Find out how to develop organisational resilience, and why it’s vital for companies to survive in the long term.

Purpose

At the end of World War II Viktor Frankl, a brilliant ex-Auschwitz inmate, wrote Man’s Search for Meaning. The book demonstrated that purpose was a key differential between prisoners surviving or perishing. From existential philosophers such as Sartre, to famous psychologists such as Martin Seligman, many others have added to the chorus on the importance of purpose.

In effect, an individual’s sense of purpose helps them to build resilience; even in harrowing circumstances like a concentration camp. In today’s context, purpose is highly important in the realm of organisations. Purpose-inspired management theories have been written about by people like Seneca, and Charles Handy, and have been implemented in both public and private organisations in order to enhance performance and increase organisational resilience.

” By purpose, I am not referring to a bland and meaningless ‘mission statement’, to which only lip service is paid. “

Rather I am talking about a deep and abiding direction such as reflected in Konosuke Matsushita’s (the founder of Panasonic Corporation) mission statement. In 1932 he said, “The mission of a manufacturer is to overcome poverty by producing an abundant supply of goods.” This genuine commitment and objective for the company may very well have been a critical factor in Panasonic’s sustained survival. It’s critical however, that Matsushita actually believed in the mission.

Exposure to stress

If we want resilient organisations, an overarching purpose may be a necessary ingredient, but is it also sufficient? Not according to Nassim Nicholas Taleb, who’s book, Antifragilepostulates the idea that complex systems, including human beings themselves, can become stronger when exposed to stress, as long as these periods of stress are followed by periods of recovery.

Some of what Taleb proposes makes sense to many corporate leaders; such as the foolishness in assuming that the worst thing that happened in the past is the limit of our risk exposure. That was not true of the Fukushima nuclear power plant disaster, nor was not true of the collapse of many ‘safe’ securities during the GFC. Similarly, many would recognise that bureaucracy reduces our ability to respond to sudden stressors.

However, it may be less obvious that some strategic planning mechanisms are too constraining and limit our flexibility to act. For example, a plan to which we must rigidly adhere over a 5-year period, even when the environment is changing in ways that we did not expect, reduces our responsiveness, and hence our resilience. This is effectively an argument for adaptability.

Autonomy and adaptability

Researchers and writers such as Andrew Zolli and Ann Marie Healy, who wrote Resilience: Why Things Bounce Back in 2012, have a great deal to add to the link between adaptability and organisational resilience. Some recommendations seem like applied common sense, such as insuring we have buffers, and improving our ability to sense changes. However, other observations are less obvious, such as the potential for tightly linked organisations to be more fragile in times of upheaval.

Simply put, more autonomous units have a greater freedom to respond, and if you have enough of them you might find a uniquely appropriate adaption. Such units can be protected by building fire-breaks between them, so that financial contagion or reputational damage can be contained. Indeed, this is one of the strategies proposed for the banking sector after the GFC, i.e. the separation of various divisions so that the failure of one does not destroy all.

Yet, it is not always economically viable to have organisational structures with autonomous units. So, an alternative is to consider the consistency of practice if not structure. Units that act and think independently can still share a lot of the organisational DNA of a high-performance enterprise. For Matsushita each factory was a separate company, yet core lessons on manufacturing excellence were shared.

So, if organisations want to be able to survive or even thrive in the long-term, then they should enhance their resilience by passionately pursuing purpose, whilst building the competencies and reserves of a truly adaptive enterprise.

By Roger Perry – CEO Bevington Group