Defining Resilience - part 2 to "Resilience - what is it really?"

In my first blog post back in May 2012, I defined resilience as the capability, capacity and will to succeed by anticipating risk and reorientating for survival and advantage in the face of adversity both seen and unseen, known and unknown.

 Exploring this definition we can further break it down as follows:

 ‘The capability to succeed - Having in place the right people, systems, tools, processes and functions to meet the persistent challenges of adversity (seen and unseen, known and unknown). These capabilities must include effective programs for risk management, business continuity management, emergency management, security risk management and organisational development. Capability must be focused on the required business outcomes, including the resilience of the organisation and the supply chain. 

The capacity to succeed - Being able to use our capabilities and will to create, or expand and use our available space to achieve our required (and desired effects). This capacity includes making room for flexible and adaptive response using the available resources and capabilities in the face of unexpected disruption and turbulence. Capacity is further optimised by using the space to persistently scan for and understand risks (both current and emerging) regardless of the shocks, turbulence or disruptions that are about to occur, have occurred or are occurring. Risk intelligence will help maximise that space. Capacity is further characterised by finding the ‘sweet spot’ between a lean capability and crisis capacity. This ‘sweet spot’ is achieved through risk intelligence, adaptive planning and ultimately, good business decisions.

 The will to succeed – having the leaders, staff and stakeholders who understand both the environment and the objectives and who are agile and responsive in the face of change and unprecedented adversity. The will to succeed manifests in a way that organically promotes synergistic effort and results (aligned with the objectives) between the leadership and staff in the organisation, supply chain and sphere of operations and influence. This will to succeed must be embedded in the organisation’s culture and leadership. The will to succeed is characterised by an intrinsic understanding of the mission, vision and values of the organisation and its leaders. Trust must be pervasive otherwise the will to succeed will be under-nourished, diminish the will to succeed, reduce the effectiveness of our capabilities and force a reactive response.

 In many ways capacity, capability and will make up a resilience triangle where if any one of these three components are missing, the organisation's level of resilience will be deficient. Resilience is critical to business success. There are many definitiions around resilience but I hope this adds to the discussion.

Creating space in a crisis

Stephen Covey in his book The 8^th Habit: From Effectiveness to Greatness includes a quote that resounds very strongly with me in terms of business resilience, risk management and crisis leadership.

'Between stimulus and response there is a space. In that space lies our freedom and power to choose our response.....'

According to http://www.brainyquote.com/quotes/quotes/v/viktorefr160380.html the quote comes from Victor E. Frankl. More about Viktor E. Frankl can be read here.

 We get so busy sometimes that we forget that there are limits to our ability to think and act on intuition or 'gut' alone. We need to be able to create space for thinking in response to complexity.

·        We all have the capability to create space

·        That space to think before acting is a capability multiplier in delivering value

·        Failure lays in wait for those that seek to adapt on instinct alone. There is still a need to sense and decide (sometimes very quickly)

·    In that space is our power to act

As crisis leaders, we must create and own the space between stimulus and response. By stepping back, albeit briefly from the crisis, we can articulate assumptions in the absence of facts. We can understand the risks and opportunities, reaffirm our objectives and identify what strategies and actions will best support those objectives,  minimise downside risk and capitialise on opportunities.

We lose effectiveness when we get caught always reacting to issues in our work environment. However, there are times this is necessary. To manage this, make decisions but take the time to identify assumptions and make sure you and your stakeholders understand the uncertainty that is inherent in the decision This then allows you to question and test assumptions and adapt effectively as the true situation (often very complex) becomes clearer. Make this a habit as part of business as usual and it will also serve you well in a crisis.

Take a breath, seek a moment of calm and create that space before you act. Be realistic and know the limitations of information. Where possible create the space or make it larger, especially if the decision is critical. The 8^th Habit may not be for everyone (although it is on my recommended reading list), but this is certainly one powerful tool for business resilience during crisis and for managing through complexity.

Five reasons to invest in resilience - success, culture, knowledge, efficiency and muscle

1.      Business success

Business success is my top reason for investing in organisational resilience. Creeping failure, turbulence and shocks disrupt business as usual, undermine business success and impact on business as usual – thus the key reason for investing in resilience. The rest of the reasons are also closely linked to business success but this is one that has to be called out as the priority reason to invest in resilience.

2.      Organisation culture

While it is not good to be hyper sensitive to potential failures, it is important to be change ready and adaptive. The good health of any organisation requires the team and its leaders to be moving in the same direction.  As a practical tool, emergency, crisis or disaster exercises are a great team building activity that have organisational value. Next time you are thinking about investing in a cultural change or transformation program, look at how emergency exercises may compliment the program. Alternatively, get a business and stakeholder group together and throw at them a wicked problem that is in their mutual interest to solve but outside their normal responsibilities. Resilience is a great way to build a good culture internally and across the supply chain.

3.      Knowledge advantage

Any business worth its salt recognises the value of knowledge. Risk intelligence is a critical element of business resilience and success. We live in a connected world characterised by complexity. Our scanning and sensing activities should focus on understanding this complexity. This includes the interrelationships between economic, environmental, political, cultural, social and technical forces (and many more). When we invest in resilience incorporating risk intelligence, we are placed to succeed.

4.      Business efficiency

The practical aspect of resilience involves the business functions of risk management, emergency management, security management (or security risk management), business continuity management and other aligned disciplines. While ‘other’ is listed here, don’t underestimate the importance of human resource management, business improvement and business planning sections of your business in contributing to resilience. Risk based decision making and disruption or resource based planning are not new. Having silos in the mentioned areas will potentially increase organisational costs, result in duplication, or most dangerously result in a tug of war over finite business resources that is not only unnecessary but can also lead to business failure. Avoid silos and misdirected resourcing at all costs and leverage aligned organisational functions. 

5.      Muscle

Efficient and appropriate investment in resilience will ensure the lean characteristics of the business or supply chain are not creating an unacceptable vulnerability that will lead to business failure. The resilient supply chain for example, needs to include some redundancy or contingency to allow agility and adaptive capacity to be leveraged when complexity strikes. This is not fat, it is lean muscle – Resilience ensures the bones that make up the supply chain are supported, lending strength, endurance and short bursts of speed and agility at need. While this is closely related to efficiency, it also ensures survival of the most adaptive and may include lower recovery costs and improved market position over the competition when things go wrong.

Organisational Resilience from New Zealand

My first post to this blog was my own definition of organisational resilience. I followed this by a summary of some key characteristics of a resilient organisation. Keeping true to the purpose of this blog, to encourage discussion around resilience, I would like to share with you a New Zealand take on organisational resilience which has been backed by a significant amount of research and more recently some learnings from the 2011 Christchurch earthquakes and other earthquakes over the past few years.

I would encourage you to explore the site and read some of the papers. The Site is called 'Resilient Organisations' (I have no affiliation with the site). You can find it at www.resorgs.co.nz or via this link.

I hope you find this informative and thought provoking.

Checklists? Plans? Adaptation? Plan to Adapt!

The Checklists

Many an academic debate about the merits or otherwise of checklists, plans or adaptation is started over a red wine. All three have their place but they work best in concert with each other with respect to emergencies and other organisational crises.

Checklists are widely used in OH&S and certified standards such as ISO27001 and ISO9001. They support quality checks and help ensure critical processes, steps or requirements have not been missed. In emergency management, they are also regularly used for key position holders in the emergency management team so they know what to do in a usually time-pressured, unfamiliar environment where the space to think is limited. The challenge with checklists is to focus on the outcome that needs to be achieved rather than on the string of tasks as a starting point. With this in mind, checklists can be a powerful tool but they are not the panacea.  

In emergency management, I personally advocate checklists being made up of several elements including:

• Role and accountabilities
• Tasks (can be by phases)
• Considerations

Considerations are included to ensure the person reading the checklist does not become singularly focused on the task at hand to the detriment to the overall response and recovery objectives. How to apply considerations also may need to be included in a plan. Outside of an engineering / process environment where critical variance limits are very tight, checklists can result in a singular focus that is at risk of becoming tunnel vision.  They also lack the broader framework provided for by a well formed plan.

The Plan

Plans are usually more detailed than a checklist (may include checklists as attachments) and will typically include:

• Background/purpose
• Objectives/goals
• Strategies to achieve those objectives
• Contingency arrangements and special contract arrangements
• Tools to support plan implementation

 

Plans provide a great basis for developing understanding and establishing the approach to be taken when crisis hits. They are an essential component of good business and good emergency and continuity management. However, Plans of themselves will never remove the risk as they tend to focus on a specific type of disruption or a specific threat. They can never account for the complexity of chaos. The cost of an organisational crises usually occurs as a result of the secondary and tertiary effect and the complexity born out of a multi-dimensional, multi axis wicked problem. The plan prepared for an emergency, contingency or crises will not survive first contact (initial execution) without change. For this reason, plans should not be developed to artificially constrain necessary action.

Adapt

Perhaps, then the answer lies in adaptation and agility, the ability to rapidly, change direction. To change, you need something to change from and in to. In terms of crises and emergencies, that change can often be very quick and sometimes painful if the level of preparedness is inadequate. Adaptation relies on effective leadership and a change ready culture. It also relies on risk intelligence. Without all these elements, we may end up morphing into something that does not meet the needs of the current situation. We may run head long into danger, never knowing what that danger really was.

Plan to adapt!

Every organisation is different and we often have difficulty ‘templating’ the success of one organisation and applying it to others. This is not to say we can’t learn from experience and adapt to our needs. Lessons and experiences should be built into plans and checklists, accountabilities, delegations and roles should also be clearly set out. The key though is to plan to adapt and continue planning, but faster (often much faster). In this way, all three elements work together to ensure the response (and recovery) meets the unique circumstances at the time. No business can afford to become blinkered in terms of their overall response to adversity – We must plan to adapt but not get lazy and think adaptation is the panacea to all our problems.

Stop choking on the dust

I attended an ASIS International breakfast (Qld Chapter) this week which featured a guest speaker, Robbie Sinclair who is also a friend of mine. He spoke about the need for, and value of, security professionals acquiring and maintaining leadership and management skills. His presentation is below.

Asis presentation robbie sinclair 2012 v1

 I walked away from the morning having consumed significantly more caffeine than is probably good for me; reflecting on the need for security professionals and others to align their outcomes with those of the business. As leaders and managers, we need to ensure we are also good followers.

I often see people get very frustrated by an inability to gain organisational commitment, budget or other resources when their proposal is important and should be a priority. What they may not realise is that there are also many CEOs who also get frustrated when they get approached by managers and subject matter experts who articulate very well the specifics of what they think is needed without understanding their internal customer (in this case the CEO). 

We often complain about the sales person who tries to sell something we don’t need or something that is outside our own budget (even if it is shiny and new). Why do they waste my time? Don’t they know I can’t afford that? Don’t they know I would never use that? Don’t they know I have other priorities at the moment? 

If we take the time to reflect on our own experiences, we should come to realize that the CEO has many internal (and external) ‘sales people’ who are trying to tell him he what he needs. The most painful thing is that the CEOs strategy tells these people what he needs most, what drives the business and what road the organisation is travelling on yet many fail to see this. 

Understanding this, will help us provide solutions that are appropriate to the path being taken. A boat is no good if the path is not over water and a truck is no good if we are travelling light.

 Investing the time in understanding the CEO, the Board and the rest of the team helps us get engaged and make progress (not to say you should not expect potholes and bumps). Sometimes, you may just need to repackage what you are passionate about, compromise or realign your efforts to supporting the boss and making sure you don’t get left at the back of the pack, sucking in dust while everyone else has fresh air and good health – so to speak.

If you have read the strategy, business plan and engaged in setting the priorities but still can’t get results, perhaps you should just ask how you can help… and make sure you are looking at the same map and travelling the same road in the same vehicle.

Hastie Group Limited - what went wrong?

Hastie Group Limited became a publically listed company in 2005 with a strong growth outlook in the supply of commercial air conditioners and other commercial services as they diversified. Looking through their annual reports, it appears that in 2009 they were struggling off the back of the GFC, property/building bubble burst and an increasing focus on reducing energy use/costs and carbon footprint. In 2010, profits were down and 2011 saw continued concerns despite some diversification.

Hastie Group Limited had stayed the course with their original strategy at time of public listing through to 2011 which was to ‘expand its range of technical building services and geographical coverage through organic growth and acquisitions’ (2011 Annual Report). I do wonder at this continued strategy during a GFC, building sector downturn, tightening of markets and climate change adaptation pressures. Perhaps this momentum contributed to Hasties going into administration? The $20 million anomaly found a couple of weeks ago at a time when new leadership were trying to revive the business and negotiate funding broke the camel’s back but failures are rarely simple.

The Financial Review released an article today titles 'Heads in the sand eventually bury Hastie' which highlights systemic problems within the organisation around its leadership and culture. You can find the article here.

No doubt this will be one to watch as the experts provide further insight and analysis. I certainly will be looking at this one a little closer of the next few months. I would encourage you to have a look back through some of the annual reports, read some of the analysis by the experts and make up your own minds about what went wrong and please share your views.

While we can study this, and I am sure many of us will, let's not forget the human cost of these failures. It is as good a reason as any to continue our journey and improve our understanding and development of organisational resilience.