 |
Skyline Business School |
 |
|
Skyline Business School |
|
Issue:7
The Quest for Resilience
The world is becoming turbulent faster than organisations are becoming resilient. Big
companies are failing more frequently. Even perennially successful companies are finding
it more difficult to deliver consistently superior returns.
In an article, "The Quest for Resilience" in the Harvard Business Review,
September 2003, the authors, Gary Hamel and Liisa Välikangas maintain that companies can
no longer depend, as they did in less turbulent times, upon their existing momentum to
sustain their success. What is required is strategic resilience, and according to them
strategic resilience is not about responding to a one-time crisis. It's not about
rebounding from a setback. It's about continuously anticipating and adjusting to deep,
secular trends that can permanently impair the earning power of a core business. It's
about having the capacity to change before the case for change becomes desperately
obvious.
In a turbulent age, the only dependable advantage is a superior capacity for reinventing
your business model before circumstances force you to. Achieving such strategic resilience
isn't easy. Four tough challenges stand in the way:
The Cognitive Challenge
A company must become entirely free of denial, nostalgia, and arrogance. It must be deeply
conscious of what's changing and perpetually willing to consider how those changes are
likely to affect its current success.
The Strategic Challenge
Resilience requires alternatives as well as awareness - the ability to create a plethora
of new options as compelling alternatives to dying strategies.
The Political Challenge
An organisation must be able to divert resources from yesterday's products and programmes
to tomorrow's. this doesn't mean funding flights of fancy; it means building an ability to
support a broad portfolio of breakout experiments with the necessary capital and talent.
The Ideological Challenge
Few organisations question the doctrine of optimisation. But optimising a business model
that is slowly becoming irrelevant can't secure a company's future. If renewal is to
become continuous and opportunity-driven, rather than episodic and crisis-driven,
companies will need to embrace a creed that extends beyond operational excellence and
flawless execution.
Conquering Denial
Every business is successful until it's not. What's amazing is how often top management is
surprised when "not" happens. Why the surprise? Even "unexpected"
shocks can be anticipated if one is paying close attention. What does it take to break
through this hard shell of denial? Three things:
Senior managers must regularly visit the locations where change happens first.
Filter out the filterers. Anyone who blocks or censors futuristic or less than rosy prognostications should be removed.
Face up to the inevitability of strategic decay. Though difficult, one must often accept that a dearly beloved strategy is rapidly going from ripe to rotten. Strategies decay for four reasons:
Over time they get replicated, they lose their distinctiveness
Good strategies get supplanted by better strategies
Strategies get exhausted as markets become saturated
Strategies get eviscerated. Power is rapidly
migrating from producers to consumers.
For many companies, the future is less unknowable than it is unthinkable, less inscrutable
than unpalatable.
An accurate and honest appraisal of strategy decay is a powerful antidote to denial.
Valuing Variety
Life is the most resilient thing on the planet. Genetic variety, within and across
species, is nature's insurance against the unexpected.
The arithmetic is clear: It takes thousands of ideas to produce dozens of promising
stratlets to yield a few out-size successes. Yet only a few companies have committed
themselves to broad-based, small-scale strategic experimentation.
Remember, most experiments will fail. The issue is not how many times you fail, but the
value of your successes when compared with your failures.
Liberating Resources
Institutions falter when they invest too much in "what is" and too little in
"what could be." They over-invest in the status quo. A persistent failure to
distinguish between new ideas and risky ideas reinforces companies' tendency to
over-invest in the past.
It is perfectly possible for a company to earn its cost of capital and still fail to put
its capital and talent to the most valuable uses.
Embracing Paradox
Most management theory and scientific management techniques concern themselves only with
improving efficiency and optimisation of input-output ratios.
There is an inherent paradox between the relentless pursuit of efficiency and the restless
exploration of new strategic options. An accelerating pace of change demands an
accelerating pace of strategic evolution, which can be achieved only if a company cares as
much about resilience as it does about optimisation.
The Ultimate Advantage
Some people believe that large organisations can never be truly resilient. Size often
shelters a company from the need to confront harsh truths. Companies get big because they
do well. The problem isn't size but success. Size is a barrier to resilience only if those
who inhabit large organisations fall prey to the delusion that success is
self-perpetuating.
Any company that can make sense of its environment, generate strategic options, and
realign its resources faster than its rivals will enjoy a decisive advantage. This is the
essence of resilience. And it will prove to be the ultimate competitive advantage in the
age of turbulence - when companies are being challenged to change more profoundly, and
more rapidly, than ever before.
Reviewed form Harvard Business Review - September, 2003
by Mr. Amrish Sahgal, Faculty - Marketing
Comments and questions: info@skylinecollege.com
URL: http://www.skylinecollege.com
