Rather than containing risk, make sure it works in your favour
Resilience lets firms turn disruptions into new opportunities.
We live in an increasingly interconnected and volatile world, so companies can find it hard to anticipate risky events that can cause significant financial losses. From minor shipment delays and weather disruptions to a major crisis like Ebola, it’s clear that things can often go wrong. But instead of trying to create the ideal of stability, firms are much better off coming up with a strategy to adapt and grow in the face of turbulent change. The good news is that resilience is a concept that can be learned and a practice that can be developed, says Judith Rodin, president of the Rockefeller Foundation. Here are some of her suggestions:
PREPARING FOR THE UNEXPECTED
While catastrophe is not always preventable, resilient organisations can respond to disruption more effectively, and can mitigate the costs of an unexpected event to a large extent.
Take the example of Toyota. As Rodin says in her book The Resilience Dividend, the carmaker sustained severe damage to more than 600 of its plants in Japan after the Fukushima earthquake and tsunami in 2011. Many of these were essential for producing parts that go into the assembly of its cars, and the production of around 370,000 vehicles came to a halt.
Toyota was ready to step up to the challenge, however. The company’s president empowered and encouraged middle managers to take important decisions, “respecting the knowledge of those closest to the situation,” Rodin says. This allowed Toyota to restore production almost immediately, by promptly delivering emergency supplies and restoring 90 per cent of its production capacity within four months.
The company was able to quickly regain strength, by putting into practice what Rodin calls the resilience framework. This involves: awareness of one’s own strengths and vulnerabilities; diversity, or the capacity to mount a wide range of responses; integration, to ensure collaboration between people and teams; the capacity for self-regulation, to prevent risk from cascading through different levels of the organisation; and adaptiveness, to improvise in the face of unexpected challenges.
MAKING THE MOST OUT OF CRISES
Resilient organisations can also anticipate crises and use them to grow stronger and explore new opportunities, says Rodin.
The Ikea store in Brooklyn, for example, was well-prepared to face the aftermath of Superstorm Sandy, which hit New York City in 2012. The store took some damage, but it was in great shape compared to neighbouring buildings. Its fast recovery was the result of more resilient design. But the store also became a hub to distribute food, clothing and other supplies to those affected by the flooding. By playing an important role in relief efforts, Ikea had the opportunity to strengthen its connections with the neighborhood. As Rodin says, “resilience can bring benefits to multiple groups and result in wonderfully unexpected results”.
Invoicing for people in a hurry
Invoice2Go is an app designed to simplify the task of sending a professional invoice and securing payment. It lets you sync your documents across all your devices, and create charts to track who has paid and who still owes you money. The service is available in 11 different languages and has more than 200,000 users worldwide. It recently launched an app for the Apple Watch, so if you’re one of the early adopters, you can take care of your finances on the move.