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Media Release

Helping organizations prevent crises

Ivey expert explains how to detect weak signals that forecast unexpected problems

 

LONDON, ON, February 24, 2010 - Toyota may have avoided its recent recall of millions of vehicles due to safety issues if it had an appropriate organizational attention system in place to detect tell-tale signs that the problem was brewing.

Recent research by Claus Rerup, Associate Professor of Organizational Behaviour and Donald G. & Elizabeth R. Ness Fellow in Entrepreneurship, Richard Ivey School of Business, shows how organizations can detect and prevent rare and unexpected crises.

Most studies on organizational attention focus on "salient issues," which are conspicuous and make a lot of noise.

However, Rerup said it's the subtle clues that matter.

"(Salient issues) don't help organizations detect problems that are incubating because crises or accidents in the making tend to give off weak cues," said Rerup.

In a paper recently published in Organization Science, Rerup studied the Novo Nordisk insulin crisis of 1993. Novo Nordisk, a leading healthcare company focused on diabetes care, discarded six months of insulin production destined for the U.S. market after it overlooked changes in the U.S. Food and Drug Administration's goods manufacturing practice. There was nothing wrong with the insulin produced. Novo Nordisk could not document that its products were produced in accordance with how they were registered with the FDA.

From his study of Novo Nordisk, Rerup developed the concept of "attentional triangulation" - three dimensions of attention that help organizations detect potential problems:

  • Attention "stability," which focuses on how to sustain attention on a particular issue over time;
  • Attention "vividness," which helps organizations see how different issues might be related;
  • Attention "coherence," which is about co-ordinating attention through command structures and across levels of the firm.

According to Rerup, the groundwork for crises and accidents is often laid in factors common to every organization: political processes, bureaucratic structures, and managers with ambition and bias.

"These factors influence the way that people look at cues and attend to them," said Rerup. "Managerial practices around attentional triangulation help cues move faster from the bottom to the top, so management can make swift decisions and act quickly."

Details of Rerup's research will be released in the March edition of impact, an online monthly publication featuring new research from faculty at the Richard Ivey School of Business. impact will be available on March 1. To subscribe, please visit impact.

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About the Richard Ivey School of Business

The Richard Ivey School of Business (www.ivey.ca) at The University of Western Ontario offers undergraduate (HBA) and graduate degree programs (MBA, Executive MBA, PhD and MSc) in addition to non-degree Executive Development programs. Ivey has campuses in London (Ontario), Toronto, and Hong Kong. Ivey recently redesigned its curriculum to focus on Cross-Enterprise Leadership - a holistic issues-based approach to management education that meets the demands of today's complex global business world.

 

For more information, please contact:
Richard Ivey School of Business, Dawn Milne, 519-850-2536, dmilne@ivey.ca