System Archetype 6: Escalation
Description of Escalation
One of the
System Archetypes is "Escalation". This archetype tells us how the performance of one entity affects the other. It may be a person or an organization as a whole who are doing things just because the other person is doing them and don't want to be left behind. Most of the times it is good but it may restrict you from many other things which you could have possibly done to grow.
There is a common belief that if the competition is doing something then we must also do that to sustain our competitive advantage or to gain competitive advantage and, in some cases, just because that is the only response managers are supposed to give. The Escalation archetype tells us about the irony when the managers try to further the best interests of the organization and end up engaging in the escalating behavior which puts the organization in danger and reduces the value to its stakeholders and customers.
Early Warning Symptoms of Escalation
You may hear people saying, "Once our opponent slows down, then only we could stop competing and focus on some other things as well". When you see that you are making decisions based on what the other party or person is doing, this is when you must realize that you might fall in the trap of escalation.
Structure of Escalation
Management Principle (What to do?)
You should look for a way where both parties benefit or reach their objectives. In many of the cases, if one of the sides makes a peaceful movement which means it is trying not to be too aggressive, then the other side should also feel less threatened and stops countermeasures. This may help both sides to complete their objectives without worrying too much about the
competition.
Business Example of Escalation
A company launches a new bag in the market which is multipurpose as well as waterproof. It is quite a hit among youngsters. Just after that, one of its major competitors launches a very similar product. After some months, jealous of the competitor's market share, the first company decides to lower its price by 15%. It hits the second company's sales and so it also decides to lower the price. After that, the first company again reacts by decreasing the price even more. After watching this, the second company reluctantly decides to also decrease its price further, even if the profits are suffering. After some years, both companies are barely breaking even on the product and hence the survival of the bag is threatened.
Real Life Example of Escalation
A teacher gave a talk to students and decided to give some incentives for completing the task faster. The final deadline was 5 days later and there was an incentive of 10 points to the group which completes it first. So, all the groups tried really hard to complete the task as early as possible. However it was found that the first group which submitted the task first had made many mistakes which made their overall score less than all other groups, even if they got the extra 10 points.
⇨ Feel free to add more management situations which you might have faced and what you did to tackle them...
Sources:
Peter Senge, "The Fifth Discipline – Appendix 2: Systems Archetypes", 1990.
William Braun, "The System Archetypes", February 2002
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