Business Strategy:  Become Uber Resilient. #Resilience #Adapability

How do you deal with a volatile, unpredictable world?  How do you futureproof your institution?  In part, by becoming uber resilient.  (I say “in part” because becoming more adaptable is also important.  But that’s not what I am thinking-out-loud about here.  I am focusing on risk and risk mitigation.)

Why become uber resilient?  Well, if survival isn’t good enough, how about:  If you’re more resilient than your competitors, when the inevitable disruption occurs, you win and they lose.

(Note:  I use the term “institution” because the ideas here are applicable to businesses, government agencies, and non-profits.  By uber resilient, I mean the ability to take a major body blow and quickly recover to normal operations, both capabilities and capacity.)

 

How might you go about becoming uber resilient?

Assess your resilience:

Here are some thoughts on risks and futureproofing.  Use them to kick-start your own assessment and thinking.  I bet you will identify some risks I haven’t thought of.  (Credit to the Bain Advisor Network, my colleagues, and the school of hard knocks.)

1. 1. Accept and embrace the unpredictability of the future … and the inevitability of “black swans.”  Black swans will happen.  Black swans will ruin your whole weekend.  (Note:  A black swan is a low probability event with severe impact.  In retrospect, they are obvious risks.)

2. 2. Geo-political risks aren’t going away.  US / China / Russia will continue to bump and grind in tri-power competition, e.g., China’s muscle flexing (Taiwan, China Belt and Road) and Russia’s attempts to re-assemble the Soviet Empire.  Iran and North Korea want to harm the US.  Who knows where, but significant flare-ups elsewhere will both surprise and impact us, like the 2023 attack on Israel and its on-going war with Hamas.  I suppose these risks will be amplified by political dysfunction and social division in the US … which are perhaps risks in of themselves.

                      Which of your major markets, suppliers and supply chains, talent, capital, and facilities are at risk due to their

                      concentration in specific countries?

                     

                       Put fewer eggs in any one basket … and get more baskets. 

3. 3. Labor and capital markets will remain tight.  The mobility of labor and capital will decline.

                      Are your labor and capital efficiency/productivity best-in-class?  One of my core beliefs is that a best-in-class 

                      cost structure is one of the most powerful strategic weapons.

                      If not, get there.  Innovate your way to lower dependence on labor and capital. 

                      Attract and retain labor (aka talent) both with “work from anywhere” and by geo-diversifying your facilities and 

                      offices.  As you geo-diversify, consider cost-of-living, quality of life, and appeal to city-, small town-, and rural-philes.

4. 4. Damage from extreme environmental events will be more frequent and widespread.

                      Which of your markets, operations, facilities, utilities, and suppliers are at risk to black swans?  It’s a long list:  

                      floods (coastal & otherwise), earthquakes, volcanic eruptions, tornados and hurricanes, wildfires, droughts, etc. 

                      … and the resulting prolonged outages of electricity, gas, fuel, telecom / internet, water, etc. supplies.

                      Speaking of water, in addition to Mother Nature giving us too much, having too little can be a risk too, an odd 

                      thought for an East Coaster.  (I think it was Joan Didion who said something like “the definition of the American 

                      west is where people think about water.”)  But there is a small town not far from Baltimore that constrains              

                      commercial and residential development and growth because they don’t have enough water. 

                       Again, put fewer eggs in any one basket … and get more baskets.

5. 5. Unexpected disruptive breakthroughs in technologies will occur.  A couple of years ago AI wasn’t on anyone’s radar screen.  Now, if you’re not experimenting with AI, you’re committing management malpractice. 

                       What technology breakthroughs … in either the technology itself or its acceptance in the marketplace … 

                       would disrupt your business?  How about quantum computing, fusion reaction, blockchain, genetic engineering,  

                       cryptocurrency, nanotechnology, etc.?

                       Devote some of your institution’s IQ points to thinking about this and developing very sensitive “radar” for seeing 

                       the disruption coming and rudimentary contingency plans.

6. 6. You and/or your supply chain will get cyber attacked.  Enough said.

Do something about it:

1. 1. Invest your own time in improving your institution’s resilience.  If you don’t, no one else will.

2. 2. Be prepared to invest resources in resilience.  In my experience, 5% of your annual capital and operating expense budget is a pretty good benchmark.  It’s a relatively modest investment … and, after a couple of years, you wake up a lot closer to being uber resilient.

3. 3. Take your version of the risk assessment above as “givens,” aka “inevitables.”

4. 4. Given these inevitables, where are you vulnerable and weaker than your competitors?  How can you fix?  What are the handful of specific projects you might invest in?

                        Example:  Suppose your major facilities are in riskier locations than your competitors’.  Don’t make a big 

                        problem bigger.  Identify your high-risk locations and stop adding capacity to them.  Grow at your lowest risk 

                        locations.  (I once led an organization that had about half its staff in one location and half in another 300 miles 

                        away.  It was a pain, and many wished we could all be in one location.  I did a little back-of-the-envelope arithmetic 

                        assuming only modest growth and attrition.  If we took all our growth in one place and backfilled all our attrition 

                        there as well, in a couple of years, 90% of us would be in one place.  My point is that relocating facilities might not 

                        be as onerous and costly as you initially think.)  

5. 5. Given these inevitables, identify where you are more resilient than your competitors (markets, products, talent, operations, finances)?  How can you get even stronger?  How can you exploit disruptions to get even stronger, to make lemonade out of lemons?   What are the handful of specific projects you might invest in?

                        Example:  Suppose your major competitor has a major facility in a hurricane prone area … and you don’t.  

                        Put in a little more inventory during hurricane season.  Then you’ll be ready to quickly and easily capture 

                        Customers and sales if and when your competitor gets hit and can’t fill orders.

6. 6. Prioritize these resilience improvement projects.  Consider the timing and level of each project’s risk/opportunity, and their cost and benefit.  Which are “no-regrets” in any future? 

7. 7. The hard part:  Decide, commit resources, and implement.