If anything is resonating worldwide, not in the least due to the fallout of the recent pandemic, it is about having or building resiliency. As an individual, resilience is the capacity to cope with life’s challenges and bounce back from hardship. People that remain calm in the face of disaster have resilience. Instead of falling into despair or hiding from issues by using unhealthy coping strategies, resilient people face life’s difficulties head-on. But what about businesses and organizations?
But how about businesses and organizations? How can they improve on how they face and bounce back from adversity? And if so, how do you measure and manage the level of resiliency?
Martin Reeves and Kevin Whitaker wrote on HBR: “Amid the Covid-19 crisis, we have become painfully aware of the fragility of supply chains, health care, and other critical systems. Many leaders have announced the intention to build back their businesses more resiliently, but not many know how. Few business schools teach resilience, and today’s managerial toolkit is dominated by financial performance management. As a result, very few companies can explicitly design for, measure, and manage resilience.” Ergo, there is a huge resiliency capabilities gap.
In another article on HBR, author Martin Reeves argues that a firm’s capacity to adapt is the new competitive advantage: “We live in an era of risk and instability. Globalization, new technologies, and greater transparency have combined to upend the business environment and give many CEOs a deep sense of unease. Just look at the numbers. Since 1980 the volatility of business operating margins, largely static since the 1950s, has more than doubled. This has increased the gap between winners (companies with high operating margins) and losers (those with low ones).” Ergo, the ever-growing resiliency capabilities gap decreases SME businesses’ survival odds worldwide.
Resilience, robustness, reliability, and resistance represent different approaches to adversity, and their effectiveness can vary based on the specific context and nature of the challenges. Here’s a comparison of these approaches:
Building Resilience: Resilience is generally considered highly effective in adversity. Resilience enables entities to adapt, bounce back, and even thrive in the aftermath of disruptions. By fostering adaptability, learning, and agility, resilience allows individuals and organizations to navigate uncertainties, capitalize on opportunities, and maintain long-term viability.
Increasing Robustness: Robustness is effective in maintaining stability and functionality during disruptions. Robust systems are designed to withstand stress and maintain performance. However, robustness may have limitations when faced with complex or unpredictable challenges that require flexibility, adaptation, or innovation beyond the system’s predetermined capacities.
Improving Reliability: Reliability ensures consistent performance and dependability in normal and adverse conditions. Reliable systems, processes, and individuals deliver expected outcomes consistently. While reliability is important for stability and predictability, it may not be sufficient to address all aspects of adversity, especially when resilience or adaptability is required.
Offering Resistance: Resistance is generally considered less effective in the long term as an approach to adversity. Resistance involves maintaining the status quo and resisting change or adaptation. While resistance can provide short-term protection or preservation of existing structures, it may limit the ability to respond effectively to evolving challenges. It may hinder growth, innovation, and resilience in changing circumstances.
In summary, resilience is often regarded as the most effective approach to adversity because it focuses on adaptability, learning, and the capacity to bounce back stronger. Robustness and reliability contribute to stability and consistency, but they may have limitations in dynamic or complex environments. On the other hand, resistance is generally seen as a less effective approach, as it may hinder adaptation and responsiveness to adversity.
When Uber Pop entered the taxi business, the natural response was resistance. When that didn’t work, the response shifted to reliability and robustness, making existing processes more efficient. However, no one had anticipated the disruption or taken measures to increase its resilience. Consequently, these digital laggards had a hard time catching up.
Building Future Resiliency
Future resiliency for businesses refers to their ability to adapt, thrive, and remain competitive in the face of future uncertainties, disruptions, and rapid changes in the business landscape. It involves proactive planning, strategic decision-making, and the development of capabilities that enable organizations to withstand and capitalize on emerging challenges and opportunities.
We created an incomplete list of what may enhance your firm’s future resiliency:
- Anticipatory mindset: Developing an anticipatory mindset involves actively scanning the external environment for emerging trends, technologies, and potential disruptors. This allows businesses to stay ahead of the curve and proactively prepare for future changes.
- Agile and adaptive practices: Implementing agile methodologies and fostering a culture of adaptability within the organization enables quick responses and adjustments to changing market dynamics. This includes flexible decision-making, iterative processes, and a willingness to experiment and learn from failures.
- Innovation and continuous learning: Encouraging a culture of innovation and continuous learning is crucial for future resilience. Organizations should promote creativity, experimentation, and the exploration of new ideas while fostering a learning environment that encourages employees to acquire new skills and knowledge.
- Strategic partnerships and collaborations: Building strong partnerships and collaborations with external entities, such as startups, academic institutions, or industry networks, can help businesses access new technologies, expertise, and diverse perspectives. These collaborations enhance their ability to adapt to change and seize emerging opportunities.
- Technology adoption and digital transformation: Embracing technology and undergoing digital transformation enables businesses to enhance their agility, efficiency, and ability to leverage data and analytics. This includes adopting emerging technologies, implementing robust cybersecurity measures, and leveraging automation and AI-driven solutions.
- Talent development and retention: Attracting, developing, and retaining skilled and adaptable employees is essential for future resilience. This involves investing in training programs, promoting a learning culture, and fostering employee engagement and well-being to ensure a resilient workforce.
- Risk management and scenario planning: Implementing effective risk management strategies and conducting scenario planning exercises helps organizations identify and mitigate potential risks and uncertainties. This allows them to anticipate and respond to future challenges effectively.
- Positive inquiry: Incorporating positive inquiry into future resilience efforts encourages a mindset of optimism, resourcefulness, and creative problem-solving. It involves identifying and leveraging existing strengths, best practices, and success stories within the organization to inspire and guide future actions.
- Social constructionism: By encouraging diverse perspectives and engaging employees at all levels, organizations can collectively construct a shared understanding of the future, identify potential challenges, and co-create innovative solutions.
- Strategic foresight: Strategic foresight involves systematically exploring and analyzing potential future scenarios to inform decision-making and long-term planning. By integrating foresight practices, organizations can anticipate emerging trends, disruptions, and opportunities, enabling them to shape their strategies and business models accordingly and proactively.
- Organizational agility: Organizational agility refers to the ability to respond and adapt quickly to changes in the external environment. This includes having flexible structures, processes, and systems that allow for rapid decision-making, resource allocation, and cross-functional collaboration.
- Customer-centricity: Placing customers at the forefront of decision-making and designing products, services, and experiences that meet their evolving needs is crucial for future resilience. Organizations should prioritize understanding customer preferences, gathering feedback, and using data analytics to drive customer-centric innovation.
- Ecosystem thinking: Recognizing that businesses operate within complex ecosystems and understanding the interconnectedness of various stakeholders, industries, and societal factors is essential. Adopting an ecosystem mindset helps organizations identify new opportunities for collaboration, partnership, and co-creation, enhancing their ability to adapt and thrive.
- Ethical and sustainable practices: Integrating ethical considerations and sustainability into business operations contributes to long-term resilience. Organizations should prioritize responsible practices, such as environmental stewardship, social responsibility, and ethical governance, to ensure their actions align with evolving societal expectations and mitigate potential risks.
- Resilient leadership: Strong leadership is critical in fostering a culture of resilience. Resilient leaders inspire and motivate employees, promote a growth mindset, and create a psychologically safe environment that encourages innovation, learning, and risk-taking.
- Continuous monitoring and adaptation: Building future resilience requires ongoing monitoring of the external environment, tracking trends, and assessing the effectiveness of strategies. Organizations should embrace a learning-oriented mindset, allowing them to adapt and refine their approaches based on new information and feedback.
- Diversity and inclusion: Embracing diversity and fostering an inclusive organizational culture promotes various perspectives, creativity, and innovation. A diverse workforce brings a range of experiences, ideas, and approaches, enabling the organization to adapt and respond effectively to diverse challenges and opportunities.
- Stakeholder engagement: Engaging with key stakeholders, such as customers, employees, suppliers, and local communities, helps organizations understand their needs, expectations, and concerns. By actively involving stakeholders in decision-making, organizations can build trust, gain valuable insights, and ensure their actions align with stakeholder interests.
- Continuous improvement: Cultivating a culture of continuous improvement emphasizes ongoing learning, feedback loops, and iterative approaches. Organizations can adapt quickly, identify inefficiencies, and continuously innovate by encouraging employees to seek ways to enhance processes, products, and services.
- Robust communication: Effective communication is crucial for building future resilience. Organizations should establish clear and transparent communication channels, ensuring information flows smoothly across different levels and departments. Open and honest communication fosters collaboration, alignment, and quick response to changing circumstances.
- Resource allocation and flexibility: Allocating resources strategically and having flexibility in resource utilization enables organizations to adapt swiftly. This includes financial resources, human capital, technology, and infrastructure. By having the ability to reallocate resources as needed, organizations can seize emerging opportunities or mitigate potential threats.
- Learning from failure: Embracing a culture that views failure as an opportunity for learning and growth is vital for future resilience. Organizations should encourage experimentation, risk-taking and view setbacks as valuable feedback for future actions. By embracing a “fail fast, learn fast” mentality, organizations can iterate and improve their strategies and processes.
- Long-term orientation: Building future resilience requires a long-term perspective beyond immediate gains. Organizations should balance short-term objectives with a focus on sustainability, longevity, and creating enduring value. This involves investing in research and development, talent development, and innovation to build capabilities for future success.
- External collaboration and knowledge sharing: Engaging in external collaboration and knowledge sharing with industry peers, research institutions, and experts allows organizations to tap into external expertise, gain new insights, and access resources beyond their capabilities. This fosters innovation, learning, and the exchange of best practices.
- Scenario planning and stress testing: Conducting scenario planning exercises and stress testing helps organizations anticipate and prepare for future situations. Businesses can identify vulnerabilities, evaluate contingency plans, and make informed decisions by simulating different scenarios and assessing their impact on the organization.
- Adaptive governance and decision-making: Implementing adaptive governance structures and decision-making processes enables organizations to respond swiftly to changing circumstances. This involves empowering frontline employees, decentralizing decision-making where appropriate, and enabling rapid experimentation and iteration.
- Financial resilience: Building financial resilience involves maintaining healthy financial practices, such as strong cash flow management, diversification of revenue streams, and prudent risk management. This gives organizations the financial stability and flexibility to weather economic downturns or unexpected disruptions.
- Emotional intelligence and well-being: Prioritizing emotional intelligence and employee well-being contributes to resilience at the individual and organizational levels. Supporting employees’ mental and emotional health, fostering a positive work environment, and promoting work-life balance enhances engagement, productivity, and adaptability.
- Adaptive learning systems: Developing adaptive learning systems, such as knowledge management platforms, data analytics tools, and learning platforms, helps organizations capture, organize, and leverage knowledge effectively. These systems facilitate continuous learning, enable data-driven decision-making, and enhance organizational agility.
- Ethos of innovation and experimentation: Cultivating an ethos of innovation and experimentation encourages employees to generate and test new ideas, challenge the status quo, and embrace calculated risks. This includes providing resources, time, and support for innovation initiatives and recognizing and rewarding creative contributions.
- Environmental scanning and trend analysis: Actively scanning the external environment, monitoring industry trends, and analyzing market dynamics allows organizations to stay abreast of changes and identify emerging opportunities. This involves leveraging market research, trend analysis tools, and industry networks to inform strategic decision-making.
Robust risk management: Implementing a comprehensive framework enables organizations to identify, assess, and mitigate potential risks that could impact their operations. This includes establishing risk mitigation strategies, contingency plans, and monitoring systems to address risks proactively.
Customer-centric innovation: Placing a strong emphasis on understanding and meeting customer needs through innovation helps organizations stay relevant and competitive in the future. This involves actively seeking customer feedback, conducting user research, and integrating customer insights into the product or service development process.
Adaptive supply chain management: Developing a resilient supply chain that can adapt to disruptions and changing market demands is crucial. This includes diversifying suppliers, building strategic partnerships, implementing agile inventory management practices, and leveraging digital technologies to enhance supply chain visibility and responsiveness.
Regulatory and compliance readiness: Staying informed about regulatory changes and ensuring compliance with relevant laws and regulations helps organizations navigate future uncertainties. Proactively monitoring regulatory developments, maintaining robust compliance processes, and engaging with regulatory bodies contribute to future resilience.
Sustainability and social responsibility: Integrating sustainability practices and social responsibility into business operations enhances long-term resilience. This includes adopting environmentally friendly practices, addressing social and ethical considerations, and aligning with the expectations of stakeholders who prioritize sustainability and responsible business practices.
Empowered and adaptive workforce: Fostering an empowered workforce is crucial for future resilience. This involves promoting a learning culture, encouraging employee autonomy and ownership, providing ongoing training and development opportunities, and nurturing talent that can adapt to evolving roles and responsibilities.
Effective crisis management: Developing a robust crisis management plan, including clear communication protocols and response mechanisms, helps organizations effectively navigate unexpected crises. Regularly testing and updating the crisis management plan ensures readiness and the ability to respond swiftly and effectively.
Continuous market and competitive analysis: Conducting continuous and competitive analysis allows organizations to identify emerging trends, potential disruptions, and threats. This involves monitoring competitor strategies, analyzing market dynamics, and gathering market intelligence to inform strategic decision-making.
Organizational agility and flexibility: Cultivating organizational agility and flexibility is essential for future resilience. This includes being open to change, adapting processes and structures as needed, fostering a culture of agility and learning, and embracing new technologies and innovative approaches.
Digital readiness: Embracing digital transformation and having a strong digital infrastructure prepares organizations for future disruptions and opportunities. This includes adopting emerging technologies, leveraging data analytics, and building digital capabilities to enhance operational efficiency, customer experiences, and innovation.
Continuous monitoring of megatrends: Keeping a pulse on global megatrends, such as demographic shifts, technological advancements, and geopolitical changes, helps organizations anticipate long-term shifts and adapt their strategies accordingly. Regular monitoring of megatrends supports proactive decision-making and strategic planning.
Cultural adaptability: Cultivating a culture that values adaptability, learning, and embracing change supports future resilience. Organizations should foster a growth mindset, encourage cross-cultural collaboration, and embrace diverse perspectives to effectively navigate cultural shifts and global market changes.
Strategic partnerships with startups and disruptors: Collaborating with startups, disruptors, and entrepreneurial ventures can infuse organizations with fresh ideas, innovative approaches, and emerging technologies. Establishing strategic partnerships or investing in relevant startups allows organizations to stay at the forefront of industry developments and tap into disruptive innovations.
Ethical AI and responsible automation: Emphasizing ethical considerations in adopting artificial intelligence (AI) and automation ensures responsible use and safeguards against unintended consequences. Organizations should prioritize transparency, fairness, and accountability in AI and automation practices to build trust and avoid potential risks.
Resilient infrastructure and operations: Building resilience into physical infrastructure, operational processes, and supply chains is crucial for mitigating disruptions. This includes redundancy measures, backup systems, disaster recovery plans, and robust operational protocols to minimize the impact of unforeseen events.
Collaborative networks and ecosystems: Building collaborative networks and participating in ecosystems, industry associations, and knowledge-sharing platforms fosters resilience through shared resources, collective problem-solving, and collective intelligence. Collaborative networks enable organizations to pool expertise, access specialized knowledge, and share best practices.
Adaptive marketing and customer engagement: Adapting marketing strategies and customer engagement approaches to changing consumer behavior, and preferences helps organizations remain relevant and responsive. This includes leveraging digital channels, personalization, and data-driven insights to deliver tailored experiences and maintain customer loyalty.
Entrepreneurial mindset: Cultivating an entrepreneurial mindset throughout the organization encourages proactive problem-solving, innovation, and opportunity-seeking. Empowering employees to take calculated risks, encouraging creative thinking, and rewarding entrepreneurial behaviors fosters a culture of resilience and adaptability.
Continuous self-assessment and learning: Regularly assessing organizational performance, learning from experiences, and adapting strategies are crucial for future resilience. Organizations should embrace a continuous improvement mindset, encourage feedback loops, and prioritize learning and knowledge sharing at all levels.
This incomplete list shows the multifacet aspects, viewpoints, approaches, measures, and frameworks that should be considered when enhancing future resilience and positioning the company to thrive in an ever-changing and uncertain business environment.
Future Resiliency Summit
Given the complexity of our age and the challenges executives face to build future resilience into the company, we’re working toward organizing a Future Resiliency Summit.
Why do we use the term resiliency instead of resilience? Like efficacy and efficiency, resiliency matures and can be measured, tracked, and improved. Future Resiliency, therefore, should be considered a KPI. Considering the industry’s benchmark, this multifacet indicator will allow the executive team to determine if the organization’s resilience level is below, on, or above par.
We wrote these words almost a decade ago: “Everything that can be disrupted will be.” Today, we are amidst continuous disruption, health crises, and geopolitical turmoil.