Creating the resilient organization: Turning disruption into opportunity
- Posted on May 13, 2020
- Estimated reading time 4 minutes
The current pandemic has demonstrated fundamental weaknesses in company operations. In many cases, a drive for efficiency has failed to yield resiliency. Disruptions in the supply chain, workforce location, consumer buying habits, and government restrictions have, recently, provided the perfect storm. However, disruptions, of one sort or another, happen with some frequency – technology outages, terrorist attacks, material regulatory changes, and natural disasters are far more common. Successful firms will recognize this fact and develop their own resilient organization.
The resilient organization is one that can constantly adapt to current events. It develops and maintains an operating model that enables organizational renewal. Disruptions will continue to radically change our workplaces and world, so organizations must be agile and in a constant state of readiness to respond, reset, renew.
There’s likely no one right response for any given scenario. However, companies must develop a response muscle for various predictable situations. How will individuals within the company react? What factors impact that reaction? Is there built-in flexibility to the response reactions? In the case of a natural disaster, how easy or difficult is it to relocate employee populations? For a COVID-like pandemic, does the organization enable short-term remote work? If the immediate geography surrounding the company headquarters or major manufacturing location becomes inaccessible, how vulnerable is the infrastructure necessary to operate? Finally, what processes, technology, or company cultural norms will allow the firm to restart or continue operations with minimal interruption? These, and many other questions, can create the foundational response framework.
The Respond phase’s criticality cannot be understated. There are a set of behavioral principles from human resiliency research that can be a useful reference:
- Recognize that disruption happens with some frequency; you and your organization aren’t especially unique
- Selectively and ruthlessly focus attention on a very narrow range of immediate concerns; an apt analog is how pilots train to prioritize immediate emergency response actions – “aviate, navigate, communicate”
- Question each action’s benefit; develop a way to quantify or qualify the value of an action to the organization. This will help enable good decision-making when trying to selectively apply effort and attention.
Resetting the company recalibrates the way the firm operates. It may involve semi-permanently changing operating models, implementing new technology, and / or materially changing operations. Determining how permanent the changes may be a matter of situation and context. However, in all cases, it’s critical that companies avoid immediately returning to pre-disruption normality – each event should represent a teaching moment for the company and its employees. Focus on reconfiguring the product portfolio and the rapid creation of a scalable operating model to support changing market and employee needs. For example, extreme employee dislocation may prompt a move to enable limited employee mobility or complete location independence for certain roles. Supplier disruption may prompt updates to product design, diminishing the need for certain raw materials from that supplier or reformulating to allow for great raw material diversity tolerance. In short, the reset phase is an opportunity to become a better, more resilient organization.
This phase represents a two-fold opportunity: industrialize the recalibration from the Reset phase and reinvent your business model to address existing and new opportunities. Achieve greater resiliency by examining broad company operations, while also capitalizing on competitive advantages born from the disruption. Is there an opportunity to create elastic production, a capability that is not rigidly tied to a geography or modality? Can you explore contract manufacturing in multiple geographies or explore a radically different manufacturing process, e.g., 3D printing vs. traditional discrete assembly? It could be that large physical offices aren’t necessary for some employee populations and / or investment in advanced telecommunications technologies reduces travel necessities. While these examples have been possible historically, the current pandemic has demonstrated just how unprepared many companies have been. Further, it also highlights that a culture of innovation can’t be temporary or part-time.
Organizations are collectively moving beyond the respond phase. As such, here are five reset actions organizations can focus on to make a step change in enterprise resilience and responsiveness:
- Enable non-factory floor employees to effectively operate anywhere. This could potentially translate to investments in advanced telecommunication, collaboration, automation, and productivity solutions that are mobile centric and, potentially, divorced from company-owned assets.
- Factories need to recognize that enhanced personal protective gear and environmental sensors are now critical safety elements, regardless of product manufacturing modality. For example, some clients have begun to install sensor packs that would enable employee temperature checks as they enter a building and enhanced environmental controls that would reduce conditions that may aid disease spread.
- Customer populations need additional ways to interact with your products and services. Many retailers have been unprepared for the radical change in customer access. As a result, you may need to consider investments in online purchasing, virtual showroom visitation, curb-side pickup, and other enhanced customer service modalities.
- Operational and information technology that depends on fixed, on-premises infrastructure creates unnecessary and, potentially, damaging weakness in both response and reset phase effectiveness. Cloud technologies improve flexibility by freeing companies from fixed computing capacity, while also enabling them to expand or reduce spending based on usage.
- Innovation agility and implementation should be better integrated into company operating models. Companies need to move beyond the ability to execute “science experiments” and move to practical, integrated innovation capacity that can quickly be implemented to mitigate operational risk and/or capture opportunity. For a good primer, check out my previous post on developing an innovation program.
The current global disruption requires you to make changes in weeks that previously would have taken years. Avanade combines business strategy, agile innovation, and deep Microsoft technology expertise to help you rethink, so you can transform faster and smarter.