How resilient businesses are able to turn unexpected threats into commercial advantages
Survival is not enough. Companies that want to generate long-term, sustainable success must nurture the skills to evolve quickly and adapt to an increasingly disruptive and turbulent operating environment.
They must develop the ability to identify threats, the vision to turn them into opportunities and the operational agility to deliver change in short timeframes. In a word, they must become resilient.
Developing organisational resilience goes beyond risk prevention and recovery. It is more than protecting resources, safeguarding assets and responding to unexpected shocks.
It also demands the ability to counter attack at pace. The most resilient organisations can turn imminent and unexpected threats into commercial advantage, adapting their products and services to changing market dynamics.
The British Standard for Organisational Resilience BS65000 defines resilience as the, “Ability of an organisation to anticipate, prepare for, and respond and adapt to incremental change and sudden disruptions in order to survive and prosper.”
Benefits of resilience
Developing the requisite framework and culture to support organisational resilience at every level is difficult. Some companies see it as a painful but necessary evil to comply with supplier contract or customer tender terms. Others have made organisational resilience part of their DNA.
Wherever companies are on the journey, creating and evolving organisational resilience is never-ending, because the landscape in which they operate changes continually. But there are significant benefits for those that put it at the centre of their corporate thinking.
In recent years, companies such as Google and Amazon have demonstrated the power of organisational resilience. Not only have these businesses evolved their initial core offering dramatically, but they have pushed into many new sectors, deploying their technology in innovative ways to see off competitors and develop new revenue streams and customer bases.
Older companies like 3M have shown that organisational resilience is effective over the long-term. The company was founded in 1902 as the Minnesota Mining and Manufacturing Company. It has long since left behind its mining background and now makes tens of thousands of products ranging from adhesives, abrasives and electronic circuits, to healthcare software and optical films. It has a turnover of over $30bn.
3M’s success contrasts distinctly with that of Woolworths. The retailer was founded in 1909 and despite surviving the twentieth century was unable to adapt to the digital demands of the twenty first century.
Woolworths’ collapse underscores the fact that past longevity does not guarantee future prosperity and companies must evolve continually and quickly.
In a whitepaper entitled: “Organisational Resilience: Harnessing experience, embracing opportunity,” national standards organisation BSI Group stated: “Executives believe organisational resilience is vital to their long-term growth and financial performance.”
Brent Gleeson, founder of management consultancy TalkingPoint Leadership, is bullish about the prospects of companies that look beyond the demands of short-term results and take a more strategic view.
Writing recently in Forbes, he stated: “Resilient organisations have sound leadership at all levels and strong cultures founded on trust, accountability, and agility. They have a foundation of meaningful core values that all members of the team believe deeply in and a sense of team unity beyond what you find in many organisations. They also have a tendency to show consistent and better-than-average profitability year after year.”
Implementing organisational resilience is not a one-step process. It is an ongoing journey. Professional risk management association AIRMIC has done two seminal studies into organisational resilience – Roads to Resilience (2014), and Roads to Revolution (2018).
The first identified the following five principles that underpinned resilience. AIRMIC labelled them as the five Rs, and they are:
- Risk radar
The ability to anticipate problems and see things in a different way to help an organisation develop an early warning system and be able to seize new opportunities
- Resources and assets
Well-diversified resources and assets provide the flexibility to respond to opportunities as well as adverse or changing circumstances
- Relationships and networks
Risk information flows freely throughout the organisation up to directors to prevent the ‘risk blindness’ that affects many boards
- Rapid response
Capability that prevents an incident escalating into a crisis or disaster because people and processes are in place to quickly restore things to normal
- Review and adapt
Learn from experiences, including near misses and make the necessary changes and improvements to strategy, tactics and capabilities
The second piece of research focused on the digital transformations that companies are going through.
The five Rs remain relevant, albeit with the need to apply them in light of developments in technology.
There are then three more Rs for businesses to consider, and AIRMIC says companies must:
- Redesign processes to embrace new technologies and encourage innovation
- Retain stakeholders during digital transformations by analysing big data
- Reinvent purpose by opportunity awareness, commitment and capabilities
Exploring these principles and developing the capabilities to adhere to them takes a lot of time and effort. Senior management must commit to this way of working and secure support from top-down and bottom-up.
They must create self-aware organisations that collect and analyse information about every aspect of their operations, and then use the learning from their analysis to inform future decisions and change course where necessary.
Organisational resilience is not an afterthought. Companies must commit to it and make it a central consideration at all levels. It must run through their culture and be systemic in its influence.
It is like the corporate version of the hokey cokey – companies are either in or they are out. A quick look at the corporate giants that failed because they were not resilient enough suggests this is not a dance companies should sit out.
Benefits of organisational resilience – John Hurrell CEO, AIRMIC (2009 – 2017)
“The qualities that make companies resilient make them superior in other respects. Among many other things, they have better reputations, loyal staff and suppliers, and strong relations with their customers.
“We concluded that resilience should be at the heart of corporate strategy. In too many organisations it is still something you do in case things go wrong or a box that the compliance people have to tick. If that is the position, you are missing a great opportunity to become more competitive.”