study, namely validation and testing.

9. References
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[5] Darling, J. R. "Crisis Management in International Business: Keys to Effective Decision Making", Leadership & Organization Development Journal, 15(8), 1994, pp. 3 8 [6] De Tura, N., Reilly, S. M., Narasimhan, S., & Yin, Z. J. Disaster Recovery Preparedness through Continuous Process Optimization, Bell Labs Technical Journal, 9(2), 2004, 147 162 [7] Dutton, J. E. "The Processing of Crisis and Non-crisis Strategic Issues", Journal of Management Studies, 23(5), 1986, pp. 501 - 517 [8] Earl, M. "Knowledge Management Strategies: Toward a Taxonomy", Journal of Management Information Systems, 18(1), 2001, pp. 215 - 233 [9] Fink, S. Crisis Management: Planning for the Inevitable, New York, NY: American Management Association, 1996 [10] Fuchs, P. H., Mifflin, K. E., Miller, D, & Whitney, J. O. Strategic Integration: Competing in the Age of Capability, California Management Review, 42(3), 2000, pp. 118 - 147 [11] Henderson, J. C., & Venkatraman, N. Strategic alignment: Leveraging information technology for transforming organizations, IBM Systems Journal, 38(2&3), 1999, pp. 472 484 [12] Johnson, V., & Peppas, S. C. Crisis management in Belgium: the case of Coca-Cola, Corporate Communications: An International Journal, 8(1), 2003, 18 22 [13] Lagadec, P. Learning Processes for Crisis Management in complex Organizations, Journal of Contingencies and crisis management, 5(1), 1997, 24 31 [14] Miles, R. E., Snow, C. C., Meyer, A. D., & Coleman, H. J., JR. Organizational Strategy, Structure, and Process, Academy of Management Review, 3(3), 1978, pp. 546 - 562 [15] Mitroff, I. I. "Crisis Management: Cutting through the Confusion", Sloan Management Review, 29(2), 1988, pp. 15 - 20 [16] Mitroff, I. I. "Crisis Management and Environmentalism: A Natural Fit", California Management Review, 36(2), 1994, pp. 101 - 113 [17] Mitroff, I. I., Pearson, C. M., & Harrington, L. K. The Essential Guide to Managing Corporate Crisis: A Step-by-step Handbook of Surviving Major Catastrophes, Oxford, UK: Oxford University Press, 1996 [18] Mullin, R. P. What can be learned from DuPont and the freon ban: A case study, Journal of Business Ethics, 40(3), 2002, pp. 207 218 [19] Nishiguchi, T., & Beaudet, A. "Case Study: The Toyota Croup and the Aisin Fire", Sloan Management Review, 40(1), 1998, pp. 49 59 [20] Pearson, C. M., & Mitroff, I. I. "From Crisis Prone to Crisis Prepared: A Framework for Crisis Management", Academy of Management Executive, 7(1), 1993, pp. 48 - 59 [21] Pearson, C. M., & Clair J. A. "Reframing Crisis Management", The Academy of Management Review, 23(1), 1998, pp. 59 - 76 [22] Pearson, C. M., & Rondinelli, D. A. "Crisis Management in Central European Firms", Business Horizons, 41(3), 1998, pp. 50 - 60 [23] Pollalis, Y. A. Patterns of co-alignment in informationintensive organizations: business performance through integration strategies, International Journal of Information Management, 23(6), 2003, pp. 469 - 492

[24] Quarantelli, E. L. "Disaster Crisis Management: A Summary of Research Findings", Journal of Management Studies, 25(4), 1988, pp. 373 - 385 [25] Richardson, B. "Socio-technical Disasters: Profile and Prevalence", Disaster Prevention and Management, 3(4), 1994, pp. 41 - 69 [26] Sabherwal, R., & Chan, Y. E. Alignment Between Business and IS Strategies: A Study of Prospectors, Analyzers, and Defenders, Information Systems Research, 12(1), 2001, pp. 11 33 [27] Salter, J. "Risk Management in a Disaster Context", Journal of Contingencies and Crisis Management, 5(1), 1997, pp. 60 - 65 [28] Shaluf, I. M., Ahmadum, F., & Said, A. M. "A Review of Disaster and Crisis", Disaster Prevention and Management, 12(1), 2003, pp. 24 - 32 [29] Shrivastava P., & Mitroff, I. I. Strategic management of corporate crisis, Columbia Journal of World Business, 22(1), 1987, pp. 5 11 [30] Simon, L., & Pauchant, T. C. Developing the Three Levels of Learning in Crisis Management: A Case Study of the Hagersville Tire Fire, Review of Business, 21(3/4), 2000, 6 11 [31] Zack, M. H. "Developing a Knowledge Strategies", California Management Review, 41(3), 1999, pp. 125 - 145 [32] Zack, M. H.. Managing codified knowledge, Sloan Management Review, 40(4), 1999, pp. 45 58

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