Consider a major crisis your company could encounter — like the CrowdStrike outage that brought numerous businesses to a standstill, or the engineering failures affecting Boeing planes. If your organization hit such a hurdle tomorrow, would the problem escalate or stay relatively contained?
The difference lies in corporate resilience. When organizations are resilient and capable of confidently dealing with varied types of risk, they're well-positioned to thrive in their respective industries. But as multiple public examples have shown, not every company is prepared.
True resilience means having a plan for early intervention, one that can stop problems before they damage a business's long-term prospects. As a corporate decision-maker, you have the power to implement these systems. That means your own knowledge of organizational resilience best practices can have a huge impact on your organization's future trajectory.
Read more: Learn about the process of building organizational resilience through systems thinking.
What does 'organizational resilience' really mean?
Organizational resilience is a blanket term for your company's ability to cope with challenges and suffer minimal setbacks. This means applying:
- Learning to identify risk factors early to mitigate them before they turn into crisis situations.
- Launching fast, effective responses in line with a business continuity plan when problems strike.
- Reversing the effects of catastrophic problems affecting the company via disaster recovery practices.
Businesses may not realize they lack organizational resiliency until a disaster strikes, revealing the weaknesses in the company's plans. Even a business that works smoothly and efficiently under optimal conditions may fall apart when problems strike. Creating a specific resilience strategy is a way to avoid this potential pitfall.
One useful view of these concepts comes from the expert faculty members responsible for MIT Sloan Executive Education's course Building Organizational Resilience, Senior Lecturer John Carrier, Professor Retsef Levi, and Associate Professor Miho Mahzereeuw. These experts promote the use of systems thinking and continuous improvement as tools to build organizational resilience.
A systems thinking approach to organizational resiliency means building robust, flexible processes that will help the business survive difficult times. To apply this method and create your own resilient organization, you can focus on:
- Checking assumptions in real-time to make sure they're still valid under current circumstances, then adjusting practices when applicable.
- Being aware of the difference between the way operations actually work and the way they're supposed to work — also known as the "hidden factory" phenomenon.
- Treating possible disruptions as systems under which the company might have to operate, seeing how long the business could survive in those conditions.
- Using technology as a means to an end in responding to risk factors, rather than an end unto itself.
The best organizational resilience programs won't just prepare your organization to deal with specifically anticipated dangers or unexpected risk factors — the systems you implement should account for both kinds of events. This includes incidents that strike specific companies, like data breaches or PR crises, as well as industry-spanning disruptions, such as geopolitical conflicts and pandemics.
See more: Watch an expert webinar on a quick-start approach to building resilience.
Why does organizational resilience matter?
Organizational resilience is important because risk management, against factors both predictable and wholly unexpected, can strike at any time. When these events occur, well-prepared businesses can rise to the top of their industries while more vulnerable competitors lose ground. Building resilience is a way to put your company on the right side of that divide.
The amount of damage caused by sudden failures and destructive incidents shows the value of planning for these events. Businesses that fail to anticipate points of weakness or vulnerability in their everyday practices may find that external or internal factors have rendered their operations ineffective.
The CrowdStrike failure, with its massive knock-on effects on other companies' computer systems, provides a clear example of the consequences. Businesses were caught off-guard as this third-party software provider's update issues rendered their systems unusable. Flights being grounded because of a security company's configuration problems seemed fanciful until it happened.
Read more: See one executive's experience building skills, including organizational resilience.
The link between everyday effectiveness and risk minimization
One important point to internalize when learning about organizational resilience is that you don't have to choose between building a resilient business and maximizing your day-to-day efficiency. Carrier emphasizes that the same systems that increase resilience are good for performance.
The method Carrier and his fellow professors promote in their Building Organizational Resilience course is based on correcting small, everyday issues that accumulate within companies' practices. The method comes back to the so-called "hidden factory," workarounds and shortcuts that don't fully mesh with the company's official methods.
By correcting the flaws and annoyances that lead to a "hidden factory," your company can simultaneously streamline its everyday processes while building up resilience against earth-shaking risk factors.
How do you build organizational resilience?
While the risk factors that threaten to throw your business off course are varied and unpredictable, building a defense against these dangers can be a straightforward, organized process. When describing their systems thinking approach to building resilience, Carrier and Levi recommend simple but impactful actions, including:
- Establishing structured decision processes: Your company should have a standardized approach to making key decisions. This means going through a checklist of good practices every time there's a significant choice, from considering all the aspects to debriefing. Applying excessive forethought to business continuity planning is better than acting hastily and encountering setbacks.
- Designing systems for resilience and everyday performance: Your systems need to be both efficient and flexible. The same processes that work well during optimal conditions must include fallbacks and responses to problems. Building both the capability to operate in a steady state and a resilience framework to apply in a crisis situation should become standard practice.
- Understanding technology's potential and limitations: A powerful organizational resilience strategy requires technology, including Internet of Things (IoT) sensors, to provide rich data, analytics systems to crunch those numbers, and applications to control processes. However, you need to consider how each new tech deployment fits into your strategy rather than adding new systems heedlessly and compromising on quality.
- Infusing resilience into the organizational culture: Everyone in your company has a role to play in applying risk management practices. This means all levels should internalize organizational resilience concepts, starting with the C-suite. Carrier and Levi noted a few issues that can harm resilience efforts, such as business leaders who value return on investment at the expense of risk mitigation and an organizational culture that discourages employees from reporting problems.
To truly keep your business safe from threats, it's important to stay aware of the situation in your company, your industry, and the world at large. When new risk factors arise, it's essential to monitor these issues in real time and adapt your plans when the danger becomes pressing enough.
Read more: See the playbook on enhancing resilience from the expert MIT Sloan Executive Education faculty.
Deepen your organizational resilience knowledge
Developing your awareness of organizational resilience best practices is a powerful way to protect your business against the unexpected and increase your value to the company. MIT Sloan Executive Education provides the ideal environment to build competency and awareness.
Professors Carrier, Levi, and Mahzereeuw deliver their systems thinking mythology to address organizational risk factors and teach participants to build and implement 90-day resilience playbooks. You'll emerge from the course with the knowledge necessary to mitigate both expected risks and novel crises, maintaining a resilient organization through whatever comes next in your industry.
Enroll in Building Organizational Resilience to learn this high-priority skill from expert faculty amid fellow business leaders who share your focus on operational quality.