Building Resilient Organizations: Best practices, tools and insights to thrive in ever-changing contexts

Organizational Resilience Through Culture

EMIL ANDERSSON AND TAHIROU ASSANE OUMAROU

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Academic research identifies three main streams of thought in how we understand the notion of resilience:

1.something an organization has,

2.something an organization does, and

3.a measure of disturbances that an organization can tolerate.

This research concludes: Resilience, at the organizational level, is the measurable combination of characteristics, abilities, capacities or capabilities that allows an organization to withstand known and unknown disturbances and still survive. (Ruiz-Martin, 2018, p. 21). Given this description, it is little wonder that resilience is a much-repeated phrase—and aspiration—for organizational leaders throughout the world.

The assumption commonly made is that organizational resilience is an issue of our time. The evidence for this is undoubtedly very strong. The presence of a volatile, uncertain, complex, and ambiguous (VUCA) environment fundamentally challenges the way we organize and work. Daily, we witness the speed of change resulting from intensified competition, changing sociopolitical landscapes, altered customer expectations, and technological advancements. It is daunting for organizations to develop strategies and organizational capabilities that simply work under these conditions and the current state of turmoil. Instead, organizations need to sense and respond to change a great deal more in today's business environment. Adaptation to external conditions is therefore a crucial aspect of business. This is a form of organizational sensitivity—an ability to move fast as the situation evolves and as multilayered global contexts shift. The ability to meet these conditions starts from within the organization.

While these are unprecedented times, we are not alone in experiencing turbulence and technological leaps. Companies have been responding to crises and the unexpected since their very inception. Consider what happened during World War II when companies changed their entire product lines to support the war effort. In the United States, Cadillac and Chrysler manufactured tanks, Oldsmobile made heavy caliber shells, Packard made boat engines, and IBM expanded its product line to include Browning automatic rifles. In Japan, Matsushita produced ships and planes with no experience in either product (Crainer, 2000).

The organizational ability to survive and thrive in unpredictable conditions has long been a source of research and, for those on the organizational front line, worry. Now, in the wake of COVID-19, there is an opportunity to understand more about organizational resilience. There are many cases of companies surviving the last three years against the odds and seizing the opportunity to adapt. Bill Fischer of the International Institute for Management and Development (IMD) reports on a brilliant example of adaption: the story of Gong Yi, the R&D director of a microenterprise within the Chinese white-goods company Haier (Fischer, 2021). Waiting at a vaccination center, he noted a Haier refrigerator. In a busy clinic, the door of the refrigerator was hardly ever closed; he realized this compromised the condition of the vaccines, which needed to be stored at a constant temperature. Along with two colleagues, Gong Yi set out to develop a new refrigerator with eight doors. The team then gave themselves the task of changing the entire vaccination customer experience in China's 52,000 vaccination centers; they now offer turnkey renovations of centers along with the custom-developed refrigerators.

Such stories—and there are many worldwide in the wake of the pandemic—offer hope and suggest resilience is largely a matter of turning challenges into opportunities. This opportunistic element is important, but the key realization of the last few years is that building organizational resiliency is a long and deliberate process rather than a one-time occurrence. While a crisis can make the need and value more apparent, preparatory actions must be taken, even without a crisis.

Resilience, in turn, reflects an organization's culture. The power of people and culture can often be held back by inefficient organizational hierarchies and silos, as well as differences in basic assumptions. In turn, a poor organizational culture contributes to fragmentation and anxiety among employees, all of which lower the chances of becoming resilient (Brightline Initiative, 2019).

In the case of Gong Yi, the key facilitation for his strategic insight was the fact that Haier has a culture built around microenterprises. It has a lengthy track record of actively encouraging employees to come up with ideas and develop them into stand-alone businesses. Strategic insight plus culture is a potent combination.

Our work at Brightline® suggests that resilient cultures have the following four vital elements:

Culture Through Leadership

As indicated by the much-acclaimed expert on culture and leadership, Ed Schein, culture is fundamentally anchored and dependent on the actions of the organization's leadership. To change the culture, it is crucial to have leaders who collectively and convincingly communicate the needed change and inspiringly model the new target behaviors (Brightline Initiative, 2018).

The challenge for leaders is to create conditions so that others feel capable and safe to step forward, and recognize that not everyone will want or need to lead a team. Leaders need followers to be successful and so they need to make followership a valued behavior. Rather than always looking for ways to lead, good leaders recognize when and how to take more of a back seat. Rather than always looking for ways to create more leaders, good leaders acknowledge and support the essential roles of those who follow.

Leaders should empower lower-level decision-making and translate strategy into a few clear and measurable outcomes that employees can understand, align with, and rally around. Decentralized decision-making generates timely and powerful market insights from employees on the front line who are navigating changing market conditions. If you are a good leader, you will only make choices that you are definitely better equipped to make than anybody below you. It is your job to explain the rationale behind those choices to the next level and all the way down. Then leaders need to make it clear what choices everyone else has to make and the boundaries in which to make them, says strategy expert Roger Martin (Brightline Initiative, 2019).

Organization-Wide Collaboration

Increasingly, the talk around organizations is of community, collaboration, ecosystems, and people working together. Leon Prieto and Simone Phipps have championed the idea of cooperative advantage—the notion that an organization's willingness to cooperate with others offers a distinctive competitive advantage in increasingly crowded global marketplaces. Resilience requires having the right individuals who can each do their own thing and, when needed, work well together. When the task requires it, teams can break down silos, add diversity to the creative process, and generate thinking and responsiveness far greater than the sum of individuals.

Care must be taken to craft such teams—whether from internal or external talent pools—with the right mix of capabilities and skill sets and explicitly set the conditions that enable people to work collectively. Successful leaders recognize that establishing effective collaboration takes time and deliberate coordination efforts. They also recognize the importance of incentivizing and forging processes that encourage and reward collaboration across organizational functions. Regardless of core structure, cross-functional teams are often viewed as the primary means in successful, organization-wide initiatives. Enhancing organization-wide collaboration that is focused on team performance rather than the individual can create a more flexible and responsive culture. It contributes to the ambidextrous strength of the organization, ultimately making it more resistant to changes in the business environment.

The bigger picture in collaboration is the changing nature of competition. Ron Adner, a professor at the Tuck School of Business at Dartmouth College and author of The Wide Lens and Winning the Right Game, argues that competitive rivalry is shifting from well-defined industries to broader ecosystems (Business Ecosystem Alliance, 2022). He explains: COVID is a great example of an ecosystem disruption. It is something that in the old world, it's a virus, it's supposed to be solved within the realm of healthcare. Its impact broke through all these other boundaries. COVID is something that impacts international relations, trade, every function of government was impacted by COVID, and so the response to something like that can't just be within healthcare. The same is true of these other problems.

If collaboration crosses boundaries at strategic and competitive levels, then the willingness to embrace the perspectives and practices of others must begin within the organization. In other words, to be resilient, organizations must understand and practice collaboration at all levels. Consider how DBS Bank (DBS) has transformed itself partly through building ecosystems with partners. DBS realized that banking could no longer stand alone in a connected world (Speculand, 2021). As Robin Speculand describes, a key component of its ‘Making Banking Joyful’ strategy was starting to build ecosystems with partners. Before DBS's digital transformation, its business model was based on a network of branches, data centers, and customers reached through multiple products and services. Now, it focuses its business model on building ecosystems because banking can no longer stand alone in a connected world.

An extra challenge here is that collaboration is also an area that requires monitoring and management. Columbia Business School's Rita McGrath points out that companies, such as Samsung and Apple, compete with each other over patents and in the mobile phone market, yet work together elsewhere, with Samsung manufacturing many of Apple's products. We're seeing much more the rise of what some people have called coopetition, where you compete in some markets and cooperate in others. You can't just be thinking about yourself and your own value chain, you've got to be thinking horizontally as well. Who else is in your arena? Who else is helping you add value to the customers? says McGrath (Thinkers50, 2021).

Mindset: Fearless and Humble

To build organizational resilience through culture, leaders need to instill the right mindset. Much of this relates to acceptance, trust, and recognition. Companies frequently tell employees that collaboration is important, and then they force rank or assess them solely on the basis of their individual contributions, says Harvard Business School's Amy Edmondson, author of The Fearless Organization. Employee evaluation needs to include rewards for cross-functional work so that people aren't faced with situations such as holding back ideas because they won't receive any credit for them.

To fully empower employees, leaders need to create a culture that embraces psychological safety and the acceptance of making mistakes. As pointed out by Edmondson, leaders need to value and model humility. This requires empathy and the ability to understand how difficult change can be for many people. Leaders also need to engage by coaching as well as embracing the different behaviors of employees.

One organization that successfully embraces and empowers employees is the global energy company Enel. Enel is now undergoing a deep transformation of its legacy model while driving the energy transition toward electrification and a sustainable future for all. Enel's Chief People & Organization Officer, Guido Stratta, has started a reinvention of the firm's management style and culture toward what he defines as kind leadership: moving from a bureaucratic command and control model to an empowering, motivating, and purposeful one based on mutual trust, creating the environment for people's passions and talents to bloom (Cervini & Rosani, 2022).

Culture for Strategy

Strategy needs culture. Not only must culture support strategy, it must move in lockstep with a dynamic, evolving strategy where the behavioral recipe for winning is not fixed or static. While culture can neither be built directly nor accomplished through a blueprint or a checklist, it cannot be left to chance.

It requires understanding the intricacy of culture as a dynamic and living organism made from the collective tension between individuals’ behaviors and responses. Navigating that tension in an increasingly complex and changing environment depends on a shared sense of purpose and legitimate trust among employees. Coupling culture with strategy is a complicated and never-ending endeavor in shepherding influences, assessing outcomes, and adjusting the focus to building behavioral advantages that deliver winning strategies.

It is clear that our notion of what strategy is and how it impacts culture and resilience needs to change in many organizations. Roger Martin puts it this way:

Strategy is about imagining possibilities and then picking the one for which you have the strongest logic, not the strongest data. If we're teaching everybody in order to make business decisions, you must analyze the past then they will not invent the future. What's changed more than anything else is the domination of analysis in business decision making and that is the biggest threat to innovation and the suppressor of innovation in the modern business world. You've got to imagine possibility. Imagine a future that does not now exist. And if you are an excellent manager, you will figure out how to make that happen. We have a chance to do that. We've always had a chance to do that, but it's been suppressed over the last several decades. (Thinkers50, 2021)

And as an organization continues to sense trends and measure and monitor performance, there could be a need to strategize and make deliberate decisions to completely reimagine its business or to remain dormant while the destructive winds of a crisis blow and then for the organization to reemerge stronger and ready than ever to tackle future challenges.

Leadership, collaboration, mindset, and the ability to couple culture with strategy constitute a fertile ground for planting the seeds of resilient organizations. This has to be intentional and not left to chance. The time to begin is now.

References

Brightline Initiative. (2018). Brightline people manifesto. https://www.brightline.org/people-manifesto/

Brightline Initiative. (2019). Testing organizational boundaries to improve strategy execution. https://www.brightline.org/resources/testing-organizational-boundaries-to-improve-strategy-execution/

Business Ecosystem Alliance (2022). Winning the right game. Webinar with Ron Adner, 23 March 2022. https://business-ecosystem-alliance.org/2022/03/25/winning-the-right-game/

Cervini, P., & Rosani, G. (2022). Radical reinvention. Dialogue. https://dialoguereview.com/radical-reinvention/

Crainer, S. (2000). The management century. Jossey-Bass.

Fischer, B. (2021). Relationships > assets: Haier's ecosystem revolution. The Power of Ecosystems. Thinkers50.

Speculand, R. (2021). World's best bank: A strategic guide to digital transformation. Bridges Business Consultancy.

Ruiz-Martin, C., López-Paredes, A., & Wainer, G. (2018). What we know and do not know about organizational resilience. International Journal of Production Management and Engineering, 6(1), 11–28.

Thinkers50. (2021). The purpose of strategy. Online event.

About the Authors

Emil Andersson, MSc, is a project manager at Brightline®, a Project Management Institute (PMI) initiative. He is a consultant and practitioner in the fields of business strategy, transformation, and project management. Emil has been involved in over 40 global strategic projects and has a strong interest in disruptive technologies and how organizations create and deliver value.

Tahirou Assane Oumarou, MASc, P.Eng., PMP, is director of Brightline®, a Project Management Institute (PMI) initiative. He has over 20 years of experience in leadership roles, civil engineering, strategy, transformation, and project management. Previously, he worked as the deputy director of infrastructure and project management group in the United Nations Office for Project Services supporting the successful implementation of peace-building, humanitarian, and development projects around the world. He was also a senior project manager with the Ministry of Transportation in Ontario, Canada.

How to Become Comfortable With Discomfort

SCOTT D. ANTHONY

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To kick off discussions about navigating disruptive change, I asked group participants to pick which of nine images they associate with the current business environment. In the first half of 2022, about 1,000 people did the exercise. More than 50% of them picked images that had connotations of turbulence or struggle, namely a roller coaster (22%), a boat on stormy seas (17%), and an intense game of tug-of-war (14%). In contrast, only 17% of people picked the most optimistic images: a rocket ship taking off (9%), a calming image of rocks in water (4%), or a sailboat heading off into smooth water as the sun sets (3%). The discussion that typically follows surfaces collective angst about challenges, tensions, struggles, hardships, fatigue, and more.

While some might hold out hope that things will get back to normal, in late 2021 The Economist demonstrated that memories of quiet, calm pre-pandemic life are false ones. It is time to face the world's predictable unpredictability, the article noted (Economist, 2021). The pattern for the rest of the 2020s is not the familiar routine of the pre-COVID years, but the turmoil and bewilderment of the pandemic era. The new normal is already here. We've been dealing with persistent uncertainty for decades and we'll be dealing with it forever more. The only constant, indeed, is change.

How do you build the organizational resilience to thrive in this era of predictable unpredictability? It comes down to another seemingly paradoxical phrase: being comfortable with discomfort. The text that follows describes practical pointers derived from the work my colleagues and I at Innosight have done over the past two decades, helping organizations around the world navigate disruptive change.

Embrace Emergent Strategy

In 1985, Henry Mintzberg and James Waters published a paper that changed the field of strategy titled Of Strategies Deliberate and Emergent. The paper contrasted two approaches to strategy (Mintzberg & Waters, 1985). Deliberate strategies involve planning and then acting. You thoroughly analyze strategic options by doing thorough research, talking to internal and external experts, and building sophisticated financial models. Once you identify the optimal strategy, you develop and carefully execute a deliberate plan to achieve your strategic ambitions.

A deliberate approach is rational and reasonable in stable conditions when you are competing against known competitors in a defined and measurable market. However, the approach is inappropriate in more fluid, uncertain circumstances. In these circumstances, the only certainty is that your first strategy will be wrong in some material way. The trick, then, is to learn how you are wrong as quickly and efficiently as possible.

Rather than planning and acting, emergent strategies are about testing and learning. Instead of gathering and analyzing data in search of the optimal option, an emergent strategy involves the design and execution of market-facing experiments. These experiments generate learning that, over time, allows the right strategy to emerge from the marketplace.

Emergent strategy is the essence of venture capital. While most entrepreneurs start with some kind of business plan, every venture capitalist knows that no business plan survives the first contact with reality. So, venture capitalists stage investment. Ventures that generate promising learning that suggest further potential get more funding; those that don't, don't.

An historical example helps to show emergent strategy in action. Back at