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The resilient business
High impact events and economic shocks will continue to happen. To survive and thrive in the future, the more resilient organisation needs to rethink what 'being resilient' really means. Resilience Reimagined seeks to help organisations understand what being resilient means to them and to show the way to building stronger resilience for the benefit of all.
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- The time to strengthen resilience is now
- Becoming a more resilient organisation
- Thriving before, during and after adversity
- The three pillars of resilience
- The resilience dividend
The time to strengthen resilience is now
The financial crisis, the UK’s exit from the EU and now COVID-19. We never imagined these events could happen, but they have. While the impact of such events are felt for some time, they also show us we can move rapidly, find new ways of doing things, build new networks and keep services going.
But relying on 'we'll find a way through' is not enough. Nor is it sufficient to rest on the achievements made so far, as expectations have been set for the future.
The impact of COVID-19 reveals where you have resilience and where there are vulnerabilities; now is the time to consider what changes you should make to enhance the resilience of your organisation and its new ways of operating.
Becoming a more resilient organisation
The more resilient organisation adopts a mind-set of ‘What if? What next?’ Not just the next risk, but the next opportunity.
It specifically addresses the three pillars of resilience – finance, operations and reputation – and by doing so, the more resilient organisation is better placed to deal with future uncertainties. Furthermore, by instituting resilience indicators, it is able to measure and maintain resilience for the long-term, improving transparency and governance over what keeps it resilient.
The more resilient organisation has a broad view of resilience, understanding what it means for them and what it means for their customers, suppliers, employees and wider society. It finds the right balance between ‘defensive’, stopping bad things from happening, and ‘progressive’, making good things happen. It has foresight, hindsight, insight and oversighti.
Thriving before, during and after adversity
So, what does resilience really mean? There are many definitions. A simple one is: resilience is thriving before, during and after adversity.
To thrive during adversity requires an organisation to have resilience by design. This is more than having tried and tested plans in place. It requires diversity, just enough redundancy and the necessary resourcefulness built-in. These are fundamental principles for resilience. The more resilient organisation uses these principles to create the options and make the right strategic choices to be able to respond and adapt. These organisations have the mind-set and the capabilities to stay ahead of the next obstacle and in step with the next opportunity.
Resilient organisations have a clear purpose on which difficult choices and decisions can be anchored, well-honed crisis leadership skills at all levels of the organisation and the organisational capabilities to coordinate and communicate quickly and effectively. These capabilities must be developed, trained and practiced.
Thriving before and after adversity requires the organisation to adapt rapidly to changing markets, new threats and disruptive competition, and to learn lessons. The more resilient organisation does not just respond positively to change – it seeks to be part of it, influence it, and has the confidence to take risks and learn from experience. It ensures resilience through change.
Therefore, a more resilient organisation is ‘resilient by design’, safeguards ‘resilience through change’ and demonstrates ‘resilience in adversity’.
The three pillars of resilience
Of course, resilience must achieve practical outcomes, reflecting the three core pillars of financial resilienceii, operational resilienceiii and reputational resilienceiv. This is because, when a shock or disruption happens, it will typically affect one of these pillars first, but their combined strength will ultimately help them thrive.
To achieve resilience for the long term, and create value from it, the more resilient organisation constantly monitors their resilience and stress tests it under reasonable worse case scenarios. Learning from the financial crisis, it is possible to create financial resilience indicators, combined with stress testing to help achieve greater financial resilience. Resilience indicators provide the necessary transparency to win the confidence of regulators and investors seeking enhanced resilience and help Boards make informed decisions.
Similar practical indicators can be designed for operational resilience and reputational resilience, for example, we must have at least: 25-days buffer stock, 15% spare operating capacity, AA grade independent ESG rating and 75% employee satisfaction.
The resilience dividend
Yes, resilience costs, but a lack of resilience costs a lot more. Research indicates that on average, investing USD 1 in resilience early helps avoid on average USD 5 in future losses – a very clear case for investing up front rather than spending money only after an event to deal with incurred losses and finance repair and recoveryv. The challenge for organisations is knowing how much to invest and where; being able to balance ‘just-in-time’ efficiency with ‘just-in-case’ redundancy to create ‘just enough’ resilience?
There will be vulnerabilities, trade-offs and priorities to consider. Absolute resilience is not achievable. But there is a ‘double dividend’ from investments in resilience. The first is the avoidance of tangible and intangible damage during adversity. The second arises before and after adversity including greater service reliability, higher levels of financial stability, enhanced ability to take risks, and better connectedness with all stakeholders.
Building stronger resilience
Resilience must be achieved by design, safeguarded through change and demonstrated in adversity.
By specifically addressing the three pillars of resilience – finance, operations and reputation - you will make your organisation more resilient to future uncertainties and shocks.
Establishing resilience indicators will enable you to measure and maintain resilience for the long-term, improving transparency and governance over what keeps you resilient.
This is the key to your enduring success.
[i] Denyer, D. (2017). Organizational Resilience: A summary of academic evidence, business insights and new thinking. BSI and Cranfield School of Management.
[ii] Financial resilience is the ability of an organisation to withstand events that impact its liquidity, income or assets. These events may include routine or severe but plausible shocks and stresses.
[iii] Operational resilience: refers to the way an organisation uses its non-financial resources to withstand and absorb the impacts caused by shocks and stresses affecting its demand or supply, its people, technology or facilities.
[iv] Reputational resilience: is about the organisation being responsive to external perceptions; scrutinising self-limiting behaviours, building brand capital and reserves, and maintaining a foundation of trust and dependability.
[v] Keeping an eye on natural hazards - Lessons learned to become more resilient, Zurich, June 2020