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Confronting the Edge of Chaos Continuity
Strategy Implications

• The take-away
• Businesses and industries are complex adaptive
  systems.
• Businesses and industries are governed by deep
  laws of complexity
• Plans that lack flexibility will constrain the
  users
• Energy drives everything
• Clearly defined rules for the world do not exist,
  therefore computing future risks can only be
  accomplished if one knows future uncertainty

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Confronting the Edge of Chaos Continuity
Strategy Implications
There are hundreds of strains of avian influenza
virus but only four -- H5N1, H7N3, H7N7, and H9N2
- are known to have caused human infections,
according to the World Health Organization.
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Confronting the Edge of Chaos Continuity
Strategy Implications
What We Know (Facts)
What We Think We Know (Assumptions)
What We Do Not Know (Speculation)
What We Do Not Know that We Do Not Know (Unknown
Unknownables)
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World Population 6,525,170,264 (approximately)
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Pandemic The Second Wave
While the cause influenza will remain the same,
the problems that we will face in the second wave
of a pandemic will not be the same problems that
we faced in the first wave.
Seat of the Pants?
Forward Thinking?
Process Oriented Rigidity Old Planning
Paradigms Ineffective Response
Modes Inflexibility
Situational Awareness Adaptive Behavior Active
Analysis Futureproofing
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Time How Much How Long?
Antivirals and Vaccine Supply It will take 10
years to provide enough antivirals to treat 20
of the worlds population if bird flu becomes
seriously endemic worldwide. Fact H5N1 is
already endemic in much of Asia. Question How
will we know which 20 to provide antivirals
for? Question Where will the antiviral supplies
be stored? Question How will we know if current
vaccine will be effective against the emergent
strain of influenza (mutated virus)? Statement F
or production of new pandemic vaccines to start a
new virus (mutation) must emerge.
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Black Swans, Randomness, Preparedness
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Confronting the Edge of Chaos Continuity
Strategy Implications
The biggest single threat to business during a
pandemic will be staying with a previously
successful business model too long and not being
able to adapt to the fluidity of situation
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Confronting the Edge of Chaos Continuity
Strategy Implications

• Failure to recognize
• Weak cause-an-effect linkages
• Small and isolated changes can have huge effects
• Complexity making the strategic challenge more
  urgent
• How the complexity of the event can facilitate
  the ability of the organization to adapt if it
  can broaden its continuity approach

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Leadership Decision Making and Situational
Awareness
Uncontrollable Inputs
Influencers (positive or negative)
Observe
Orient
Decide
Act
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Leadership Decision Making and Situational
Awareness
Uncontrollable inputs result in compressed logic
stream leading to higher potential for failure
Influencers (positive or negative)
Compression
Observe
Orient
Decide
Act
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Confronting the Edge of Chaos Continuity
Strategy Implications
A few important factors will drive your
organizations success
Focus on aligning pandemic plans with business
goals and objectives
Directly contributes to business need and
competitive advantage
Can provide quick-hit solutions
Deliver immediate value and ROI
Understand business drivers and focus efforts to
support them
Proven, experienced teams
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Confronting the Edge of Chaos Continuity
Strategy Implications
A few important factors will drive your
organizations success
Ongoing, strategic staff allocation
Pinpoints skill sets when and where needed
Enables decision making based on best available
intelligence
Active Analysis
Drives solutions that enable realignment to
strengthen your position in the marketplace
Long-term strategic alignment
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Second Wave A Speculative Look
How Flexible is Your Organizations Plan?
Have You Built a Sandcastle, Pyramid or Cathedral?
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Confronting the Edge of Chaos Continuity
Strategy Implications
Will your workload increase in respect to the
severity of a pandemic or will it decline due to
lack of demand for your product/service?
Workload Factors
Demand Will your product or service be in
demand?
Workload at 100
Demand
Product/Service Relation to Pandemic Cycle
Staff at 100
Product or service demand down Workforce
degradation less
Staff Degradation Factors
Pandemic Declared
60 180 days
180 320 days
320 600 days
600 800 days
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Confronting the Edge of Chaos Continuity
Strategy Implications

• America used to lead the world in education, now
  it depends on the world for larger and larger
  percentages of key skill sets to keep operating
• In 3 or 4 years, there's expected to be a 30 to
  40 shortage of technical and professional oil
  workers in the U.S.
• As much as 80 of the oil industry workforce will
  be eligible for retirement in the next decade.
• In the next 5 years, just as the nuclear industry
  hopes to launch a renaissance, up to 19,600
  nuclear workers 35 of the workforce will
  reach retirement age.
• The top 25 oil companies in the industry have
  shed more than one million employees since 1982.
• According to the US Bureau of Labor Statistics,
  more than 25 of the working population will
  reach retirement age by 2010, resulting in a
  potential worker shortage of nearly 10 million.

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Confronting the Edge of Chaos Continuity
Strategy Implications

• Premise for Collapse
• Relationships among resources, capital, waste and
  production form the basis for an ecological model
  of collapse in which production fails to meet
  maintenance requirements for existing capital.
• Tainter complex societies break down when
  increasing complexity results in negative
  marginal returns. Unsustainably high level of
  complexity.
• Extended process of progressive disintegration
  rather than a rapid shift from an unsustainable
  state to a sustainable state.

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842 Million Tourists Traveled in 2006 (Top 17
Countries)
Rank Country International tourist
arrivals Monthly Average 1 France 79.1
million 6.591 million 2 Spain 58.5
million 4.875 million 3 United States 51.1
million 4.25 million 4 China 49.6
million 4.13 million 5 Italy 41.1
million 3.425 million 6 United Kingdom 30.1
million 2.50 million 7 Germany 23.6
million 1.96 million 8 Mexico 21.4
million 1.78 million 9 Austria 20.3
million 1.69 million 10 Russia 20.2
million 1.68 million 11 Turkey 18.9
million 1.575 million 12 Canada 18.2
million 1.52 million 13 Ukraine 17.6
million 1.46 million 14 Malaysia 17.5
million 1.458 million 15 Hong Kong 15.8
million 1.32 million 16 Poland 15.7
million 1.31 million 17 Greece 14.3
million 1.19 million
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World's busiest passenger airports

• World's busiest passenger airports Annual Month
  ly
• Hartsfield-Jackson Atlanta International
  Airport 84,846,639 7,070,553
• O'Hare International Airport (Chicago) 77,028,13
  4 6,419,012
• 3. Heathrow Airport (London) 67,530,197
  5,627,516
• 4. Haneda Airport (Tokyo) 65,810,672
  5,484,227
• 5. Los Angeles International Airport 61,041,066
  5,086,756
• 6. Dallas/Fort Worth International
  Airport 60,226,138 5,018,845
• 7. Paris-Charles de Gaulle Airport 56,849,567
  4,737,464
• 8. Frankfurt Airport 52,810,683 4,400,890
• 9. Beijing Capital International
  Airport 48,654,770 4,054,564
• 10. Denver International Airport 47,325,016
  3,943,751
• 11. McCarran International Airport (Las
  Vegas) 46,193,329 3,849,444
• 12. Amsterdam Airport Schiphol 46,065,719
  3,838,810
• 13. Madrid Barajas Airport 45,501,168
  3,791,764
• 14. Hong Kong International Airport 43,857,908
  3,654,826
• 15. John F. Kennedy International Airport (New
  York City) 43,762,282 3,646,857

U.S. 46
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World's busiest ports
Busiest Ports By Volume 1. Singapore2.
Rotterdam, Netherlands3. South Louisiana,
U.S.A.4. Shanghai, China5. Hong Kong, China6.
Houston, U.S.A7. Chiba, Japan8. Nagoya,
Japan9. Ulsan, South Korea10. Kwangyang, South
Korea
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World's busiest ports
Busiest Ports By Containers 1. Hong Kong,
China2. Singapore3. Pusan, South Korea4.
Kaohsiung, Taiwan5. Rotterdam, Netherlands6.
Shanghai, China7. Los Angeles, U.S.A.8. Long
Beach, U.S.A.9. Hamburg, Germany10. Antwerp,
Belgium
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Profitability of Selected U.S. Industries (Average
ROIC, 1992 2006)
Security Brokers, Dealers 40.9 Soft
Drinks 37.6 Packaged Software 37.6 Pharmaceu
ticals 31.7 Perfume, Cosmetics,
Toiletries 28.6 Advertising Agencies 27.3 Disti
lled Spirits 26.4 Semiconductors 21.3 Medica
l Instruments 21.0 Mens, Boys
Clothing 19.5 Tires 19.5 Household
Appliances 19.2 Malt Beverages 19.0
Child Day Care Services 17.6 Household
Furniture 17.0 Drug Stores 16.5 Grocery
Stores 16.0 Iron, Steel Foundries 15.6 Cookies,
Crackers 15.4 Wine, Brandy 13.9 Bakery
Products 13.8 Engines, Turbines 13.7 Laborator
y Equipment 13.4 Oil, Gas machinery 12.6 Soft
Drink Bottling 11.7 Knitting Mills 10.5 Hotels
10.4 Catalog, Mail-Order Houses
5.9 Airlines 5.9
Return On Invested Capital (ROIC) Measure of
profitability for strategy development. Earnings
before interest and taxes divided by average
invested capital less excess cash
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Confronting the Edge of Chaos Continuity
Strategy Implications
How Flexible is Your Organizations Plan?
Plans are not failure proof what will your
organization do if your plan does not work
exactly as it is conceived?
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Antivirals
One course of Tamiflu and/or Relenza is
approximately 80. The dose of Tamiflu (for
grownups) is one 75mg capsule twice a day for
five days.  The dosage for kids varies from
30mg twice daily to 75mg twice daily depending on
their weight. (Children that weigh more than
88lbs take the adult dose of 75mg per
day).Every Tamiflu prescription must contain 10
doses.  Sometimes people don't take all 10 pills
- this is not good.  If you do this, the medicine
may not work well.  Your illness could come
back.You must not skip any doses if you expect
it to work.  Even if you feel better, you must
take all 10 doses regardless.You need to begin
taking it within 40 hours of catching the flu or
it may not work.
no guarantee as yet that Tamiflu will prove
effective against a pandemic strain of Bird
Flu... Scripps Reports Press Release 11/2006
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Antivirals Planning

• Pandemic of 500 days duration
• Tamiflu 80.00 per course (1 course 10 pills, 5
  days of treatment)
• 100 courses per employee to cover each - 8,000
  per employee.
• Pandemic of 800 days duration
• Tamiflu 80.00 per course (1 course 10 pills, 5
  days of treatment)
• 160 courses per employee to cover each - 12,800
  per employee.
• Pandemic of 90 days duration
• Tamiflu 80.00 per course (1 course 10 pills, 5
  days of treatment)
• 18 courses per employee to cover each - 1,440
  per employee.

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Antivirals/PPE Planning

• Antivirals/PPE are subject to
• Confiscation by government eminent domain for
  social greater good
• Loss after distribution misplaced, stolen
  and/or used otherwise
• Black-market price after declaration, bartered
  for goods/services
• Undersupply stockpiles insufficient for demand
• Family member needs distributed to family
  instead of taking
• Out of date (Inventory expiration) disposal of
  old inventory
• Theft cargo, distribution, warehouse, etc.
• Greater demand supply imbalance
• Lessened effectiveness it takes more that the
  normal course

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Other Planning Considerations

• Personal
• Masks
• Gloves
• Hand Sanitizers (individual)
• Kleenex Tissues
• Antibacterial Wipes
• Antivirals Individual Issue
• Personal Thermometer
• Enterprise
• Cleaning Supplies
• Decontamination Equipment/Supplies
• Hand Sanitizers (Restrooms, etc.)
• Signage in Various Languages
• Antivirals Bulk Supplies
• Visitor Kits

Whats the cost? Whats the liability? When do
you make the commitment? How long are you
committed to maintaining the inventory?
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Sector Analysis (98 days) The financial sector
is faced with solvency issues as savings and
checking accounts are drawn down. Banks
experience a demand for money (physical currency)
that exceeds their ability to supply currency.
Institutions such as the World Bank,
International Monetary Fund and Asian Development
Bank saw donor nations suspend their commitments
of funds. Many recipient nations petition for
restructuring of their loans. Consumer credit
evaporates as merchants demand cash as payment
for goods and services. Central banks in some
countries cannot keep up with the demand for
currency. Interests rates, exchange rates,
stock, bond and commodity markets experienced
wide swings as the worldwide economy is
disrupted.
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Sector Analysis (98 days) The manufacturing
sector feels the impact of the pandemic,
factories are forced to close due to workforce
issues, in some areas quarantine, lack of raw
materials availability and curtailment of imports
and exports due to border closures. Firms
dependent on outsourcing and parts made
externally are forced to alter their operations
(either reducing operations or suspending
operations) creating spot shortages and
displacing workers.
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Sector Analysis (98 days) The service sector,
comprised of volume driven firms, sees demand for
services dwindle. A significant portion of the
workforce is laid off as a result. Severe
strains on the financial health of the service
sector begin to appear as credit and debit card
firms see defaults on payments due. Fraud
becomes an increasingly significant issue for
this sector.
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Sector Analysis (98 days) The
telecommunications sector continues to be under
intense pressure as worldwide, people attempt to
telecommute. In many countries governments
exercise authority and commandeer the bulk of
telecommunication services in attempts to
maintain order and keep government operations
functioning. Telephone exchanges in many parts
of the world have degraded to sporadic service as
demand far exceeds capacity.
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Sector Analysis (98 days) The utility sector
is under intense pressure. Brownouts in most
areas of the world are normal, in part due aging
infrastructure, lack of and/or disruption of fuel
supplies. Distribution issues and demand shifts
continue to create reliability issues. Blackouts
of extended duration are beginning to affect many
countries. In many areas fuel supplies are being
rationed due to curtailment of deliveries.
System maintenance becomes more difficult due to
a lack of experienced workers and rampant illegal
tapping of supply lines (electrical, gas, water,
etc.). In many instances government has had to
intercede to assist the utilities maintain
operation, through guarantees of payment as
displaced workers are unable to pay utility
bills. A spike in residential demand as more and
more workers are forced to stay at home due to
quarantine, facility closures, lack of work and
fear of exposure to illness continues.
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Sector Analysis (98 days) The insurance sector
sees an upsurge in claims for medical benefits
during the initial 60 days of the pandemic,
causing a slowdown in payments due to volume
impact. As the system is overwhelmed, the volume
of claims drops dramatically as healthcare
providers are unable to process claims and health
insurance companies experience depletion of their
workforce due to illness and other factors.
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Sector Analysis (98 days) The healthcare
sector continues to be overwhelmed by patient
volume. Healthcare operations in some areas
cease to function due to surge, lack of supplies,
panic and inability to staff facilities. This
continues to be a factor as people who think they
have exhibited the symptoms of the influenza seek
medical aid. Limited availability of critical
supplies due to trade disruption and border
closures continues. Hospitals are unable to
contain other illnesses, such as, adenovirus,
MRSA (Methicillin resistant Staphylococcus
aureus) due to lack of staff and supplies.
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Sector Analysis (98 days) The energy sector
sees a decline in demand, but a spike in prices
for raw materials due to worker shortages
continues to see chaotic swings in prices.
International and national travel is less than
30 of pre-pandemic levels. The shift from
occupied offices in cities to stay at home
workers has reduced the demand for transportation
fuel. However, due to the disruption in
international trade there continues to be erratic
spikes in commodity prices.
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Sector Analysis (98 days) The agriculture
sector continues to experience commodity shock
as demand for agricultural products cannot be met
as transportation sector disruption continues.
As a major importer of foodstuffs the U.S.
continues to suffer regional spot outages as
grocery stores are forced to close due to lack of
inventory. Government food warehouses are unable
to alleviate the shortages due to the impact of
fuel distribution problems affecting the
transportation sector, shortages of personnel and
transportation system closures due to quarantine
and border closures. Spoilage becomes a factor
in planning for this sector. Political tensions
continue to build as food prices increase faster
than the World Food Program (WFP) and other
Non-Governmental Organizations (NGO) budgets.
Food-constrained nations continue to have
difficulty getting agricultural products due to
transportation, border and port closures. The
U.S., the worlds biggest agricultural supplier,
is hampered in its ability to ship agricultural
products due to a lack of agricultural inspectors
as a result of illness and other factors.
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Sector Analysis (98 days) The education sector
continues to remain closed as students and
teachers furloughed when schools close due to
health concerns, quarantine and transportation
system impacts are not returning. Additionally,
many schools converted to provide healthcare
services during the surge are still occupied and
in general decontamination is required for all
facilities.
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Sector Analysis (98 days) The high-technology
sector continues to see surges in demand for
access and support related to the Internet.
Hampered by workforce degradation, many call
center operations are being reconfigured
resulting in significant disruption of services.
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Anticipating Surprise
Whether a natural or human induced disaster,
surprise is the key element in an organizations
failure to anticipate effectively. Geary W.
Sikich - 2003
What we missed because we did not plan for it,
will be extremely obvious in retrospect
Have you developed a plan, policy or protocol for
dealing with deaths occurring in the workplace
during the pandemic?
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Geary W. Sikich Principal Logical Management
Systems, Corp. www.logicalmanagement.com g.sikic
h_at_att.net or gsikich_at_logicalmanagement.com