July 20, 2020 LCM

Why Resilience is more important now?

In the midst of the Covid-19 crisis, we have become painfully aware of the fragility of supply chains, health care, and other critical systems. Many leaders have announced the intention to build back their businesses more resiliently, but very few companies are able to explicitly design for, measure, and manage resilience.

Managing for resilience requires more than just grafting new ideas or tools onto today’s approaches. It requires a fundamentally different mental model of business one that embraces complexity, uncertainty, interdependence, systems thinking, and a multi-timescale perspective.

Of course, many companies already undertake some form of risk management but mostly to understand and minimize exposure to specific, known risks. Resilience must deal also with unidentified risks, and it must consider the adaptations and transformations a company must make to absorb environmental stress and even turn it to advantage.

How to Become a More Resilient Company

Crises are opportunities for change. With Covid-19, companies have a unique opportunity and necessity to revisit their business models to build greater systemic resilience, starting with the following six actions.

  • Seek advantage in adversity. Don’t merely endeavor to mitigate risk or damage or restore what was; rather, aim to create advantage in adversity by effectively adjusting to new realities.
  • Look forward. In the short run, a crisis many appear tactical and operational, but on longer timescales, new needs and the incapacitation of competitors create opportunities. Crises can also be the best pretext for accelerating long-term transformational change. One of the key roles for leaders is therefore to shift an organization’s time horizons outward.
  • Take a collaborative, systems view. In stable times, business can be thought of as performance maximization with a given business model in a given context. Resilience, by contrast, concerns how the relationships between a business’s components or between a business and its context change under stress.
  • Measure beyond performance. The health of a business is not captured only by measures of value extracted, which tend to be backward-looking. Measuring flexibility, adaptation, and other components of resilience is critical to building a sustainable business. This can be done quite simply by looking at either benefits or capabilities.

Resilience represents not just an opportunity to mitigate risk but also an opportunity for competitive advantage for enterprises who choose to focus on it. In today’s business world, transient high performance is commonplace; it is sustained performance by resilient companies that stands apart.


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