Today I am reviewing one of the earliest, and certainly one of the more influential, articles describing the concept of resilience as it applies to organisations. Despite being almost 8 years old, this paper still offers some interesting insights into the concept of resilience for the contemporary reader.
“The Quest for Resilience” by Gary Hamel and Liisa Valikangas, Harvard Business Review, September 2003.
I was reminded of not having discussed this paper when I started to read Valikangas’ book on resilience.
Wikipedia describes a quest as a significance-laden journey – which certainly is another very applicable metaphor.
There is, of course, much more to talk about than just the imagery inspired by the title.
Hamel and Valikangas start by introducing the “resilience gap” – which is created because the world is becoming more turbulent faster than organisations are becoming resilient.
They are talking about “Strategic Resilience”. The willingness and ability to to reinvent your business model before you are forced, by circumstances, to do it.
Resilience at this level is seen as a form of innovation – perhaps the highest form of innovation. The three essential forms of innovation they describe are;
- Revolution – examples offered include eBay and Dell
- This is described as ‘creative destruction’
- Here you innovate with respect to industry rules
- Described as creative reconstruction
- Here you you are innovating with respect to your traditional business model
- “refers to a capacity for continuous reconstruction”
- Requires innovation with respect to those organizational values, processes, and behaviors that systemically favor perpetuation over innovation.”
- This places it firmly in the arena of culture.
The authors describe 4 challenges that we will encounter while pursuing this quest. Overcoming these challenges will requires courage, resourcefulness and a willingness to embrace new ideas.
- The Cognitive Challenge
- to overcome this challenge the company must become “entirely free of denial, nostalgia, and arrogance.”
- We can develop our ability to cope with this challenge by exposing ourselves to people & places where change happens first, filtering out the filterers (those who exist to protect senior Execs from the unconventional and inconvenient news) and by facing up to the fact that all strategies actually decay over time.
- “Every business is successful until it’s not” – we need to overcome the denial and arrogance that lead to “not” being a surprise!
- The Strategic Challenge
- where we must develop “alternatives as well as awareness”
- in addressing this challenge, “variety matters” – we must learn the lessons of life and nature that genetic and biological diversity are important to ensure survival.
- there is a warning not to promote “innovation ghettos” where new ideas try to grow while isolated from the “resources, competencies, and customers of the main business”
- this challenge also provides a warning about the risk of conformance and the values we inherited from the industrial age – more on this in the later challenges.
- The Political Challenge
- which requires that capital and talent is liberated in order to support a portfolio of breakout experiments
- the competition for these resources within the organisation is normally “an intensely political process”.
- this challenge must also support the Strategic Challenge – and ensure these liberated resources are available in the appropriate mix for Explore and Exploit options (more on this aspect in the next post)
“The average company, though, operates more like a socialist state than an unfettered market. A hierarchy may be an effective mechanism for applying resources, but it is an imperfect device for allocating resources.”
- The Ideological Challenge
- where we are faced with the ultimate challenge – to “question the doctrine of optimization” and the rest of the dogma of Scientific Management.
- “optimization is sufficient only as long as there’s no fundamental change in what has to be optimized.”
- More importantly, this has at its root a cultural problem – and the need to support the previous two challenges
“Resilience will become something like an autonomic process only when companies dedicate as much energy to laying the groundwork for perpetual renewal as they have to building the foundations for operational efficiency.”
- Read my post about Cultural Theory and the competition and lack of understanding/communications between the different world views.
“just maybe, all those accountants and engineers, never great fans of paradox, can learn to love the heretics and the dreamers.”
Despite the age, this paper still offers some useful insights for our current project of resilience.
I, like others, have argued that resilience only assumes meaning in context. Then it follows that one area of context is internal to the organisation.
- Resilience will mean different things in the Strategic, Tactical and Operational contexts.
- “a company can be operationally efficient and strategically inefficient” say Hamel and Valikangas.
- Operational Resilience is described in the article as a short-term response, or a response to short-term upheaval.
- The arena of Operational Resilience is being explicitly developed by CERT (amongst others), and I will discuss their model in more detail in a subsequent post.
- It also needs to take account of the concepts around Operational Risk
- I would warn about the risk that we simply view this as the domain of BCM – which on its own will never really address the wider domain of resilience.
- But clearly we can address Strategic and Operational resilience in different ways
At both levels the need to embrace paradox, and uncertainty, is fundamental.
- Even at the Operational Level we suffer from the dogma of Taylorism and the Industrial Age
- We put too high a value on formal plans and procedures, and not enough on the development of Adaptive Capacity
- “The quest for resilience can’t start with an inventory of best practices. Today’s best practices are manifestly inadequate. Instead, it must begin with an aspiration …”
- Encouraging variety can also force us to confront paradox.
- Our resilience could be enhanced at times my considering a variety of recovery options, and perhaps investing a small amount into exploring several of these – rather than attempting to optimise and and execute on a single recovery strategy.
- Again these issues highlight the cultural dimensions of the problem, and that it needs to be addressed in part using cultural responses.
Finally, “To be resilient, businesses must minimize their propensity to overfund legacy strategies.”
Have you taken a critical look at your Risk and BC Management Programs lately?
They are probably also based on the same legacy thinking that Hamel and Valikangas talk about.
Perhaps the reason so many find the concept of resilience hard to understand is that they are approaching it from perspectives that reduce resilience.
A resilient Risk/BC Program is one that has the capability to change, before circumstances force it too.
When (not if) will your recovery strategy become no longer viable? Will you be surprised?