Enigmatically titled Achieving resilience requires understanding how we can’t, Ilseven’s rumination on the nature of resilience in organisations and how to increase it is, at times, somewhat abstract and counter-intuitive but definitely worth thinking about.
Can resilience be predicted ahead of a crisis?
Ilseven begins with a self-reflection. Facing a crisis, he is forced to pause, process the adrenaline, take some deep breaths, attempt to slow down his heart rate, and consider what has just happened and how to proceed. The crisis event was unexpected; there was no way for him to be prepared. It disrupted all the plans he had made for the upcoming months. There was no clear way of responding to the situation.
He realised later that—compared to his experience of a crisis as an individual—organisations face a unique challenge: the immediate consequences of a crisis event get entangled and intertwined with the complex dynamics of the organisation. That results in an even less predictable, and often exacerbated, situation. This is partially caused by what he describes as the decoupling of observable reality from the unobservable one.
An organisation is a complex system, whose components interact with each other in varied ways. Even a chief executive will never have a completely accurate picture of an organisation, which means that everyone operates with both a set of observations of what happens and assumptions about what does not happen. So, all organisations and their members run the risk of being distracted by the observable, leaving unobserved reality in a blind spot.
In theory, to achieve a resilient organisation, too much preparation can never be a bad thing. However, in practice, an emphasis on preparedness ahead of a crisis can backfire. The author quotes Drucker’s concern about the regular conduct of crisis drills—that too much practice appears to remove the rare sense of urgency necessary for a real crisis response.
As an example of such decoupling, Ilseven uses the example of earthquakes in Southern Turkey that early in 2023 led to 51,000 casualties, destroyed 47,000 buildings and knocked back the productivity of a region that before the earthquake had generated 10% of the country’s GDP and its exports. Ilseven poses the question: was this destruction all due to the unexpected severity of the earthquake? He concluded that, on the contrary—due to decoupling—it was, to a significant extent, a man-made disaster:
Just as dormant tectonic fissures lead to earthquakes, the dormant social polarization and fragmentation surfaced in crisis time. The unstoppable market forces led to a doubling and tripling of the prices of commodities, trucks, containers, and many other necessary supplies. The cultural rift between locals and immigrants led to ineffective resource sharing. The political forces clashed, not just miscoordinating but undoing each other’s efforts to be the one to deliver help.
How could this have happened? In 2019, government entities and disaster response organisations participated in a drill for a 7.6 earthquake with the same geographic origin as the 2023 event, resulting in a disaster response plan identifying stakeholders and their specific roles and responsibilities. Despite this, the decoupling of the carefully crafted and practiced disaster response plan and the fragmented response due to social fissures meant authorities were unable to respond to a crisis when it was time to do so.
As a result, IIseven asserts that the resilience of an organisation cannot be measured ahead of a crisis. Unfamiliar, disruptive and unexpected events—exacerbated through cascading organisational dynamics— will have unpredictable outcomes. He further concludes that this is due to the decoupling between individuals’ beliefs about the organisation and the realities of the entity, eliciting difficult-to-predict organisational responses. He again invokes Drucker: “…decisions concerning the future will always remain anticipations; and the odds will always be against their being right”.
Does this mean that any initiative to design resilient organisation ahead of unexpected adverse events is doomed to fail?
IIseven returns to his own crisis and how he navigated his way out of it. In retrospect, he concludes that awareness coming from strategy was the answer, and that awareness and strategy constitute the basis of resilience in an organisation. Having a clear-cut strategy was his main source of resilience.
IIseven says that having a strategy helps distinguish opportunities from threats. Opportunities taken advantage of are the manifestation of that strategy. A crisis is unexpected, unfamiliar and disruptive but a clear strategy supports judgement on which opportunities are better than others:
The more clearly the strategy is defined and the more robust it is during crisis times, the more decisively an organisation can act and thus respond to the adverse event and consequent circumstances. Resilience then becomes the manifestation of the strategy, and it is assessed by the organisation’s ability to fulfil its objectives, maintain its performance, and pursue its strategy.
Echoing Peter Drucker again, Ilseven advocates for managing by objectives, where defining and pursuing the organisation’s strategy arise from self-control, not top-down imposed authority. He notes, however, that in an organisation where managers define their own objectives, tasks and performance metrics, achieving organisation-wide alignment and a unified understanding of the organisation’s ultimate strategy is not straightforward.
A strong strategy communicated clearly throughout the whole organisation is one way to improve the awareness needed to reduce the risk of decoupling. Ilseven uses as an example the Haier Group Corporation, an organisation that emphasises self-control, proximity to the user, creation of value for the end-user, and decentralised self-management. A key factor appears to be its organisation into numerous microenterprises that form ecosystem micro-communities, each focused on creating value for the consumer. Members are on the same page because they understand that, in the end, they are paid not by the company, but by the users of the products they produce.
Given that managers are likely to err on their forecasts and assumptions, decoupling is an unavoidable risk. Ilseven, therefore, advocates piloting (experimenting with small-stakes engagements) as a way for organisations to further develop their awareness. Piloting leads to better decisions by, as Drucker puts it, ‘testing reality’.
Running such tests also fosters the development of skills that will be valuable in a crisis. One of these is the ability to abandon projects that are not working, when the normal tendency is to escalate commitment—to throw good money after bad:
Oftentimes long-term large-scale engagements at the workplace result in strong personal identification with them that can exacerbate this tendency to commit to failing endeavours. However, by practicing abandonment, managers learn to manage themselves, to cope with their biases and to develop a self-awareness informing them that their past efforts and engagements do not define them.
There is no one structure, one way of leading, or one way of competing guaranteed to safeguard against adversity. All of these are only a means to an end. As we regularly advise readers and clients, good governance starts with clarity of the ends that are sought. Only then can alternative means be evaluated, and a choice made of those that seem most likely to be effective.
Organisations should aim at improving their managers’ awareness of both their internal and external world. Being aware of how the business environment is changing will enable managers to redesign tasks, objectives and performance metrics successfully. It is also important for them to be aware of what the people with whom they collaborate know and will feel about things.
Buffering the impact
While building resilience is the aim, Ilseven contends that an organisation has responsibility for how much it allows its workers to be exposed to adversity. It must ensure resources are available when necessary and allow its people to learn from experience. Although self-reliance and self-sufficiency are important, organisations must acknowledge the limitations of these as a source of resilience.
Forming trust-based collaborative partnerships in and outside organisations is also essential. Being able to reallocate material and human resources from one department to another (or even from one organisation to another in a decentralised fashion) can make a notable difference in the recipient’s ability to cope with a crisis. Ilseven argues, therefore, that managers should have budgets not only for operations and innovation but also a third one for resilience, to be used when operations and innovation are disrupted, discontinued or dysfunctional.
Achieving resilience cannot be rushed and, in a crisis, it is the responsibility of a manager to buffer the impact: “to adjust the dosage of adversity”. This also gives the manager the responsibility of being patient. Having a strong strategy with practices mitigating the decoupling problem will help, but neither the unpredictability of crises nor the necessity of experience can be abolished.
Crises cannot be predicted and so the resilience of an organisation cannot be estimated. The pursuit of resilience defies any optimisation logic. However, having a commonly understood and accepted strategy and the skills to embrace change can help reduce the man-made consequences of adverse events as a result of a decoupling of belief and reality.