Learnings from past decade and going forward… What are our imperatives now…
Had gone thru material on resilient organizations by consultants like BCG,Mckinsey,BSI and some individual papers.I liked the BSI frame work. Below is the out come.
In the space of last few years the roads we thought we owned have become crowded, competitively fierce and the journey turned in to race.
COVID 19 has reminded the uncharted landscape of tomorrow,up ahead we see a word of chaos and uncertainty.
A world of accelerating change with new normal.A word where economics will be based not on land,assets,intellectual capital but on ability to anticipate,adapt, imbibe/abandon strategies,and execute new ways of working expeditiously which are going to change at fierce pace in this fast changing world.
We would require a new kind of vehicle,some very different & changing skills and whole new sense of direction more importantly we will need to challenge even more fundamentally all our personal and organizational assumptions .
The exciting thing about disruption is it also breeds opportunity.In simple terms we need a all terrain vehicle to drive into future.
“Every morning in Africa, a gazelle wakes up. It knows it must move faster than the lion or it will not survive. Every morning a lion wakes up and it knows it must move faster than the slowest gazelle or it will starve. It doesn’t matter if you are the lion or the gazelle, when the sun comes up, you’d better be moving.” You have to get ahead in planning for macroeconomic events because those who move early are the ones who tend to thrive.
The belief that organizations must master the ability to innovate and drive new products and services to market in order to beat out the competition has contributed to the focus on agility & adaptability as a critical success factors.These organizations must “fail fast”, quickly learn from mistakes, and adapt to changing market conditions in order to outperform their competitors in the long-term.
Are these virtues sufficient to tide over COVID like disruptions?
As per book, Strategy Beyond the Hockey Stick (Wiley, 2018), who researched more than 2,000 companies over two decades to show that corporate performance follows a power curve. A small number of companies capture the lion’s share of global economic profit, while the vast majority return just slightly above their cost of capital.
In spite of organisations having Virtues of Agility,Adaptability, flexibility and culture of excellence and right leadership,many of the organizations are instead sleepwalking to disaster through complacency of processes and practice.
In the three boom years before 2007, ‘A’ Group of organisations (top quintile of 2000 organizations)actually under delivered slightly on TRS( Total return to shareholders)However, they opened up a slight TRS lead relative to their sector peers during the downturn and extended this lead through the recession.By 2017, the cumulative TRS lead of the typical ‘A’ Group organisations had grown to more than 150 percentage points over the ‘B’ Group(all organizations excluding the top & bottom of quintile)This lead was tough to reverse: nearly 70 percent of the ‘A’ remained top-quin-tile performers in their sector, with just a small fraction of the ‘B’ Group joining them.
When the economy started heading south, what distinguished the ‘A’Group was earnings, not revenue. Barring a few sectors that were exceptions, A Group lost nearly as much revenue as industry peers during the early stages of the slowdown. However, by the time the downturn reached its trough in 2009, the earnings, measured as earnings before interest, taxes, depreciation, and amortization (EBITDA), of A group had risen by 10 percent, while industry peers had lost nearly 15 percent.
The A group organisations did not wait out for the storm to be over, Rather, there leader faced the paradox of embracing risk to succeed . Doing so required them to prepare their businesses to react to threats as opportunities, adapting to survive and prosper.
‘A’ group organisations have had greater ability to anticipate, prepare for, respond and adapt to incremental change and sudden disruptions in order to survive and prosper compare to there counterpart ‘B’ group organisations. ‘A’ Group organisations were far more resilient than ‘B’ group organisations.
What differentiated this ‘A’ group organisation in disruption, clearly they have had much better ability to handle viz a viz there peers, the strength could be akin to like development of immunity in human beings against disease besides every other thing remains same.
Economic downturns are impossible to predict and sure as sunrise. Build resilience now, because when the sun comes up, you’d better be moving.
When there are disruptions like SARAS or COVID like,organization have to perform twin task,One defensive (stopping bad things happen) and second those that are progressive (making good things happen) as disruption do throw opportunities besides challenges.This also necessitates behaviors that are consistent and also those that are flexible.
The differences between these perspectives and behaviors have been the source of much disagreement and misunderstanding. It is therefore not surprising that leaders seeking to enhance Organizational Resilience always receive conflicting guidance. More recently, a new, fifth strand of thinking on Organizational Resilience has emerged that integrates, balances and seeks fit (fitness for purpose) and this besides earlier conflicting virtues requires paradoxical thinking.
The four perspectives described above are opposite of each other that is defensive against being aggressive(progressive);consistent opposite to flexible.
These gives the leader four quadrants to operate on namely preventive control,mindful action,performance optimization and adaptive innovation
In most organizations there has been a preoccupation with defensive resilience behaviours & perspectives and not enough focus on resilience to adapt to opportunity to deal with the big, complex issues that abound in modern business.
Organizational Resilience requires a holistic approach and an appropriate balance between preventative control, mindful action, performance optimization and adaptive innovation.
Organizational Resilience requires effective leadership and a shift in mindset – of leaders and colleagues.
Paradoxically, therefore, executives have to manage and master the tension between the strong supportive leadership that people want to see during times of change, and the more demanding collaborative leadership that will sustain the organization. In leadership, as in Organizational Resilience as a whole, an increasingly volatile, uncertain, complex and ambiguous world calls for an appropriate balance between defence and progression, consistency and flexibility
Resilience due to above can not be built overnight it is sustained effort over longer horizon and heavily dependent on strategy, structure, culture and leadership. Agility Adaptability & flexibility and Excellence are any way table stacks.
What are the imperatives in current situation than
1. Rightsized Teamwork, Instead of Driving Teamwork
The most successful companies are those that are best able to create a “flexible fabric” of effective interconnectedness that spans the organization. This allows organizations to utilize people’s time efficiently so that time is not wasted in chaotic situations. Knowing when and how to collaborate and work together or separately based on the situation is key.
2. Drive Stability, Instead of Focusing Too Much on Driving Change
Another key direction is the need to temper the need to constantly “drive change” by ensuring an adequate focus on, and appreciation of, creating stability to help organizations perform. When people are frayed by constant change, having stable systems and processes to rely on to ground themselves and enhance their ability to absorb and recover from disruptive change.
3. Relentless Course-Correction, Instead of Periodic Performance Reviews
The final critical factor is an organization’s ability to create a shared value of continuous monitoring and adaptation in order to adjust to changing conditions. Continuous monitoring and adaptation help organizations to correct deficiencies as well as identifying potential opportunities before their competitors. The integration of processes and tools that help people to adjust to this relentless focus on continuous course correction can help them to move past their discomforts with effectively managing performance issues.
4. From just-in-time to just-in-time and just-in- case supply chains
Stop optimizing supply chains based on individual component cost and depending on a single supply source for critical materials. How can we forge a supply chain that creates the most value?” Start redesigning supply chains to optimize resilience and speed.Look at it comprehensively till the end customer.Include all your channel partners and let the benefit flow to the end customer by using technology.
5.Accelerate the transition of digitization and automation
“Digital transformation” was a buzz phrase prior to the coronavirus crisis. Since then, it has become a reality in many cases—and a necessity for all. The consumer sector has, in many cases, moved fast. When the coronavirus hit China, Starbucks shut down 80 percent of its stores. But it introduced the“ Contactless Starbucks Experience ” in those that stayed open and is now rolling it out more widely. Car manufacturers in Asia have developed virtual show rooms where consumers can browse the latest models; these are now becoming part of what they see as a new beginning-to-end digital journey. Airlines and car-rental companies are also developing contactless consumer journeys.
The bigger opportunity, however, may be in B2B applications like ours, particularly in regard to manufacturing, where physical distancing can be challenging. In the recent past, there was some skepticism about applying the Internet of Things (IoT) to industry . Now, many industrial companies have embraced IoT to devise safety strategies, improve collaboration with suppliers, manage inventory, optimize procurement, and maintain equipment. Such solutions, all of which can be done remotely, can help industrial companies adjust to the next normal by reducing costs, enabling physical distancing, and creating more flexible operations. The application of advanced analytics can help companies get a sense of their customers’ needs without having to walk the factory floor; it can also enable contactless delivery.
