Resilient by Design: Creating Businesses That Adapt and Flourish in a Changing World - Hardcover

Fiksel, Joseph

Hardcover

ISBN 10: 1610915879 ISBN 13: 9781610915878

Verlag: Island Press, 2015

Inhaltsangabe

As managers grapple with the challenges of the effects of climate change in a hyper-connected, global economy, they are paying increasing attention to their organisation's resilience - its capacity to survive, adapt, and flourish in the face of turbulent change. Sudden natural disruptions and increasingly vulnerable supply chains are increasingly the new normal. Business as usual is no match for this new world and many companies are unaware of how fragile they really are. If they are going to cope, management needs a new paradigm, one that considers as an interrelated whole the infrastructure, the built environment, the ecosystems, and the social fabric in which businesses operate. Resilient by Design provides managers with a more complete approach to creating lasting success in a changing world. Rich with examples and case studies of organisations that are designing resilience into the very fabric of their organisations, it explains how to connect the important external systems, stakeholders, communities, infrastructure, supply chains, and natural resources, to create innovative, dynamic organisations that survive and prosper under any circumstances. Resilient enterprises continue to grow and evolve in order to meet the needs and expectations of their shareholders and stakeholders. They adapt successfully to turbulence by anticipating disruptive changes, recognising new business opportunities, building strong relationships, and designing resilient assets, products, and processes. Written by one of the leading experts in how such companies are built and managed, Resilient by Design offers a better way forward in a world that is increasingly less certain than ever.

Über diesen Titel

Über die Autorin bzw. den Autor

Dr. Joseph Fiksel is co-founder and Executive Director of the Center for Resilience at The Ohio State University. He is a recognised authority on sustainability and resilience, with over twenty-five years of research and consulting experience for government, industry, and international consortia. Previously, he was Director of Decision & Risk Management at Arthur D. Little and Vice President for Life Cycle Management at Battelle. He holds a bachelor's degree from M.I.T., a doctorate in Operations Research from Stanford University, and an advanced degree from The Sorbonne in Paris.

Auszug. © Genehmigter Nachdruck. Alle Rechte vorbehalten.

Resilient by Design

Creating Businesses that Adapt and Flourish in a Changing World

By Joseph Fiksel

ISLAND PRESS

Copyright © 2015 Joseph Fiksel
All rights reserved.

ISBN: 978-1-61091-587-8

Contents

Foreword by David Orr, 
Preface, 
Part 1: Resilience as Competitive Strategy, 
Chapter One Embracing Change, 
Chapter Two From Risk to Resilience, 
Chapter Three Systems Thinking, 
Chapter Four The Resilient Enterprise, 
Part 2: Practicing Enterprise Resilience, 
Chapter Five Generating Business Value, 
Chapter Six Resilience in Supply Chain Management, 
Chapter Seven Resilience in Environmental Management, 
Chapter Eight Organizational Resilience, 
Chapter Nine Tools for Managing Resilience, 
Part 3: Designing Resilient Systems, 
Chapter Ten Design for Resilience, 
Chapter Eleven Connecting with Broader Systems, 
Chapter Twelve Looking Ahead: From Resilience to Sustainability, 
Notes, 

CHAPTER 1

Embracing Change

The greatest danger in times of turbulence is not the turbulence — it is to act with yesterday's logic.

Peter Drucker

Today's interconnected, global economy is characterized by turbulence. Markets are volatile, supply chains are increasingly vulnerable, and disruptions can substantially affect shareholder value. Major disasters, be they natural or caused by humans, can occur unexpectedly. Even minor incidents such as a local power failure can cause significant financial losses. Emerging pressures such as climate change and urbanization will only intensify the potential for extreme events and business interruptions. At the same time, these shifting conditions are opening up new market opportunities.

The word turbulence suggests a river of change, constantly in motion, with many waves and eddies both large and small, slow and fast. That largely describes today's business landscape. Steering an enterprise through this turbulent environment has become an exercise in alertness and rapid adaptation, akin to white-water rafting, and the waves of change are coming faster and harder. It's enough to keep any company executive awake at night.

What are the options for companies to cope with turbulent change?

• Resist change by hardening defenses and trying to maintain stability.

• Anticipate change by preparing for disruptions based on experience and foresight.

• Embrace change by designing an organization that can adapt to unforeseen challenges.

The premise of this book is that to succeed in the face of turbulence, enterprise managers will need to anticipate and embrace change rather than resist it. The problem is that we still tend to cling to a belief in stability as the normal state of affairs. When a disaster strikes, such as a hurricane or a terrorist attack, our instinct is to overcome the shock, assist the victims, and return to a stable equilibrium as soon as possible. But what if the quest for stability is futile? Faced with a turbulent business environment, our best strategy may be to plunge in, accept change as the new normal, and improve our capacity for rapid response and adaptation. To ride the waves of change, companies need to become more resilient. They need to be prepared for unexpected events and bounce back quickly or, better yet, "bounce forward" by improving their competitive posture.

Turbulence is a consequence of many shifting forces, including cultural, political, technological, and environmental changes. These forces can be divided into two major types:

1. Gradual stresses include population growth, climate change, urbanization, mobile device proliferation, and the rising income gaps between the poor and the wealthy. Some types of gradual change, such as metal corrosion or sea-level rise, may not be recognized until severe consequences become evident.

2. Sudden shocks include hurricanes, tsunamis, industrial accidents, power failures, economic collapses, terrorist attacks, and political upheavals. In some cases, a small-scale disruption, such as a facility structural failure or a regulatory policy change, can trigger a chain of events that develops into a crisis.

Any of these forces alone would be challenging to cope with, but when they occur simultaneously and interact with one another, the challenges can seem overwhelming. A potent example occurred in 2013, when Superstorm Sandy pounded the northeastern coastline of the United States, which has gradually become more vulnerable to flooding due to rising sea level. As a result of this storm, much of the New York coast and New Jersey lost power and water service for weeks, and economic losses totaled about $70 billion. Our traditional management tools, such as risk analysis, are inadequate for understanding or predicting the collective effect of these complex forces on a business enterprise. Catastrophic disruptions that arise from an interplay of stresses and shocks are difficult or impossible to forecast with any confidence.

Experience has shown that business enterprises tend to lose their resilience as they grow and mature. They become vulnerable to surprises and slow to recover from disruptions. Companies that emphasize stability may cling to outmoded practices and proven technologies, may fail to question their assumptions, and may have blind spots that hamper their recognition of external change. As a consequence, they are unable to react to external challenges until they reach a state of crisis and require a drastic intervention.

On the flip side, companies that embrace change are better positioned to identify and seize emerging opportunities more nimbly than their competitors. Today, innovative companies such as Dow Chemical, IBM, Unilever, and Royal Dutch Shell have begun to view resilience as a source of competitive advantage. They are supplementing their traditional risk management processes with continuous monitoring of external situations and strategic capabilities for agility and adaptation. Like skilled athletes, these companies strive to operate at peak performance while being alert and prepared for emerging challenges. As a consequence, they are able to thrive in a constantly changing environment, discerning opportunities and consistently building shareholder value.

Despite the turbulence around them, resilient companies find a way to survive and prosper. They accept the inevitability of surprises and are able to adapt gracefully, sometimes transforming their very structure. In the words of Andrew Grove, former chief executive officer (CEO) of Intel, "Bad companies are destroyed by crises; good companies survive them; great companies are improved by them."

The New Normal

Crises are becoming more commonplace than ever. The giant reinsurance company, Munich Re, reported that there has been a sharp increase in the number of natural catastrophes since 1980, a trend that has been linked to climate change. Other destabilizing pressures include rapid urbanization, resource depletion, and political conflicts. As our planet's systems become more tightly coupled and volatile, the incidence of "black swan" events seems to be increasing. Aside from natural disasters, we are increasingly confronted with unexpected technological failures, including infrastructure collapses, power failures, and ecological crises such as BP's Deepwater Horizon oil spill of 2010 in the Gulf of Mexico.

Perhaps the greatest stress factor is the increasing complexity and connectivity of the networked global economy. Companies can no longer operate as isolated entities that focus on internal process improvement; rather, they must account for interdependencies, partnerships, and potential conflicts with suppliers and customers throughout their spheres of operation. For large multinational companies, this practice effectively covers the entire world. Thanks to the growth of international trade, industrial parts and feedstocks are sourced from distant parts of the world, and the resulting products are often exported to distant markets. As a result, companies may be vulnerable to shocks or stresses that are far from their view and generally outside their control.

For example, on March 11, 2011, a magnitude 9 undersea earthquake off the coast of Japan caused a powerful tsunami that swept away homes, businesses, and entire cities, claiming more than fifteen thousand lives. In addition, the earthquake and tsunami severely damaged the Fukushima Daiichi nuclear power station, triggering the greatest nuclear crisis since the Chernobyl events of 1986. Millions of households in Japan lost power for months, and radioactive contamination will remain a concern for years. Moreover, the ripple effects of this catastrophic event were felt by businesses around the world. The prolonged shutdown of many Japanese manufacturing plants created costly delays in part shipments for electronics, motor vehicles, and other industries. All told, the direct costs of the disaster were more than $200 billion, not even counting the worldwide losses due to business interruption. Besides natural disasters, there are many other types of shocks that can interrupt the continuity of global supply chains. A particularly worrisome issue in the United States is the threat of catastrophic failures due to increasing demands on aging infrastructure.

Another important stress factor is the increasing resource footprint of the globalized economy. We have become dependent on a massive global throughput of resources, including minerals, fuels, food, and manufactured goods. It has been estimated that the average US citizen accounts for movement of about 30 tons of material per year, with most being released as waste and emissions within a short space of time. This excessive material consumption will only increase with rapid economic growth and increasing affluence in developing nations. It represents a clear threat to the sustainability of the world economy. The Global Footprint Network estimates that, if current trends continue, by the 2030s we will need the equivalent of two Earths to support the world's population. To flourish, companies must ensure the resilience of the critical ecological resources that are vital for continued economic prosperity.

Finally, the information technology revolution has ushered in a new era of instantaneous communication, virtually unlimited computing power, and access to enormous volumes of data. The business implications for enterprise innovation and transformation are enormous and are beyond the scope of this book. From a resilience perspective, these developments represent a double-edged sword. On the one hand, they enable real-time situational awareness and more rapid response to unexpected events. On the other hand, the growing interconnectedness of people, organizations, buildings, vehicles, and electronic devices within what is called the Internet of Things only exacerbates the complexity of the overall systems that we attempt to manage.

Indeed, modern communication has created new vulnerabilities, as illustrated by comparing the 1989 Exxon Valdez and 2010 Deepwater Horizon oil spills. The Exxon Valdez incident was mainly a concern to local stakeholders, and Exxon was able to take a slow, deliberate approach to its cleanup operations and legal defense tactics. In contrast, the Deepwater Horizon incident was shared instantaneously via broadcast and social media, including real-time video of crude oil spewing into the Gulf of Mexico. This coverage placed BP at an immediate disadvantage in defending its actions and negotiating a settlement, resulting in enterprise-wide reputational damage.

Designing for Resilience

We used to think of a company as an efficient, well-oiled machine, but machines can break down when a crisis occurs. In fact, mechanistic systems based on strict logical rules cannot cope with events that their designers failed to anticipate. Engineered systems, including electronic devices, buildings, and utility networks, are vulnerable to sudden failure or collapse. They are generally brittle, just the opposite of resilient. Technological advances such as artificial intelligence can help improve robustness, but engineering solutions tend to focus on known challenges rather than prepare for the unexpected.

In contrast, resilient companies are able to avoid crashing because they behave like living organisms, sensing, responding, and adapting to change. In the natural world, resilience is seen everywhere from individual cells to entire ecosystems. Similarly, human beings possess extraordinary resilience at many different scales, from individuals to cities to entire cultures. It turns out that companies have a unique advantage. Rather than letting natural selection take its course, they can quickly adapt to a changing environment by redesigning themselves!

This book raises some simple questions: How can our management and decision-making systems operate more like living things and less like brittle machines? How can we better cope with unforeseen disruptions that threaten business continuity and profitability? How can we design our products, processes, and assets to be inherently resilient? How can doing so help us gain competitive advantage?

Embracing change and building inherent resilience will require a new approach to dealing with risk and uncertainty. The objectives of traditional processes such as enterprise risk management and business continuity management are to minimize unwanted disruptions and to quickly resume normal operations. These approaches are suitable for a stable environment with predictable changes that occur intermittently and independently. In today's more complex risk landscape, however, these approaches are inadequate for dealing with fast-moving, unfamiliar changes that may cascade into disasters. The most damaging disruptions are often a result of rare events that seem highly unlikely until they actually happen; the catastrophe at the Fukushima Daiichi nuclear power station is but one of many examples. Resilience implies the capacity to overcome changes that are not predictable or quantifiable, representing unforeseen threats and opportunities. In the absence of predictive information, resilience involves capabilities for sensing of discontinuities, rapid adaptation, and flexible recovery or transformation.

At the same time, new business opportunities are emerging in every field to help individuals, communities, and companies adapt to an environment of rapid change and increasing variability. As illustrated in table 1.1, such opportunities can range from eliminating variability (which is often futile) to managing variability to actually incorporating variability into products, processes, and services (often the most effective approach). An extreme example of embracing variability is the concept of mass customization, wherein every customer receives a unique product tailored to his or her specific needs.

Finally, in a tightly connected world, resilience is important not only to individual companies but to the global economy as a whole. In fact, resilience is a first step toward achieving the long-term goals of global sustainability. Responding to the pervasive challenges of water scarcity, climate change, and poverty, companies like IBM and Shell are working with communities to help them become "smarter" by redesigning urban management practices and infrastructures to improve quality of life and ensure continuity in the event of disasters (see chapter 11). Besides generating new markets, these companies are learning how to strengthen the resilience of critical ecosystem services such as flood regulation and soil formation, which provide the life support system for their global supply chains.

Strategies for Enterprise Resilience

In recent years, a growing number of multinational enterprises have launched efforts to improve the inherent resilience of their global operations. They have found that the lessons of resilience are applicable to every enterprise activity, from strategic planning to product development to operations management. They are better able to respond to disruptive forces and better able to seize business opportunities that may open up. Case studies of companies that demonstrate such practices appear throughout this book and are titled "Resilience in Action."

The term resilience has quickly entered the corporate lexicon, but there are as many definitions of the word as there are business functions. For example, some management theorists define strategic resilience as "the ability to dynamically reinvent business models and strategies as circumstances change." Others prefer to define resilience in operational terms as an extension of business continuity management, as in "the ability to recover from unexpected disruptions" including chemical spills, information technology failures, natural disasters, or terrorist attacks. In the broadest sense, enterprise resilience encompasses many familiar concepts, such as agility, adaptability, robustness, and continuity, but it goes beyond these tactical notions to the very heart of the enterprise structure and culture. Our definition of enterprise resilience is quite simple: "Resilience is the capacity of an enterprise to survive, adapt, and flourish in the face of turbulent change and uncertainty." From this perspective, resilience is not just the ability to bounce back quickly and recover from a disruption. Rather, resilience is a strategic approach to embracing change that addresses both downside and upside possibilities. Resilient enterprises continue to grow and evolve to meet the needs and expectations of their shareholders and stakeholders. They adapt successfully to turbulence by anticipating disruptive changes, recognizing new business opportunities, building strong relationships, and designing resilient assets, products, and processes.

(Continues...)

Excerpted from Resilient by Design by Joseph Fiksel. Copyright © 2015 Joseph Fiksel. Excerpted by permission of ISLAND PRESS.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Details zur Ausgabe

• Verlag: Island Press
• Erscheinungsdatum: 2015
• Sprache: Englisch
• ISBN 10: 1610915879
• ISBN 13: 9781610915878
• Einband: Tapa dura
• Anzahl der Seiten: 264
• Kontakt zum Hersteller: Nicht verfügbar
• Verantwortliche Person: Nicht verfügbar