Explainers

What Leaders Must Know About Organizational Resilience

This often misunderstood concept is critical for navigating disruption and uncertainty

Organizational resilience refers to a firm’s collective ability to anticipate, absorb, and adapt to incremental change and sudden disruption. Resilient organizations more effectively respond to crises, meaning they are better positioned to maintain their competitiveness after disruption, may be viewed more favorably by the public because of their handling of crises, may minimize costs associated with disruptions due to anticipating such events, and can provide a sense of security for employees, which can lead to increased morale and reduced turnover.

Given how desirable these outcomes are, many leaders are naturally eager to create more resilient organizations, but confuse “resilience” with:

  • Reliability: Expecting the organization to continue to perform to certain standards under tight control and within specific conditions
  • Robustness: Expecting the organization to continue to perform to certain standards even amid a predictable level of adversity and failure 

Reliability and robustness certainly have their place within organizations: you need systems and processes that can withstand a moderate level of stress, handle varying demand, or switch to built-in backups for when things predictably fail.

But after years ricocheting from one existential crisis to the next, institutions are craving a way to avoid new unforeseen shocks and cascading failures. That’s why businesses are investing more than ever before in projects like resilient supply chain audits, resilient IT system overhauls, resilient organizational assessments, and executive training programs that promise to churn out resilient leaders. Yet with so many misunderstandings and misconceptions about resilience itself, few of these activities will deliver what they promise. Let’s take a closer look at what true resilience looks like, in both individuals and organizations at large.

What Is Individual Resilience?

For individuals, “resilience” refers to the the process and outcome of successfully adapting to difficult or challenging life experiences, influenced by a variety of factors, including:

  • Immediate well-being, including physical and mental health
  • Skills and abilities, like realistic optimism, positive coping skills, positive risk-taking, and honest yet gentle self-reflection
  • Personal history, such as genetic factors, early experiences, family dynamics, chronic adversity, and social connectedness

Common Misconceptions about Individual Resilience

  • Resilience is a fixed personality trait. People often perceive resilience as an innate quality that some people possess and others do not. However, resilience is actually a set of skills that can be developed and strengthened over time.
  • Resilience means never experiencing a negative emotion. Some people may believe that being resilient means never experiencing negative emotions such as fear, anxiety, sadness, or anger. However, resilience does not mean that a person is immune to negative emotions, but rather, that they are able to manage and cope with them effectively.
  • Resilience means not needing support from others. Resilience is often seen as something that a person must achieve on their own, without the help of others. However, resilience is often strengthened through support from friends, family, colleagues, and professionals.

What Is Organizational Resilience?

Organizational resilience refers to a firm’s collective ability to anticipate, absorb, and adapt to incremental change and sudden disruption. Organizational resilience requires an interconnected set of capabilities, including:

  • Sensing: anticipating, spotting, and interpreting potential disruptions
  • Probing: experimenting early, while conditions are still malleable, with paths out or ahead of disruption
  • Learning: reflecting and synthesizing useful knowledge from experiments and past efforts
  • Editing: revamping existing teams and processes based on new knowledge and new conditions
  • Coordinating: deploying new strategies, tasks, resources, and communications across teams and systems
  • Maintaining: ensuring necessary resources and individual resilience levels throughout the process of responding to adversity

Common Misconceptions about Organizational Resilience

  • Resilience is about “bouncing back.” This misconception suggests that an organization can simply return to its pre-disruption state once the crisis is over. However, true resilience means that an organization is able to not only recover, but also to learn from the disruption, and make changes that will improve its ability to handle future disruptions. 
  • Resilience is only relevant to certain industries or company sizes. While some organizations are more exposed to certain risks—or, if nothing else, singled out more in the press when problems do occur—every organization is subject to changes in the market. 
  • Resilience is only about disasters or negative events. While bad news certainly gets more headlines, disruption can be a positive event, like a breakthrough in technology, or an opportunity to acquire a key partner. Keep an open mind and look for both threats and opportunities.
  • Disruption is a one-time event. We’re in a period of ongoing uncertainty, with market conditions changing frequently, if not consistently. Again, what’s most important is to build the capacity for change, making it an ingrained part of the culture.
  • Resilience is limited only to external factors. Shake-ups can just as easily come from internal factors, like a key leader resigning, or an employee strike.  
  • Resilience is only a concern for large companies. Small- and medium-sized businesses can be equally vulnerable to disruptions, and may not have the same resources to recover. Resilience capabilities can be adapted to the size and resources of any organization.

Organizational Change

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How Leadership Supports Resilience

Leaders play a critical role in building resilience at both the individual and organizational level in a firm. In addition to individual resilience factors, resilient leaders require:

  • Objectivity to change: a willingness to acknowledge shocks directly and rapidly, to seek bad news, and to embrace necessary change
  • Self-management: a high-level of self-awareness and control of presence in communication and coordination of change efforts
  • Increased coaching and delegation skills: an increased pace for delegation and decision making, as well active coaching of new skills among staff

How leaders can support individual resilience

  • Address systems: Individuals can’t be solely responsible for remaining resilient, especially when the systems at work may make it more difficult or even impossible to prioritize the conditions and skills required to build resilience (such as adequate rest). 
  • Build skills: Provide opportunities to increase personal resilience, such as defining what “positive risk-taking” looks like within your organization, or how individuals can better manage feelings of uncertainty. Do note, however, that these skills should not be a replacement for addressing systemic issues: offering yoga and meditation classes during lunch won’t help if it means employees just have to work later.

How leaders can support organizational resilience

To help the organization better SENSE potential disruptions, leaders can:

  • Increase psychological safety so that employees feel comfortable raising issues or spotting threats when they see them, versus staying quiet to avoid reproach or recrimination
  • Adopt scenario planning practices to involve more stakeholders in foresight activities and expand the organization’s portfolio of known risks
  • Conduct regular sensing workshops with front-line employees and community members to ask them what they’re observing and what’s changing to expose any emerging disruptions 

To help the organization PROBE new ways out of or ahead of disruption, leaders can:

  • Dedicate resources to experimentation by forming a small team and giving them the resources, and authority, to experiment with new norms, ideas, and solutions. Assure them that you don’t expect them to find the perfect solution on the first try: in fact, realizing that failure is a data point, not an end point, is a critical part of increasing resilience. 
  • Push decision making down the hierarchy. To move with the speed of disruption, empower people closest to the customer to make decisions. This has the added benefit of making people feel like they’re directing change, rather than having change forced upon them. 

To help the organization LEARN more effectively from experiments and past efforts, leaders can:

  • Encourage regular project retrospectives and ensure learnings are shared across teams and divisions
  • Practice responding to disruption by hosting simulation workshops or rapid response drills, and debrief together about what worked and what didn’t

To help the organization EDIT existing teams and processes based on new knowledge and conditions, leaders can:

  • Align structures to strategies by evaluating the tradeoffs necessary to respond to change, and the capabilities required to make those tradeoffs
  • Encourage regular team retrospectives and ensure teams are experimenting with new ways of working based on reflections and learning
  • Embrace a culture of continuous improvement by thinking of change as a journey. There is no final destination; no point in time in which change will stop happening; nor will change be a smooth path without backtracking or failure. Acknowledging this upfront will make it easier to motivate teams to keep going when failure inevitably occurs.

To help the organization COORDINATE more effectively, leaders can:

  • Set the appropriate tone. Teams look to their leaders to determine how they should react to change. Are you open to change and transparent about what you do and don’t know, or do you act with suspicion or denial?
  • Support collaboration and greater coordination. Chances are high that different teams within your organization are facing the same challenges (e.g., they’re struggling with ineffective meetings) and some groups may have even solved these issues already. Connect the dots and create increased opportunities for co-mingling these ideas.

To help the organization MAINTAIN necessary resources and individual resilience levels effective, leaders can:

  • Give meaning. Individuals and organizations must have a clear understanding of how their efforts will impact other stakeholders—or else why struggle to adapt? Endure for what end? Leaders must clearly define how the work benefits the community at large, and back that definition up with actions.
  • Manage the emotional journey of change. Any change, even a positive one, involves loss. Assess what losses your teams might be experiencing, and how you can help them navigate it.
  • Celebrate progress—big and small. Change is hard, and once we’ve made change, it’s surprisingly easy to forget we ever did things another way. So your job is to call out milestones, acknowledge people for their contributions to doing things differently, and use evidence of real wins—not just promises of potential change—to keep people motivated and moving in the right direction. 

The Limits of Resilience

As much as we might prefer it, you can’t avoid disruption and failure. So much of the investment that we’re already seeing this year is actually focused on increasing reliability and robustness in hopes of staving off the need for change, but this simply isn’t realistic. Take, for example, moving supply chains out of China, which simply addresses the last known risk, not the next.

Future uncertainty and stress are, ironically, the only certain bets for the years ahead. Remember, avoiding or eliminating these conditions isn’t the true benefit of resilience: it’s the response. It’s adapting, even thriving in the face of change. Taking steps now to position your teams and your organizations for change will pay dividends no matter what happens.

Published January 15, 2023

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