Part One – Defining organisational resilience
A Google global search for the term ‘resilience’ returns results where you’ll see a clear trend of increased monthly search volumes steadily building since 2004, peaking at the start of the Covid pandemic in March 2020. And then peaking again worldwide in March 2022 and October 2022.
Yet, despite how much we’re Googling it, discussing it in boardrooms, seeking more of it and using the term ‘resilience’ in company public declarations of policy and aims, and position descriptions, resilience remains an elusive concept that most organisations struggle to define and quantify.
If we’re to help develop organisational resilience, we first need to be able to define what resilience means specifically for our organisations before taking proactive steps to cultivate organisational resilience both within our boardrooms and our organisations more broadly.
In this two-part article, we will explore organisational resilience through a governance lens; defining the term for our unique businesses, breaking down what resilience looks like in practice and steps we can take as directors to help cultivate organisational resilience.
What is Organisational Resilience?
“Organisational Resilience refers to a business’s ability to adapt and evolve as the global market is evolving, to respond to short term shocks – be they natural disasters or significant changes in market dynamics – and to shape itself to respond to long term challenges”. (https://www.organisationalresilience.gov.au)
The formal definition of resilience implies bouncing back to an original state after the stress, shock or change or having the ability to adjust to change and evolve, a definition we can reasonably apply to the concept of organisational resilience.
The February 2022 floods in Lismore and across the Northern Rivers region in Australia resulted in the physical and mental displacement for residents and business owners. There has been some bounce-back across the Northern Rivers however, many businesses and livelihoods have needed to rebuild and are only now starting to regain confidence in reopening businesses. (https://www.smh.com.au/interactive/2022/lismore-flooding/)
The Covid pandemic disrupted sectors as borders closed and work from home became the norm. The travel industry saw record government support provided across the world. Here in Australia, Qantas received more than $855 million in JobKeeper payments from the Australian Government during the pandemic.
However, in the post-Covid period, organisational resilience has been reframed thanks to companies that leveraged the pandemic to grow and innovate despite, or perhaps because of the crisis.
Companies in industries like at-home fitness (for brands such as Peloton, and Tonal), meal and meal-prep delivery services (Hello Fresh and Uber Eats), online education platforms (Skillshare), digital health platforms (Nurx) as well as more unexpected industries such as toys & board games (Hasbro) saw record growth during the peak of Covid.
More than just surviving, these organisations thrived, so the ability to flourish and grow despite great upheaval or adversity became the default definition of organisational resilience.
While some pivoted and innovated to take advantage of changed market conditions, many of these Covid success stories have since taken a tumble, their stock prices plummeting as consumers returned to pre-Covid purchasing behaviour and the demand reduced across these industries. For example, Health pathology companies have reported weaker earnings as the demand for Covid PCR tests plateaued and declined during 2022.
The second half of 2022 has challenged companies’ resilience. Finding opportunity in the face of the unexpected is a form of resilience, but a company that thrives within a specific environment or temporary conditions isn’t likely to be resilient.
Amazon doubled its workforce during Covid from 800,000 staff to 1.6 million. However, In November 2022, Amazon announced it would lay off over 10,000 staff, as growth slowed.
“In early 2022, the company saw its slowest growth rate in two decades. Sky-high inflation, soaring interest rates and a reopening world pulled consumer and business dollars in other directions. Online spending, while still robust, began to deflate. Massive overinvestments in expansion, labor and R&D dented profits – not just for Amazon, but tech companies across the board.” (https://www.forbes.com/sites/qai/2022/11/16/amazon-is-next-in-the-onslaught-of-tech-layoffs/?sh=2ae47db8351f)
And in December 2022, Apple announced it was planning to shift some production out of China after staff protested in Zhengzhou over ongoing Covid lockdowns and working conditions. (https://www.wsj.com/articles/apple-china-factory-protests-foxconn-manufacturing-production-supply-chain-11670023099)
What about the case of an organisation that found a way to survive a crisis? No record-breaking profits to report, perhaps there were even substantial profit losses; No market-changing new products or services; Simply an organisation that made it through unforeseen adversity.
While perhaps not as headline-worthy, continued existence during and on the other side of a crisis is a form of resilience.
The Bank of Queensland in December 2022 parted ways with its CEO, and the Board Chair commented: “ … the board reached a conclusion that we need a different capability and leadership style to build a simpler and more resilient bank.” (https://www.afr.com/companies/financial-services/boq-why-ceo-frazis-needed-to-go-quickly-20221202-p5c38y)
Based on these observations, resilient organisations are adaptive and proactive in anticipating and planning for change. They create systems and teams that are robust enough to absorb market shocks and external pressures, ensuring a continuity of product and service provision.
Embracing flexibility and improvisation, a resilient organisation remains committed to the vision, even when the how needs to change.
Finally, resilient organisations know that growth and innovation can be a by-product of resilience, but they’re not the end goal.
What does resilience mean for your organisation?
As directors, it’s our responsibility to question what resilience means to our organisation to make it tangible for both communications and decision-making – less we risk stakeholders at all levels becoming disengaged with the idea as it’s lost in a sea of corporate jargon.
Questions we can ask ourselves to understand what being resilient means for our organisation include:
- What does survival look like for our organisation? What’s the tipping point?
- Why do we do what we do?
- Beyond growth, what do we want to achieve? Where are we going?
- How can we be flexible in the delivery of our vision? What’s negotiable and what’s not negotiable?
And perhaps most importantly:
- How does our vision support or hinder resilience?
- How do our organisational values reflect a culture of resilience?
Exploring these questions with honesty and curiosity will help us define new opportunities, weaknesses and vulnerabilities, inconsistencies in communications vs. practice and reveal opportunities to support our executives, managers, and teams to further develop personal resilience.
Vision and values can create a culture of resilience
Previously I’ve written about the importance of the organisational vision. A powerful vision inspires growth while being realistic, actionable, and deliverable. It can also help stakeholders at all levels understand what the organisation is trying to achieve and where their role and personal contributions fit the bigger picture.
Additionally, your organisation’s vision can help foster a culture of resilience. When an unexpected shock hits or your organisation is faced with a seemingly insurmountable challenge, a strong vision fuels resilience. It gives your organisation’s board, executive team, and staff something to fight for and work towards – beyond day-to-day tasks and processes.
Equally, clear values cans serve as guideposts for decision-making during a crisis. The how might be different; clear well-articulated values provide boards, executives, teams, and individuals the freedom to respond proactively and creatively by providing clear boundaries.
Acknowledgement
I would like to thank Professor Dian Tjondronegoro, and Dr Susan Nancarrow for their input and valued feedback.
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.
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