Guest Blog from Paul Hancock Founding Partner of 360 Resilience
The shape of change
The recent and rapid evolution of our high streets in the UK and main street USA have been a very visible sign of change which few will have missed. Resilience thinking helps business leaders understand what that change will look like for their business to ensure their organisation thrives. Despite all evidence to the contrary, we all expect that change will look a certain way every time and use the same method that worked last year to address it. Investors sigh when they see another new entrepreneur’s growth projection in a pitch deck using the hockey stick curve made popular by Silicon Valley start-ups. Boards sign off on next year’s budgets based on straight line projections extrapolated from last year’s figures with some minor adjustments in variables. Whilst these aren’t the only possible shapes of change, they certainly meet the expectations of their audience, but are they right?
Starting from the beginning
If change is so sure, it should be easy to work out what it will look like and take the necessary actions to take advantage of them. If only, and I for one certainly don’t have a crystal ball in my management toolkit! Thinking about future change is difficult and requires stepping away from incrementalism built on a rear-view mirror of past sales and optimism based on the unfounded belief in a new business model. Why neither approach works today is simply explained by the increasing complexity and interconnectedness of every decision we make with the uncertainty and speed of the potential outcome.
David Snowden’s work at IBM creates the first step in how any change is viewed and how it should be responded to. In common with most problem-solving methods, the Cynefin framework allows first the ability to categorise, then respond and finally to reframe an issue. Resilience thinking means deliberately developing an understanding of the relationship between cause and effect and enabling a response as a matter of good practice, so moving it from the complex to complicated, the retrospective response to expert–led action.
Is it just a blip or more fundamental?
Digging a bit deeper into any particular change or disruption, it is likely to look like one of two types or a combination of them.
The first is a one-off event, often called an acute disruption. Characterised by a dip in performance and a return to a similar level over a period of time it is recognised by professionals in a number of fields such as logistics and manufacturing where each phase of the disruption is often analysed and optimised to reduce both short, and long-term impacts. Sheffi has developed the traditional simplified bathtub curve to describe more realistically the shape of the impact of a chronic disruption and what actually unfolds.
In regional disaster management or acute business disruption, the same character shape can be observed in retrospect, however, as each event is unique optimum responses are rarely deployed. Long term impacts mean that rarely does a business return to exactly the same performance as before, long term performance is often degraded by damage to the supporting infrastructure which is not reinstated. Resilience thinking means lessons are learned and replacement equipment/facilities are ‘built back better’, preparation includes building capacities to cope with disruption and ensures speedier recovery than the competition.
The second is more common but often less headline-worthy, a temporary and small difficulty which is called a chronic disruption. Characterised by a myriad of cumulative resource sapping workarounds, with this type of disruption things return to normal until they reach a tipping point. Ecological and social systems are often described in this way, climate change the obvious one.
Recognising these chronic disruptions and the point where they will tip the business into a new operating environment can be a surprising new way to generate efficiency at a very low cost. Resilience thinking means understanding what attributes a business should develop to create steeper sides to the curve to keep within the current and well understood ‘business as normal’ and measuring the right things to indicate when a tipping point is near.
The question is what is on the other side of a tipping point, what will the new normal look like?
Combining the two might look like; frequent staff sickness from stress over a prolonged period adds to the remaining staff workload (chronic disruption). Overtime payments, stress management counselling and some new staff hires return the situation to normal. New technology is introduced leading to changing shift patterns and strikes (chronic disruption), lead to a tipping point causing the business to miss important delivery deadlines (acute disruption). This allows a competitor to take the longstanding customer and reduced turnover for the business in the future or the ‘new normal’. Resilience thinking requires sensemaking of all of these disruptions and building attributes which are relevant to your business in advance to deal with both the chronic and acute.
A resilience thinking perspective
Returning to straight lines and hockey sticks, clearly, the shape of the line and the time it takes to develop makes a significant difference to the management response. Perspective can be important here, as many will still act like the earth is flat. Is the change a steady cumulative one, is it an exponential collapse/growth or is it an abrupt step change? In truth, it’s rarely one or the other, as complex systems have so many influences. What in the early stages might look like a straight line, can soon seem like a stratospheric growth curve which can then level off as a particular constraint is met. Looking at past performance is valuable for certain situations however is rarely a good indicator in complex and changing conditions. Resilience thinking requires a more nuanced approach, of probing, sensing, and adaptive response which takes these all into account dynamically rather than for a quarterly report or in an investor pitch deck. Resilience thinking is all about recognising change and preparing for it, whatever its shape.
Kurtz, C. and Snowden, D. (2003). The new dynamics of strategy: Sense-making in a complex and complicated world. IBM Systems Journal, [online] 42(3), pp.462-483. Available at: http://alumni.media.mit.edu/~brooks/storybiz/kurtz.pdf.
Scheffer, et al. (2009). Early-warning signals for critical transitions. Nature, 461(7260), pp.53-59.
Sheffi, Y. and Rice Jr, J. (2005). A Supply Chain View of the Resilient Enterprise. MIT Sloan Management Review. [online] Available at: https://sloanreview.mit.edu/article/a-supply-chain-view-of-the-resilient-enterprise/