Part Two: Building organisational resilience
Once we’ve established what resilience means to our organisation, as directors we have an obligation to help create organisational cultures and systems that support and build resilience.
Unlike risk management, which identifies and quantifies potential risks and problems, developing resilience is a more theoretical endeavour. How do you know whether your organisation and its people are genuinely resilient?
Reflecting on organisational resilience in an interview for McKinsey & Company, the CEO of Majid Al Futtaim, Alain Bejjani likened developing organisational resilience to raising children. “You’re preparing them for the real world, to be resilient and independent, without knowing if you’re doing everything right. You won’t know if they’re resilient until they’re really tested.”
Bejjani went on to emphasise, that while it’s near impossible to test for until after the fact, the pursuit of resilience truly matters – more so than efficiency and improvements that support growth and margins. “Resilience is something that business leaders must prioritise and communicate the magnitude and long-term significance to stakeholders”. (https://www.mckinsey.com/capabilities/risk-and-resilience/our-insights/how-ceo-alain-bejjani-an-emerging-markets-leader-models-resilience)
When it comes to resilience, we can’t know for sure whether we have it – only in retrospect. We can however take steps to improve our chances, to prepare our organisations for worst case scenarios and to model a resilience mindset in our leadership and communications.
The way you talk about a crisis matters
According to internationally recognised expert in the field of human resilience research, Professor of Clinical Psychology at Columbia University Dr Bonanno, perception is one of the central elements of resilience. That is, do we conceptualise an event as traumatic or, do we see it as an opportunity to learn and grow?
While his observations apply to individual responses to stress, we can use the same logic to organisations. As leaders, our stories and behaviour in the face of adversity, matter.
We need to take responsibility for our response and attitudes in challenging circumstances, knowing that this is just as important as the processes, systems, and structures we must continue to operate in challenging situations and handle unexpected change.
The way we frame the issue and the language we use will be vital in determining our organisation’s ability to rebound, refocus and survive periods of abnormal stress or pressure.
Words such as disaster, unprecedented, traumatic, and shocking merely make these things so. As leaders, it’s our responsibility to choose language that reflects the reality of the situation and to communicate without creating additional fear, drama, and uncertainty.
As Epictetus wrote in Enchiridion “People are not disturbed by things, but by the view they take of them.” While we can’t control the way people feel about certain events and the personal reactions to stress, we can help establish the organisation’s attitude and response.
Fear, pessimism, and doubt are contagious, but so too are resilience and fortitude.
It isn’t about blind optimism, nor bleak pessimism but rather a steadfastness and commitment to dealing with the present reality.
Therefore, as directors, we must be able to assess a crisis objectively, accept the reality and what that means for our organisation and then communicate this reality to our executive team, shareholders, stakeholders, and teams clearly, concisely, and conducive to action.
Focus on human resilience first
Risk identification strategies, contingency plans, operating procedures, financial stability, and systems are essential if our organisations are to cope with unexpected shocks. However, while essential, they alone don’t guarantee resilience.
Resilient organisations are built on a foundation of resilient individuals.
As complex and systemised as they may be, our organisations don’t exist in isolation from the human experience which is why a resilient board, executive team and workforce are needed to create organisational resilience.
If our people aren’t resilient, if they don’t have a strong sense of personal responsibility or if they feel uncertain about their contributions and boundaries, if they don’t feel supported by management and if they don’t have a sense of hope for the future, no amount of risk mitigation will help in a crisis.
It’s our imperative to help our executive and management teams recruit and develop resilient individuals who can manage stress, unforeseen events, dangers, disappointment, and uncertainty.
In a practical sense, we must ask ourselves how can we screen for and identify resilient executives, the management teams, and departments they build? What questions can we ask people to get a sense of their personal resilience? What behaviours and attitudes do we want to see modelled in our organisations?
Additionally, how can we ensure that our organisational culture, systems, and routines encourage, not hinder, further development of personal resilience? How can we create opportunities for people at all levels of our organisation to show initiative and improvise with limited resources to simulate a crisis?
Resilience is like a muscle and while it can’t be truly tested for, it can be trained for.
Develop organisation-wide resilience
Like many corporate management and leadership buzzwords, organisational resilience is at risk of being overused and misunderstood if we don’t make it real and get specific about what resilience means across the organisation.
To give organisational resilience tangibility, we need to ask what it means for key business units, processes, and outputs. Without addressing these individually, any weaknesses will compromise the organisation’s overall resilience.
Questions for boards to consider
- What is our organisation’s financial resilience? What assumptions are being made about revenue, expenses and growth?
- Business resilience is also about the finance function itself. To what extent is the leadership of the organisation constrained by the board, and how much ‘trust’ or ‘pressure’ does the board apply or provide to its top executives?
- Do we have effective board and executive communications?
- Do we have operational resilience – what does that look like for our supply chain, service delivery method and the technology we rely on? What alternatives are there, and have we explored these?
- Is our overarching business model resilient? What assumptions are we basing this on? What opportunities can we explore now that might help buffer against future crises?
- Do we design our systems, processes and user experiences based on the ‘happy path’? Or, are we considering edge cases and future needs in our design process? What opportunities are there to design for a wider spectrum of needs and scenarios?
- Do we have a resilient workforce? What does that look like and how do we measure it?
- What are our organisational habits and reflexes? Do these align with our vision and values?
- How do we nurture an individual’s resilience and harness it collectively for the organisation? For example, can we identify them and put them as “emerging” or “ad-hoc” leaders to inspire others?
- Do we have effective cross-department communication? Does each team and individual understand where their contributions fit within the big picture of a crisis?
- Is this how we want our people to behave in a crisis, as people will usually regress to ingrained habits in times of stress? How do we deal with the sceptics/pessimists and nay-sayers? Perhaps we could borrow from the theory of “calm amid chaos” and social influence and positive environment to bring others into the journey?
- What are the opportunities to improve “resilience literacy and skills” that can be taught by immersive learning i.e. the ‘leave no one behind’ principle? Can we engage the sceptics and pessimists to help writing the “what if” strategies, while optimists can drive the “why not” or “so what” strategies to bring two perspectives into a “balanced view” and provide a way forward that works with both sides of the thinking and views?
- Do we have cyber resilience – have we developed a sound strategy to protecting our organisations against cyber threats?
- Have we developed our communications plan to manage stakeholders and client interactions after a cyber threat?
- Are we prepared to recover our data and restore the trust of our stakeholders and clients, and return to business again? “Cyber resilience helps restore business-as-usual conditions and get organisations up and running again while mitigating financial loss.” Dr Ivano Bongiovanni, The University of Queensland (https://business.uq.edu.au/momentum/5-business-resilience-trends-2023)
While there are no guarantees when it comes to resilience, chaos is the nature of reality and as such we must build our organisations to be resilient in every sense.
Cultivating resilience calls for us as directors to embrace the opportunities to discuss what resilience means for our organisations, to question assumptions, to challenge our executive teams to hire, design and systemise with resilience as a priority, and to lead with resilience.
Most importantly, rather than hyper-focus on the microlevel details of risk management, resilience requires a focus on our organisation’s vision, long-term goals, and shared purpose.
Gary Morgan is an experienced board director, chief executive, consultant and corporate advisor with deep strategy, innovation and scaleup experience in the health tech, aged care, agtech, information security and research sectors. Gary is a Fellow of the Governance Institute of Australia, a Member of the Griffith University Industry Advisory Board for the ICT School and has co-authored papers and reports that have been published in leading entrepreneurship and medical journals and presented at international conferences.