Updated: Jun 13, 2022
Polling results: What does uncertainty mean to you or your organizations?
48% - Disruption
31% - Opportunity
3% - Others
17% - Not sure
Talk reflection notes:
What is the current state of research into organizational resilience?
There are several ways to understand the state-of-the-art research concerning organizational resilience. Firstly, we can see such research taking place across many different disciplines. I have prepared some illustrative figures which represent some disciplines (PEEE) in which resilience research are relatively active. For example,
Psychological resilience focuses on the ability of people in positively responding to stress and adversity, throughout their lives;
Engineering resilience focuses on the ability of a system or material to efficiently sustain its function and operations, in both expected and unexpected conditions;
Ecological resilience focuses on the capacity of a system to absorb disturbances through the adaptive cycle (exploitation, conservation, destruction and reorganization), to maintain its functions and controls;
Economic resilience focuses on the capacity of a system (e.g., micro and macro economics ), to withstand external shocks, including identifying and increasing the possibility of substitutes for damaged inputs or efficiently reallocating resources, in response to market shocks.
These have provided different perspectives and inspiration to study resilience in organizations. An organization is a complex social system, which is formed by a number of sub-systems within the organization (e.g., individuals, teams, divisions) and outside of the organization (e.g., suppliers, customers, competitors, regulatory groups). An organization, itself, is also a sub-system in a larger system, for example, in supply chain networks or ecosystems.
The study of organizational resilience takes place at several levels. At the individual level, it focuses on how to manage employee strengths or psychological strengths. This is rooted in the clinical and developmental psychology literatures. Resilience has been conceptualized as the positive psychological capacity to bounce back, not only from adversity, uncertainty, conflict, failure but also from positive change, progress and increased responsibility. The assumption of this research stream is that, resilience is a learnable capacity that can be measured and developed, to prepare employees for success or failure. This reflects the positive scholarship movement, which emphasizes the importance of nurturing the ‘good’ in people and organizations, including optimism, hope and resilience. The questions remaining to be addressed include those concerning to what extent employee strengths contribute to organizational resilience because individual resilience is different as organizational resilience. At times, individual resilience can, in fact, be at the expense of organizational resilience.
At the organizational level, resilience emphasizes the ability of an organization to anticipate and positively adjust to disruption, while maintaining its desirable functions. For example, innovative business models and processes in relation to broader information processing, loosening of control, utilization or creation of slack resources, can be enabling conditions under which organizations can constantly and continuously anticipate and adjust to a broad range of turbulence.
At the system level, resilience emphasizes design principles, which are concerned with the ability of a system to anticipate and resist disruption and quickly restore after disruption. The manifestation of supply chain resilience includes agility, flexibility, redundancy and diversification across supply chains.
Secondly, we have also observed resilience research focusing on the where, who, when and how questions, which are concerned with the positive adjustment of organizations under conditions of adversity.
The first aspect (where) pertains to the context. There is a vast array of terms for the context in which organizations find it difficult to continue as normal, including threats, environmental jolts, disturbances, disruptive events, crises, surprises, shocks, setbacks and organizational deviance. The context refers to the degree to which the severity of disruption is perceived or experienced by individuals, organizations or societies, such as climate change, geopolitical tension and pandemics, resulting in varying degrees of disruption to organizations. Some of the determining factors of organizational resilience include the size and industrial background of organizations, as well as their stage development.
The second aspect (when) is related to the role of time, such as when to respond to disruption and the speed of responding. Timing can be critical because the speed of responding may prevent the spread of the negative impact of disruption. In addition, time can help reduce the negative emotions triggered by a failure, which, in turn, can improve the learning experience from the failure.
The third aspect (Who) pertains to attributes of the actors who are involved in demonstrating resilience or ‘being-resilient.’ At the individual level, resilience is referred to in terms of psychological capital, in relation to a personal capacity. At the team level, resilience is considered as a state involving inter-dependence between individuals. At the organizational level, resilience may be considered as the characteristics of organizations that enable them to understand their environment in which to develop a strategy for dealing with uncertainty and risk. At the system level, resilience is referred to as ‘reservoirs’ of tangible and intangible resources, including culture and social connections in societies and communities, which provide the means to enhance organizational and individual capacities to cope with challenges.
The fourth aspect (how) is related to the mechanisms that activate resilience, including leadership, processes, technology and expertise. During crises, leadership is put under the spotlight because of societal expectations of leaders considered as being ‘great’ or ‘good’, in orchestrating responses and returning order in times of chaos. When businesses face increasing pressure to mitigate the impact of Covid-19, one of risk mitigation actions is to review existing contracts, especially those being held with key suppliers and customers. You may want to renegotiate contracts, in order to minimise the loss or establish relational contracting.
To date, the study of organizational resilience can be broadly divided into three research streams:
Capacity: (Lengnick-Hall & Beck, 2005)
‘a unique blend of cognitive, behavioural, and contextual properties that increase a firm’s ability to understand its current situation and to develop customized responses that reflect that understanding.’ (p.750)
Process: (Williams, Gruber, Sutcliffe, Shepherd, & Zhao, 2017)
‘the process by which an actor (i.e., individual, organization) builds and uses its capability endowments to interact with the environment in a way that positively adjusts and maintains functioning prior to, during, and following adversity.’ (p.724)
Outcome: (Shepherd & Williams, 2020; You, 2021)
‘Bouncing back’ when experiencing equilibrating adverse events
‘Transformation’ when experiencing dis-equilibrating persistent adversity
‘Organizational Resilience is a strategy of a firm to deal with uncertainty and risk (Wildavsky, 1988), surviving in the short-term and transforming in the long-term’ (You & Williams, 2022)
What are the implications for organizations in practice?
From an integrative viewpoint, organizational resilience is shaped by both environmental conditions and the ability or capability of an organization to manage the level of complexity presented by its changing environment, in a timely manner. We have been dealing with volatility, uncertainty and disruption for decades and indeed, throughout history. Many organizations might have had adaptive capacity built into parts of their businesses, through various mechanisms, such as technology, processes, and contract management, in order to improve agility and flexibility for organizational survivals.
Despite such fragmentation, what is in common is the process in which organizations deal with disruption has a similar pattern, beginning with (a) the experience of environmental change and uncertainty; moving to the implementation of organizational routines to deal with or avoid heightened uncertainty and complexity and realizing performance consequences (success vs. failure).
There are several common practices which have been adopted by organizations in recent decades.
The first strategy is the defensive strategy, which aims to reduce a firm’s interaction with its environment, in order to protect itself from any adverse consequences of environmental change. The passive strategy might work very well when an environment changes slowly and predictably, which would otherwise lead organizations to become more vulnerable because of not keeping up the pace of changing environments.
The second strategy is the reactive strategy, meaning that, organizations try to meet every environmental change with a corresponding organizational action. This strategy is constrained by its administrative arrangements, using the bare minimum of resources to effectively realign the firm with new environmental conditions. This is appropriate when faced with moderate levels of environmental complexity.
The third strategy is the proactive strategy, manifest through forecasting and strategic planning. We have seen this in supply chain management. It demonstrates a firm’s ability to exploit existing resources through innovative action, which help to effectively anticipate and capitalize on environmental changes. This is particularly helpful when faced with highly complex environments, such as hyper-competitive environments.
Challenging the underlying assumptions of existing strategies…
In spite of the helpfulness and usefulness of these strategies, delving deeper as regards some of underlying assumptions of these strategies raises at least two questions:
First, the primary assumption is that, the environmental change is from one state of equilibrium to another. The focus of adaptive activity is, thus, to adjust the firm’s internal activities to accommodate the new equilibrium conditions in the external environment. This may not always be true because from the perspective of complexity theory, environments shift in nonlinear, dynamic patterns, that never establish equilibrium.
In addition, from my reading of the literature, scholars, regardless of which generation, always claim that environmental complexity has reached a new threshold. So do we!!! The current environmental complexity, coupled with climate change, digitalization and geopolitical tension, among others, has led to an increase in crisis-level shocks to equilibrium. We don’t really know the nature of the next equilibrium, nor when it may happen.
The second assumption of these traditional strategies is that achieving effectiveness and efficiency requires an optimal balance between exploring new opportunities and exploiting existing capabilities. This is very much desirable because it follows the law of nature and this has also been acknowledged in many classical philosophies, such as the i-Ching, the book of change and Buddhist philosophy, among others. During dynamic shifts or hyper-competitive environments, which are often perceived as disruption, however, emphasising the optimal balance can make it more difficult for firms to generate or implement the novel or unconventional action required in dealing with crises. As a result, this may lead to a major crisis because of the accumulation of these negative effects.
What might be an alternative view in building resilience for the future of work?
Next, I would like to talk about alternative assumptions, drawing on some aspects of complexity theory, in the hope of that, understanding some principles derived from parts of complexity theory can enrich our understanding of organizational resilience and help us to frame better strategies for planning for events that are emergent and unpredictable. This also serves as a foundation for strategic resilience building for the future of work.
The rationale behind this is that, any social system, including organizations, operate in complex environments. This means that, all organizations are embedded in an environment of other organizations, as well as a complex of norms, values, and collectives of society at large. Presumably, any organization is a sub-system of society but is relatively self-sufficient, focusing on a specific set of goals (e.g., profit-oriented or non-profit oriented) and running their own human institutions, such as HR policy and processes, rules and regulations.
One of the common goals of any organization is to cope with the uncertain contingencies of the environment, in order to survive and thrive. Thus, resilience, as a strategy, emphasizes the way in which an organization defines and manages its relationships with the environment. The environment constitutes economic actors (e.g., suppliers, customers, competitors), technological component (e.g., digitalization, IoT, Industrial 4.0), social-political component (e.g., social actors and geo-political actors) and natural environmental component (e.g., fresh air, water, and climate change).
Given that managing uncertainty is central to resilience study, it is imperative to understand factors in the environment contributing to the formation of uncertainty. Broadly speaking, uncertainty can be objective, which is impossible to mitigate against or subjective, which can be mitigated against. The main difference lies in whether we are able to understand causal factors. Indeed, there are two main attributes of the environment:
(1) ‘complexity’, referring to the number and diversity of factors facing the organization.
(2) ‘dynamism’, referring to the degree of change exhibited in those factors.
Our approach to study complexity and dynamism…
We have started looking at four real-world cases experiencing different types of disruption. The first case is a small Dutch ‘born-global firm’, founded in 1999. The sudden disruption was that one of the two founding partners, who was central the business, was killed in the MH17 air crash. The remaining partner had to decide how to proceed amidst the shock and sadness in the company and the wider community. The second case involves a UK-based international supermarket chain (Tesco’ Fresh and Easy), which struggled with marketing strategy and positioning, community relations and unions in the US market, which led to a £1.2 billion loss in USA over 5 years. The third case involves a Dutch multinational company, Philips, which experienced the 3.5-billion-euro loss during the global financial crisis, between 2007 and 2009. The fourth case focuses on one of the more remote islands in the world, St Helena, which experienced significant delay in accomplishing a new, sustainable economic development, due to disruption relating to an airport construction. Drawing from the spatial-temporal perspective, we have investigated the nature of the disruption from which responses emerge, thus leading to a spectrum of survival issues. More importantly, this gives us an opportunity to re-define organizational resilience as,
‘A permeating boundary-less capability (PBC) that allows a focal organization, in the face of adversity, to reflect, re-energize and re-organize multiple response paths from the individual level (‘below’) to the environment level (‘above’) in order to survive and grow.’ (Williams & You, 2019)
The first attempt was concluded by the publication of the book, entitled ‘Organizing for Resilience: Leading and Managing Risk in a Disruptive World’, London: Routledge.
Our exploration has continued and manifested itself in several studies across different sectors (e.g., service, manufacturing) and geopolitical contexts (e.g., China, France and St Helena). Our findings constantly show highly complex and interactive connections among actors in resilience building, when faced with uncertainty (Williams et al, 2020; You, 2021; You & Williams, 2022). Consistent with the literature concerning uncertainty (Milliken, 1987), our results show that, uncertainty is caused by (1) lacking sufficient information to predict accurately and (2) the inability to discriminate between relevant information and irrelevant information. Consequently, this creates challenges in terms of a response choice, especially when there is a perceived need to act, the lack of which may lead to a major crisis.
Important attributes of complex systems…
Given that different environmental conditions give rise to different levels of external and internal complexity, there is no right scale on which to analyse complex systems. There are, however, certain attributes of complex systems that may help to building three aspects of resilience capacity: cognition (how do you perceive the changing environment in such a way that it encourages formulating a strategy, such as through your past experience or knowledge, imagination), behaviour (how do you personally or lead a team to react in a changing environment) and context (how do you create conditions under which your perception and action are aligned, through coordination, communication, among others).
These attributes are below:
Non-linear dynamics and emergent properties, implying that changes cannot be predicted only by the constant relationships among the actors in the system;
Capacity for self-organization, implying that, the emergence of new forms may occur because the system itself may be transformed, in response to changing conditions;
Diverse agents (or actors) with imperfect knowledge linked through networks, implying that behaviour of one part of the system may affect other parts in unintended or unpredictable ways;
Openness and connectedness with a permeable and flexible boundary;
Co-evolution and adaptation, implying that changes in one part of the environment may stimulate wider system change.
These attributes imply, for example, that we should not consider organizations as closed systems; rather they are open to external influences, which in today’s world, might be processes at the global level as well as at the level of the society or nation in which they are embedded.
Strategies to survive and thrive…
Organizations should deliberately reflect
(1) the nature of disruption you or your organizations experiences because doing so may enhance the mental and emotional capacities necessary to cope with disruption;
(2) the nature of complexity in their environment, in order to build sufficient organizational complexity in a process of adopting suitable strategies:
When environmental change is from one equilibrium to another, organizations may want to adopt the adaptive fit strategy, including disregarding complexity or reducing complexity. When environmental change is either very temporary or continuous, organizations should strive for robust transformation strategy, which is designed to absorb complexity.
This blog expresses the author’s views. Any errors and omissions are the author. Dr. Jacqueline You is an ESRC Postdoctoral Fellow at Durham University Business School, UK. Her interdisciplinary research focuses on organizational resilience and disruption. Prior to entering into academia, she worked for multinational corporations, primarily in the department of global supply chain networks and strategic procurement in China, the US, Canada and France and then, as an international entrepreneur based in the UK.
How to cite: You, J. J. 2022. ‘Navigating Disruptions Through Strategic Resilience', RISE Talk, 7 June 2022 [Blog]. Available at https://www.jacquelineyou.com/post/navigating-crises-through-strategic-resilience (Accessed date).
RISE Talk (Resilience, Innovation, Strategy and Ecosystems) is an academic initiative funded by the Economic and Social Research Council (ESRC) and hosted by the Centre for Innovation and Technology Management (CITM), Durham University Business School, in partnership with the Global Citizenship Programme, Ustinov College, Durham University.The aim is to facilitate an interdisciplinary discussion and exploration of how conventional theories inform our understanding of the phenomenon of RISE and how the role of RISE can help to address the pressing and complex issues faced by business and society, including governance and systems for sustainable development.