Published

2

Oct

2020

Report

Shock Treatment: Developing Resilience & Antifragility

The COVID-19 shock is an opportunity to build resilience & antifragility. This is a call to action: analyze scenarios & embed options so you can trigger them in future volatility & shocks.

Shock Treatment: Developing Resilience & Antifragility

Key messages

Organizations must now understand which changes have created value and learn to sustain the positive ones permanently:

Covid catalystCovid-19 has been the biggest catalyst for digital transformation in the last five years.
Organizations must now understand which changes have created value and learn to sustain the positive ones permanently.

Weaknesses in supply chainsWeaknesses in supply chains and brittle operational practices have been made public.
By embedding the right options, organizations can recover, be more resilient to future shocks and develop antifragility.

People are criticalSystems have been critical, but people even more so.
Behaviour change and group dynamics are as important as shoring up the infrastructure and equipment.
 

Information flow is criticalAccelerated, high fidelity information flow is critical for creating resilience and antifragility.
It also requires renewed attention to ethical impacts on all stakeholders.
 

Programme Management Office for the pandemic can be a continued acceleratorEvolved correctly, the Programme Management Office for the pandemic can be a continued accelerator for long-term transformational change.
Transformational change will happen not only during the shock, but also post-shock as resilient organisations learn to apply the accelerated learning process from the shock.

COVID-19 has been the biggest catalyst for digital transformation in recent IT memory.  To paraphrase Eric Schmidt, former Google CEO, in some cases, take-up of tech has advanced ten years in two monthsAntifragile organizations like Amazon and Haier – with digitally enabled, loosely coupled and distributed workforces and infrastructures – have proved it’s possible to flex, adapt and emerge stronger from crises such as COVID-19.  Future shocks, including climate change events, will become more regular and bigger, and COVID-19 is a valuable dress rehearsal.  Organizations must now understand which changes have created value and learn how to sustain the positive ones.

Three years ago, LEF pioneered a business resilience maturity model with four trajectories: fragile, brittle, resilient and antifragile.  In this report, we provide real examples of this model, based on case studies from previous shocks, times of high volatility, and the current pandemic.  

Figure 1- Resilient organizations are not antifragile

Weaknesses in supply chains and brittle operational practices have been made public.  By embedding the right options before or even during an exogenous shock or high volatility, organizations can both recover and become more resilient to future shocks.  Organizations that can embed even more options will emerge antifragile: stronger than before.

Figure 2 - Antifragile options

Figure 2 - Antifragile options

To survive shocks, systems are critical, but people even more so: behaviour change and group dynamics are often more important than shoring up the processes and infrastructure.  Communication with internal teams, suppliers and customers is crucial for emerging from the shock unscathed.  As Haier Group CEO Zhang Ruimin said in an interview with Corporate Rebels: “With the RenDanHeYi model we truly enter the network age.  But the network aspect is not even the most important. … What is more important is that we no longer try to delegate to, or ‘empower’, employees - with the RenDanHeYi model we move away from being like an empire (with a traditional closed pyramid) to be more like a rainforest (with an open networked platform).  Every empire will eventually collapse.  A rainforest, on the other hand, can be sustained.”

Accelerated, high-fidelity information flow is critical for creating resilience and antifragility.  Its use also demands renewed attention to ethical impacts on all stakeholders.  Difficult though it is to see beyond the edge of the current crisis, as we consider the potential (and pitfalls) of novel technologies to manage the pandemic, we must not only think about the present moment; we must also consider how these innovations might be used in different contexts.  For example, leading technology and medical ethics bodies are working to rapidly share guidance on the specific intersection of technology and medical ethics relevant to the current pandemic but applicable long-term.  

Evolved correctly, the Programme Management Office created for the pandemic can be a continuing accelerator for longer-term transformational change, empowering an organization to shed its pre-shock inertia, accelerate learning velocity and improve business outcomes.  Resist the temptation to throw away the pre-COVID strategy – the technology and business operating model changes required to respond to this shock may be just the accelerators needed to evolve into a resilient or even antifragile business.  What has changed through this shock, like other shocks yet to come, is the business justification and potential stakeholders that will drive change.  Instead of abandoning your plans, adjust and validate elements to shore up your organization to become resilient, and even antifragile.  

The current shock is an opportunity to build resilience and antifragility.  This is a call to action: analyze scenarios, embed options and trigger them in further volatility and shocks.

Click to read Shock Treatment: Developing Resilience & Antifragility


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