The Key to Organizational Resilience and Agility in Crisis, Disaster, and Breakdown

  • 25 Sep 2018

The ability of an organization to overcome a crisis is fast becoming an important facet, especially in the modern landscape filled with uncertainty. Termed as organizational resilience, the ability and agility to overcome a crisis or disaster are one of the key strategic capabilities organizations everywhere must map out to succeed in the today’s business, social, and political landscapes.

However, most managers fail to accord the necessary resources to ensure their organizations have the capacity to overcome disasters and disruptive shocks. The managers simply fail to acknowledge that their organizations are susceptible to disruptive shocks and catastrophes. Instead, they choose to trust in the fact that their strategic plans and organization mission and vision will carry them through such events.

However, the last decade shows that even the best-laid plans of mice and men often go awry. It doesn’t matter how well an organization attempts to manage a project, engage in market acquisition, or works to maximize the output of its labor resource. All these plans share the commonality of being susceptible to outside forces that more often than not, sink them to the ocean floor.

Take for example the financial crisis of 2008. Before the crisis, almost every organization projected an even better performance in the foreseeable future. Most organizations committed resources to expansions and consequently, better performance. When the global economic crisis struck, all these plans were shattered. The construction and housing industries came to a grinding halt. The banking sector all but imploded, the health sector was not spared. Every organization, irrespective of its industry, felt the shock of the financial industry collapse. Most of these organizations did not have mechanisms to help them overcome a disaster or a breakdown. In prosperous economic times, organizations were blinded to the fact that they were not infallible.

In hindsight, if organizations across the board had instituted plans to ensure resiliency and agility to overcome disasters, chances are that the financial crisis of 2008 would have had fewer casualties. Given the sheer importance of putting into place a strategic plan to help an organization plan, cope, and even exploit disasters, what are the main ingredients of organizational resilience plans? What are the key elements that make such strategic plans effective? Here is a brief discussion of the important ingredients of resiliency planning every organization must adhere to.

Developing a Resilient Organizational Culture

People have psychological biases that blind them from the probability of uncertain and rare events occurring. Throughout history, people have been ignorant of the fact that rare events happen, and the probability of such events happening is higher than we might think. Nassim Nicholas Taleb, a former Wall Street trader, gives a considerable discourse on the likeliness of an extremely negative event occurring. He termed the event as a black swan event. A black swan is deemed impossible to predict, and therefore the observer falsely assumes the likelihood of the event occurring to be almost impossible.

History, however, shows us that black swan events are highly likely to occur. They are so likely that planning for them is almost always the best means of coping with them. The 1997 Asian financial crisis, the Dotcom crash of 2000 and the 9/11 attacks are all examples of historical black swan events that had wide and negative impacts across numerous organizations.

Most recently, the U.S President, Donald Trump imposed a steel and aluminum tariff that had major negative repercussions for companies that exported steel and aluminum to the United States. The unforeseen and unexpected event, a black swan, had massive negative financial implications for steel and aluminum exporters to the United States.

What do black swan events have to do with implementing an effective organizational resilience plan, you may ask? Well, if managers in an organization realize the high probability of black swan events, they would be better placed to implement plans to counter the unforeseen crisis, disasters, or breakdowns their organization may face down the line. With such plans, it would have been feasible for steel and aluminum manufacturers importing products to the United States to mitigate the new tariffs Trump announced recently.

For an organization to develop such plans, it is imperative for managers in an organization to build a resilient organization culture. Humans can be taught to develop a resilient personality. For instance, following the horrors of the Gulf War, Kuwait was able to build itself as a leading economic power through sheer human resilience and determination.

By the same token, if managers work on making introducing a culture of organizational resiliency, the organization is better placed to deal with unforeseen negative events in the future brought about by a crisis, disaster, or a breakdown. When leaders in an organization show a commitment to optimism, decisiveness, integrity, and open communication, they can transform the organization to one that is resilient enough to overcome disasters and even make opportunities from such disasters. With such a culture, the organization will be able to meet its objectives and goals, even when faced with insurmountable challenges brought about by black swan events.  

Networks and Relationships

Another key ingredient in developing a resilient organization capable of coping with all manners of breakdowns is improving the network of relationships instead of solely focusing on transactions and revenue, which are seen to be the core of most organizations.

Research continuously shows that one of the keys—albeit interdependent attributes—of organizational resilience is networks and relationships. Networks and relationships in this context refer to the total sum of internal and external relationships developed for the sole purpose of helping an organization in times of need.

With the right networks and relationship, an organization can find an invaluable resource that may help it overcome a crisis, develop plans and redundant systems that ensure the organization can take advantage of any arising opportunity from a breakdown, and even enjoy the benefit of having a friend in times of need.

As much as a person needs family, school, community, and work colleagues, just to name a few, to succeed in life, an organization needs a network of partners to succeed. The ecological environment of diverse social interactions offers support in times of change or crisis. These interactions can create opportunities for development through subsistence and symbiotic existence. The social structure additionally helps an organization develop and maintain changing perspectives of the landscape that is important in managing crisis, disasters, and breakdowns. Networks and relationships, in a nutshell, give the organization the agility it requires to navigate the murky waters of an uncertain future.

Going back to the example of steel and aluminum tariffs introduced under the Trump administration, steel importers to the United States would have dealt with the consequences of the decision better if they had strong networks and relationships. They would have been able to counter the decision if they presented a unified front to counter the tariffs, with the possibility of being able to negotiate on an even field with the US government.

Being Change-Ready

The last key ingredient for ensuring an organization has the resilience to deal with a crisis or disaster is being changed already. Being ready for change is, at face value, a real means of mitigating changes in the turmoil-filled landscape that most organizations face today.

With proper planning that sets an organization on a path where it is able to accept and integrate emerging trends and events into its processes, the organization is better able to deal with a crisis. At Edu Birdie, we have worked on numerous case studies demonstrative of the fact that organizational resiliency largely depends on the ability of an organization to adapt to change. Such an ability helps the organization to gain the versatility and agility to avoid breakdowns or make the most of catastrophes.

Therefore, the leadership at an organization need to allocate the necessary resources and organizational power to ensure the organization is ready for a change. These resources can go towards elements such as stress testing an organization’s strategic plans. For instance, an organization can engage staff in simulations that test their responses to unforeseen adverse effects in an attempt to validate or disprove a strategic plan. Such tests are important since they not only give insight into the feasibility of its future plans but also it allows the organization to evaluate how such plans hold up in times of catastrophes.

However, it is worth noting that leaders should go overboard in ensuring the organization is change-ready. Extending vast resources in preparation for change has its disadvantages. For instance, it can result in the organization to enforce change during times when such a change is unnecessary. Like a bull in a china shop, such extreme efforts often have disastrous effects.

Therefore, make sure you balance your commitment to change with the current trend of the economic landscape. Striking a balance not only allows you to satisfy the market and meet organizational objectives, but it also helps you ensure you have the necessary resources to counter and exploit a future crisis. 

 

Author’s Bio:

Jeremy Raynolds is a freelance writer and career consultant based in Florida and Taiwan. He is a big believer in Louis Pasteur's motto 'chance favors the prepared.' He is a regular contributor at EduBirdie where he helps students actualize their academic writing dreams.

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