Explanation on how to avoid such crises

The notion of avoiding a snowball effect is tangential to the notion of stopping a speeding locomotive. The only chance one has of stopping either is in the beginning. In the Continental example, the central solution was ostensibly to shake up the organization completely. This included a management and labor restructuring as well as a brand image, asset, product quality, service and customer management overhaul. In reality for Continental however there was no real beginning as there was not a strategic plan or vision to convey where the organization was attempting to go.

An organization must always be in line with its mission and vision statement. To meander away from these ideals will reduce the level of efficiency and effectiveness of the organization. Indeed, the sacrifice is intended to increase revenue over expenses acquired however what does tend to happen when a business acquires an asset that is outside of its core business is that there is a decrease in marginal profit per unit when compared to core business assets. Additionally, operating and long-term expenses tend to be higher for the non-core business rather the core business.

Therefore, avoiding the crisis is a function of remediating the entire organization to reflect the flowchart necessary to realize the goals underlying the mission and vision statement.

Crisis Management

Discerning a crisis and then managing the process through to profitability is extremely difficult task to which the right individual is necessary....

A vision must be identified and then a strategic leadership plan is to be implemented by a leader that understands the vision and that takes no for an answer. A leader that is able to identify solutions to problems that no one else is able to see, or to which other executives managing departments internally are attempting to cover up and hide from reporters. Often times, the managerial accounting report will be accurate to reflect operating costs and operating revenues however the financial accounting report will deviate considerably from a unit by unit projection of valuation.
The complete restructuring of an organization to bring in the proverbial 'new blood' is often the best strategy. By bring in a new culture and training these employees in corporate protocol that governs all operations specific to the employees department as well as putting up banners and slogans throughout the work environment that entails the organizational philosophy with regard to various organizational endeavors.

Conclusion

Continental was saved by simply recognizing that there were abhorrent inefficiencies with the operation of the airline as well as years of mismanagement and simply a lack of managerial competence at the top levels, and subsequently facilitating a plan to align the organization to work symbiotically with core competencies. The additional task of investing into the product and into the other core areas that drive the business operations were also a remedy.

References

Brenneman G. "Right Away and All at Once: How We Saved Continental"