6 ACTIONS TO BECOME A MORE RESILIENT COMPANY
strategy; strategic understanding 09/04/20 Jeff Bondy

In the midst of the current pandemic, we have all become much more painfully aware of the fragility of supply chains, health care, and other critical systems. Many CEO’s have announced their intention to rebuild their businesses more resiliently, but not many know exactly how to go about accomplishing this task.  Very few business schools teach resilience, and today’s managerial toolkit is primarily focused on financial performance management. As a result, very few organizations are able to explicitly design for, measure, and manage resilience.

Resilience as a company’s capacity to absorb stress, recover critical functionality, and thrive in altered circumstances. Resilience is especially important because today’s business environment has become so much more dynamic and unpredictable. This is a result of several enduring forces stressing and stretching business systems — from accelerated technological evolution to a greater interconnectedness of the global economy to broader issues such as rising inequality, climate change, etc.

There is no better example of system stress than the coronavirus crisis. Humans impinging on the natural environment have enhanced the risk of cross-species infections. Dense urban populations facilitated the rapid initial outbreak of the disease. International travel facilitated its global spread. Extended global supply chains have broken down. Economic activity has been massively disrupted, and inequalities and social tensions have been exacerbated.

Crises like this one present an opportunity for change. With Covid-19, companies have a unique opportunity and necessity to revisit their business models to build greater systemic resilience. The author of this article presents the following six actions as a place to start when building resilience:

  • Seek advantage in adversity. Don’t merely endeavor to mitigate risk or damage or restore what was; rather, aim to create advantage in adversity by effectively adjusting to new realities.

 

  • Look forward. In the short run, a crisis many appear tactical and operational. However, over the long run, new needs and the incapacitation of competitors create opportunities. Crises can also be the best pretext for accelerating long-term transformational change. One of the key roles for leaders is therefore to shift an organization’s time horizons outward.

 

  • Take a collaborative, systems view. In stable times, business can be thought of as performance maximization with a given business model in a given context. Resilience, by contrast, concerns how the relationships between a business’s components or between a business and its context change under stress. It requires systems thinking and systemic solutions, which in turn depend on collaboration among employees, customers, and other stakeholders.

 

  • Measure beyond performance. The health of a business is not captured only by measures of value extracted, which tend to be backward-looking. Measuring flexibility, adaptation, and other components of resilience is critical to building a sustainable business. This can be done rather simply by looking at either benefits or capabilities.

 

  • Prize diversity. Resilience depends on being able to generate alternative ways of reacting to situations, which in turn depends on the ability to see things with fresh eyes. Resilient businesses prize cognitive diversity and appreciate the value of variation and divergence.

 

  • Change as the default. Alibaba founder Jack Ma sees change, not stability, as the default. Resilience is less about occasional adjustments under extreme circumstances, and more about building organizations and supporting systems predicated on constant change and experimentation. This is partly to avoid rigidity and partly because iterative incremental adjustment is far less risky than a massive one-shot adjustment.

With the mainstream of business education and managerial practice focused on managing performance, resilience represents not just an opportunity to mitigate risk, but also an opportunity for competitive advantage. Andy Warhol famously said that in the future, everyone will be famous for 15 minutes. In today’s business world, transient high performance is commonplace; it is sustained performance by resilient companies that stands apart.

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