Reflection on the RISE talk given by Professor Mathew (Mat) Hughes, from School of Business and Economics, Loughborough University on "What does it mean to be resilient and how can we work towards resurgence?"
In the fourth RISE talk (Resilience, Innovation, Strategy and Ecosystems) on 2nd December 2021, Professor Mat Hughes reflected on his recent interviews with several expert advisors, entrepreneurs and scholars and shared his thoughts with us on how resilience can be achieved in such a way that enacts resurgence? His talk began with the term, ‘The New Normal’, which has been popularized since the outbreak of the Coivd-19 pandemic. Is the so-called ‘New Normal’ new in the context of large-scale crises? In the 2010 Per Jacobsson Foundation Lecture, entitled ‘Navigating the New Normal in Industrial Countries’, Mohamed El‐Erian stated that,
‘Our use of the term [New Normal] was an attempt to move the discussion beyond the notion that the [recent financial] crisis was a mere flesh wound… instead the crisis cut to the bone. It was the inevitable result of an extraordinary, multiyear period which was anything but normal’.
Over the last decade, what we have seen is a dramatic escalation of uncertainty contributed by events, such as natural disasters (e.g., floods, infectious diseases), social-political crises, and financial crises, coupled with climate change and technological change. Undoubtedly, the ongoing crises threaten the survival of businesses. Being resilient invariably involves continuously making judgements under uncertainty. Scholars (e.g., Nikolai Foss, Peter Klein) have started developing the judgement-based approach to the study of entrepreneurship, in which firms are able to make some predictions not only as regards the risk context but also in the face of uncertainty. Such a practice-oriented approach in coping with uncertainty has indeed resonated with certain characteristics of resilience discussed in the literature, including:
‘…the firm's ability to sense and correct maladaptive tendencies and cope positively with unexpected situations’ (Ortiz-de-Mandojana and Bansal, 2016)
‘Resilience describes the characteristic of managing the organisation's activities to anticipate and circumvent threats to its existence and primary goals’ (Hale and Teijer, 2017)
‘…a firm's ability to capitalize on adversities that may threaten its survival’ (Salvato et al., 2020)
The two overarching themes emerging from these definitions are cognitive responding (e.g., sensing, anticipating) and behavioral responding (e.g., correcting, controlling and capitalizing), which interact with each other. For example, the ability to capitalize adversity relates to the ability of actors to frame a crisis as an opportunity in such a way that promotes courses of action to address challenges.
Beyond these characteristics of resilience documented in the literature, what we have also observed, especially during the Covid-19 crisis, is fluidity. This means that what we learn from one crisis is not necessarily adequate to cope with the second crisis because of the context-specific nature of crisis. For example, family businesses in Cyprus have only recently emerged from the financial crisis and have now entered the Covid-19 crisis. Research shows that mechanisms that made them resilient in the first crisis are not the same as what might make them resilient in the second crisis, due to a different set of activities in play. Another key element of fluid is the speed of change, including moving in different directions, rather than sticking to what you have always done.
What are challenges faced by businesses in becoming resilient?
The first challenge is associated with the degree to which management is ready for crisis. For example, whether management teams would accept the fact that, there is a need to fundamentally change the way how they operate, especially coming out of the crisis. Not only does this include changes in consumer behaviour, but also includes the change of business partners (e.g., suppliers, buyers, B2B markets). From the period of 2007 to 2010, we have observed that, consumer’ behavior changed shopping behaviour, from a weekly shop to more frequent shopping. Accordingly, the big four supermarkets in the UK have changed their strategy by launching smaller stores, such as Sainsbury local and Tesco express. Looking at the present crisis, consumer behavior has changed again, with a larger, single weekly shopping. In fact, these changes to adapt into the environment take time. For example, M&S’s online service and food shopping have taken nearly eight months to be ready for operation. Forward thinking and imagination in terms of what markets may change to emerging from a crisis, are critical to resilience.
The second challenge is how to balance long-term orientation and short-term adaptation. During a crisis, research shows that there has been a shift from external outward facing CSR activities to inward facing CSR activities during the Covid-19. Such shift is important as a way of supporting staff and employees. Thus, business goals can be used as a compass to navigate how firms emerge from a crisis, while responsibility can act as a moral compass as to what it should act and react.
The third challenge is related to how firms leverage social capital (including internal and external relationships). The movement of digitalization, to a certain extent, dehumanizes the workplace relationship, where people used to have a sporadic synergistic conversation over a coffee/tea. Instead, we have seen the emergence of the virtual coffee, which tries to substitute for that collegiality. In terms of managing external relationships with stakeholders, being able to communicate with important partners is essential for resilience because it helps to develop shared mental models, which allow them to focus on the best action options. In addition, prior experiences and relationships with business partners can be linked to subsequent resilience. For example, suppliers whom you have mistreated in the past are unlikely to prioritize your need during a crisis because they may be overwhelmed by orders. The quality of relationship depends on what you have done in the past and therefore, it is essential to know how to build and develop these relationships.
Resilience Activation: Fortification Through Soft Factors
In general, firms have some degree of latent survival capital (e.g., heritage legacy, the vision of the business), which can activate a reaction moment, leading to the acceptance of the reality in which crisis occurs. To absorb adversity, stoicism as a propensity to leverage the history of the firm form survival instincts. For example, firms may look at how they coped with similar crises in the past and what are the lessons learned where to enhance an absorptive capacity. Organizational culture does matter in a way that it assimilates change driven by people who work together. When employees start making emotional investments, this is a point where resilience fortified.
Resurgence Through Hard Factors
Although soft factors are crucial to setting up willingness to change, hard factors are critical to build space and capacity for transition from resilience to resurgence, including (Hughes, 2021)
Embracing uncertainty
• Evaluate your readiness to change and act on that diagnosis
• Build malleable structures, work processes and routines.
• Take timely action no matter the uncertainty: focus on what you can control
• Continue to digitize the business but develop channels to communicate with employees and ear their emotional labour.
Collaborating successfully
• Leverage existing relationships and communicate your situation and intention into your supply chain.
• Involve suppliers and partners in your business activities to create common ground, trust, and new value.
• Evaluate your supplier relations and determine your best allies and supporters. They are hurting too, and a collaborate approach can co-create value.
Create momentum for innovation and change
• Revisit current business practices
• Reevaluate the value chain
• Business models: rethink, realign and reengineer with trajectory of markets and changing customer sentiments and habits
• Families invest in resilience when times are good but only use it when times are bad. Invest in on-going resilience
• How useful is the past? Consider whether leaving alone or disrupting the business is better than staying relatively the same.
• Innovate with a strategic purpose and do so modestly but rapidly to edge ahead.
Dark Side of Resilience
There are dark sides to resilience, which can manifest in many different forms, such as illogical resistance to change and escalation of commitment, thus resulting in failure to learn or adapt. Exiting the business or the market might be the best strategy because markets may be fundamentally different after crises. For example, people’s working and social habits or consumer’s behaviour may change. During the crisis, customers can also develop heightened sensitivity in light of services and products which no longer seem to satisfy their needs. Exit strategy is not identical to a business closure. Instead, we may consider how to innovate or invest in the future. Thus, exiting with an entrepreneurial mindset can also mean entering new market or launching new products or services, even though it may only be for the short term. In support of fighting the Covid-19, the Mercedes F1 team has converted 40 machines that would normally produce F1 pistons and turbochargers to produce the Continuous Positive Airway Pressures (CPAP) devices in helping some more seriously ill coronavirus patients. Many fashion houses have turned their production lines to produce medical face masks and other necessities in bulk to combat the Covid-19.
Professor Hughes concluded the talk by calling for reflections what a business can do or should do, in moving into the future.
How ready and able are you to improvise? (Paul Hughes et al.)
Use this free diagnostic tool to diagnose your improvisation readiness: https://tinyurl.com/y43q8edw
How could we ‘reintroduce’, ‘recycle’ or ‘remix’ some of ‘old school’ tactics and strategies, in sensing and responding to changes for sustainable development?
Think forward and draw on the past for latent survival capital.
Leverage curiosity and creativity inside and outside of the firm (e.g., relationships are especially important in helping a business adapt its ways of serving markets and to protect its position).
Consider which trends are likely irreversible
Timely action beats random action but often, any action beats no action.
Act small and increase rapidly to scale
Test ideas thoroughly and as widely as possible and try to anticipate customer’s needs (e.g., Entrepreneurship is solving someone else’s problem)
Do not over-promise, then under-deliver
How to cite: You, J. J. 2021. ‘Resilience is not only hard shell but also fluid leading to resurgence’. RISE Talk, 14 December [Blog]. Available at https://www.jacquelineyou.com/post/resilience-is-not-only-hard-shell-but-also-fluid-leading-to-resurgence (Accessed date).
This blog expresses the author’s views and interpretation of comments made during the talk. 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 in the context of business ecosystems. 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
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. 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.