A biological approach to organisational resilience
By a lapsed microbiologist“Organisational resilience is only achievable through adaptability” Too many leaders start believing their own press and thinking that they are able to predict the future. Whilst it is absolutely true that the best indicators of the future are the events of the past. It is also true that the past is not an absolute indicator of future events because our view of the past is limited by our record of it. Some events are so rare that they are not recorded, yet they may have extreme consequences if they occur. So if we cannot predict the future with certainty, how is longevity possible for organisations? The answer is resilience, and at the core of resilience is adaptability.
The lesson from biology is that adaptation to the environment that has allowed organisms to survive and thrive. However large and seemingly terrible an organism is, if it is not adapted to its environment it will become extinct. The vast majority of species that have ever existed are not around today.
The same is true for organisations.
The vast majority of organisations that have ever existed are not around today
In simple terms the story is the same for each failed organisation. They were unable to adapt to the business environment before they ran out of resources. Those that survive a crisis are able to do so for two reasons
1 They have the resources, capital personnel leadership etc to manage themselves out of a crisis once it hits emerging weaker but alive; or
2 They are prepared to adapt if a crisis arises and have developed a broad set of principles which will work with minimal change in most eventualities. These companies still suffer from the crisis at first, but emerge stronger in the longer term.
By my reckoning, 99% of companies that manage to survive a crisis are in the first category. In most cases, those companies are then consigned to a slow death (My Space anyone?). Sometimes however, the first crisis weakens them, but they then become more resilient and bounce back to ride future crises.
This is an era of organisational accelerated extinction
What is more, the ‘extinction rate’ for companies is becoming faster as society and technology changes more rapidly.
I think we all understand that small businesses come and go, but this lesson is true for large organisations as well. Of the top 25 companies on the US Fortune 500 in 1961, only six remained there in 2011.
Research carried out on fortune 500 companies in the USA shows that the average rate of turnover of large organisations is accelerating. The turnover has reduced from around 35 years in 1965 to around 15 years in 1995.
If you think about how much the world has changed since 1995 when Facebook barely existed and Google just did search, you might agree with the idea that organisations that want to stick around need to adapt with the changing environment.
So give me the recipe!
Bad news, there isn’t a hard recipe for a resilient organisation, just like there isn’t one for a successful company, but they all seem to share some common attributes such as agility and the ability to recover quickly from an event and an awareness of their changing environment and the willingness to evolve with it amongst others. This is difficult for a number of reasons.
1 increasing connectedness – interdependencies leading to increasing brittleness of society/organisations – just in time process management – risks, in rare instances, may become highly correlated even if they have shown independence in the past
2 increasing speed of communication forces speedier decision making
3 increasing complexity compounds the effect of any variability in data and therefore the uncertainty for decision makers
4 biology – Organisations operate with an optimism bias. Almost all humans are more optimistic about their future than statistically possible. We plan for a future which is better than it is and do not recognise the chances of outlier events correct. Additionally, we plan using (somewhat biased) rational thought, but respond to crises with our emotions.
5 Organisational Inertia. The willingness to change organisational culture to adapt to a change in the environment.
Something about organisational culture and resilience
When discussing culture, resilience is more an organisational strategic management strategy, and less a security protocol. In this sense, Resilience is the ‘why’ to Change Management’s ‘how’. But both are focused on organisational culture.
Organisations, particularly large organisations, all have their own way of doing things. Organisational culture is built up because individuals within the organisation find reward in undertaking tasks in a certain way. This is the same whether we are talking about security culture or indeed financial practice. Organisational culture goes bad when the reward structure in the organisation encourages people to do things that are immoral or illegal.
Larger organisations have more inertia and so take longer to move from good to bad culture and vice versa. Generally most organisations that are larger than about 150 staff have a mix of cultures.
The more successful an organisation has been in the past, the more difficult (inertia) it will be to make change and so it becomes susceptible to abrupt failure. Miller coined the term ‘Icarus Paradox‘ to describe the effect and wrote a book by the same name. Icarus was the fictional Greek character who with his son made wings made from feathers and wax, but died when he flew too close to the sun and the wax melted, causing the feathers to fall out of the wings.
Maybe the Kodak company is the best example of this. An organisation that had been very successful for more than 100 years (1880 -2007), Kodak failed to make the transition to digital and to transition from film as fast as its competitors. The irony is that it was Kodak researchers who in the 1970s invented the first digital camera thus sewing the seeds for the company’s doom forty years later.
Where does my organisation start on the path
So what is the answer, how do we make sure that our organisations adapt faster than the environment that is changing more rapidly every time we look around? The only way is to begin to adapt to the changing environment before crises arise. This requires making decisions with less than 100% certainty and taking risk. The alternative is to attempt to change after a crisis arises, which historically carries higher risk for organisations.
It is a combination of many things –
- developing an organisational culture which recognises these attributes which is supported and facilitated from the top of the organisation;
- partnering with other organisations to increase their knowledge and reach when an event comes; and
- Lastly engaging in the debate and learning about best practices
Are there two sorts of resilience?
But is resilience just one set of behaviours or a number. When we think of resilient organisations and communities, our minds tend to go to the brave community / people / organisation that rose up after a high consequence event and overcame adversity. These people and organisations persist in the face of natural and manmade threats. Numerous examples include New York after the September 2001 events; Brisbane after the floods in 2011; and the Asian Tsunami in 2004.
However there is another set of actions, which are more difficult in many ways to achieve. This is the capacity to mitigate the high consequence, low likelihood events or the creeping disaster before a crisis is experienced. The US behaved admirably in responding to the 9/11 terrorist disaster after it had occurred, but as the 9/11 Commission Report notes, terrorists had attempted on numerous occasions to bring down the World Trade Center and come quite close to succeeding.
Life becomes resilient in that it is replicated wildly so that many copies exist, so that if some number fail, life can continue. Individual creatures carry DNA, which is all that needs to be replicated. Those creatures compete with each other and the environment to become more and more efficient. An individual creature may or may not be resilient, but the DNA is almost immortal.
How an organisation achieves this is the challenge that every management team needs to address if they want to achieve longevity.
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