Organisational resilience: the final pillar

frayed ropeIn the last of a series of articles on organisational change, BSI summarises the methods and mindset that you need to anticipate and guard against crisis.

It has been established that organisational resilience is ‘the ability of an organisation to anticipate, prepare for, respond to and adapt to incremental change and sudden disruptions in order to survive and prosper’.

Whenever anybody talks about organisational resilience, the focus tends to be on how to manage a crisis once it has occurred (business continuity and crisis management ) – but truly, resilient organisations will avoid crises altogether, or mitigate their commercial impact.

The most resilient organisations are those that put risk management at the centre of their culture, profiting from proactively identifying their risk landscape and setting out strategies that mitigate risk.

However, a recent global study by BSI, in association with the Cranfield School of Management, shows that business leaders struggle to balance risk with opportunity, which threatens the long-term survival of their firms.

Conflicting management advice is leaving senior executives confused about which path to take. This organisational paralysis is leading firms to potentially ‘sleepwalk into disaster’, according to the report.

David Denyer, professor of leadership and organisational change at Cranfield, and author of the study, comments: ‘Great businesses are built by leaders prepared to take the bad with the good. They recognise the tension between consistent defensive behaviours that stop bad things happening, and progressive, flexible ideas that allow the good to prosper.

‘Put simply, senior leaders must manage the tensions between control, action, performance and innovation if organisations are to be truly resilient – and this requires paradoxical thinking.’

Achieving resilience: current theory

Organisational resilience has risen in prominence since it was first documented in guidance from BSI in 2014. In recent years, there have been various theories on how to achieve resilience.

The report, ‘Organizational Resilience: A summary of academic evidence, business insights and new thinking’, discusses what it calls the ‘tension quadrant’. The tension quadrant comprises two core drivers: defensive (stopping bad things from happening) and progressive (making good things happen); and two approaches: consistency and flexibility.

Historically, theories have been built around the defensive mindset, with little attention given to resilience as a progressive, strategic enabler that can help organisations to adapt to the big, complex issues that arise in modern business.

What risk mindset an organisation adopts will depend on the business model, among other factors – and there are typically four ways of thinking about resilience, according to the report:

  • Preventative control (a defensive strategy based on consistency): achieved by robust risk management, physical barriers, systems backups, safeguards and standards.
  • Mindful action (defensive but based on flexibility): created by people who use their experience, expertise and teamwork to anticipate and adapt to threats.
  • Performance optimisation (progressive approach based on consistency): formed by process optimisation; continually improving, refining and extending existing competencies; and exploiting current technologies.
  • Adaptive innovation (progressive based on flexibility): created through innovation, exploring unfamiliar markets and adopting new technologies.

Organisations tend to opt for one of these four approaches, the report suggests. However, while an entrepreneurial commercial enterprise, for example, might be inclined to skew the tension quadrant towards progressive flexibility, that isn’t to say that it can’t switch its approach or mindset in certain situations – such as in the event of a setback.

Paradoxical thinking

The report puts forward a fifth way of thinking to achieve organisational resilience: paradoxical thinking. Paradoxical thinking means that organisations don’t have to commit to views that are defensive or progressive, consistent or flexible. They can instead manage the tensions between defensive and progressive views of organisational resilience.

It’s important to master tension, so that the organisation doesn’t suffer the pitfalls of committing to one agenda. Overcommitting to the progressive agenda impedes resilience, because constantly striving to achieve more can result in loss of focus on the core business.

Overcommitting to the defensive agenda impedes resilience, because the organisation becomes inflexible and unproductive.

As the report states, 'Resilient organisations must be both highly adaptable to external market shifts, while simultaneously focused on their own coherent business strategy.'

Achieving resilience – going forward

The report proposes a new methodology – one that is built for readily-changing environments that many businesses have to operate in.

The 4Sight model of organisational resilience is a repeatable process consisting of four core processes:

  • Foresight – constantly analysing the market for potential threats and possible opportunities.
  • Insight – gathering as much information as possible to gain an understanding of the status of the environment being operated in.
  • Oversight – monitoring and reviewing what has happened and assessing any changes, with a view to managing critical risks.
  • Hindsight – learning from different events and experiences, so that future performance can be enhanced.

This approach is as much about anticipating crises as it is guarding against them. In this sense, it’s very much in keeping with ISO 22316 Securities and Resilience – guidelines and a new landmark standard relating to organisational resilience – which attests that only when an organisation has a 360 degree view of what is possibly threatening or is possibly an opportunity can it increase its level of resilience.

This ISO standard is based on the principles and practices detailed and developed in the British Standard BS 65000 Guidance on Organizational Resilience, published in 2014.

Given the amount of material now available on organisational resilience, there’s good reason to believe that stories of businesses failing to take adequate steps to mitigate any unfortunate occurrences will soon be less commonplace. But, then again, maybe not.

Sources

See also