Business resilience, or the agenda for the Twenties
The resilience of any business is related to its purpose. The good news is: many existential risks are both predictable and predicted.
This year has forced a topic onto the agenda that has been coming for a while: How resilient is your business? What can we do to increase business resilience? Huge parts of that discussion have been about supply chains, which got disrupted early on in the global pandemic. But increasingly, other aspects have come into focus:
- resilient business models and sustainability,
- resilience on the demand side, or
- systemic resilience.
“Articulating a purpose — the way in which a corporation aims to serve important societal needs — is a good way to ensure that the company does not find itself in opposition to society and inviting resistance, restriction, and sanction.”
In general, a lack of purpose weakens resilience, be it personal or organisational, through alienation. In the 19h century, Karl Marx already had a theory of alienation. The social sciences have widely adopted the term. Employees can be alienated from their work, resulting in lower degrees of motivation, satisfaction, performance, and ultimately resilience. If your work doesn’t make sense, why would you do it, besides the money? Money can’t replace purpose. All of this can hurt a company’s resilience, as well as the personal resilience of its employees.
We had a lot of discussions this year about systemic relevance and “essential” workers. The late anthropologist and activist David Graeber explained, in his famous 2013 essay, “bullshit jobs” that:
“Huge swathes of people, in Europe and North America in particular, spend their entire working lives performing tasks they secretly believe do not really need to be performed. The moral and spiritual damage that comes from this situation is profound.”
That’s basically non-essential work, without purpose or relevance, be it systemic or not. To hurt the resilience of any business, it is enough that employees believe their jobs are pointless. Even if the opposite is the case, that their jobs actually are systemically relevant or essential, but employees can’t see it themselves, resilience will be lowered. Systemic resilience is tightly coupled with systemic relevance. Each lockdown or shutdown during the pandemic comes with a new round of debate about what’s relevant or essential and what’s not.
Restaurants, theatres and gyms: irrelevant, non-essential, and thus closed. Schools, supermarkets and most workplaces: relevant, essential, and thus open. This is, of course, an over-simplification. There are basic needs (think Maslow’s pyramid), and this year has clearly brought a renewed emphasis on our physiological and safety needs, especially health. Ideally, schools play on all levels of the hierarchy of needs, and this is the reason to keep schools open even in the midst of a pandemic.
But the implied health risks cut deeply into the resilience of school systems, even though the purpose is crystal clear. The same is true for many businesses which have a clear purpose, but face other existential risks. As Adam has pointed out, these risks are often surprisingly predictable. They arrive gradually (but steadily) and then suddenly. This is the nature of exponential risks: we can spot them early on, but we have to look closely and watch the doubling time.
The same is true for the current pandemic. Let’s flip back to February:
“We’re very bad at understanding exponential change. The classical example illustrating this kind of change is the wheat and chessboard problem. If we put one grain of wheat on the first square, two on the second, four on the third, and so on, doubling the number on each square, how many grains would end up to be on the chessboard? The answer is: way more than the global production of wheat. The current coronavirus epidemic follows the same logistic curve pattern. The virus has infected a relatively small number of people, but the growth dynamic is high.”
Interestingly enough, most Western societies needed to learn this lesson about exponential risk at least twice this year, first in spring and now again in autumn. Yes, the business environment is more dynamic than it used to be, in this way it’s the end of business as usual. But it’s not unpredictable. The pandemic, possibly the most disruptive single event for decades, was both predictable and predicted. The 2009 swine flu pandemic lasted for 20 months, the 1918 flu pandemic even longer. So it’s safe to assume the current pandemic will at least last another ten months, and possibly longer, despite the high hopes for vaccines.
Business resilience means constantly adapting
Resilience doesn’t mean ducking and hiding until the crisis is over, and then quickly returning to the old normal. It means constantly adapting to change, driving the change we want to see, understanding the situation, planning towards our common goals and acting accordingly. Resilience counters the short-termism that was dominant for decades and is now the root of many problems the pandemic exposes. It needs long-term goals and plans plus an agile, day-to-day approach towards them.
Alvin Toffler suggested as long ago as 1980 that speed and agility are critical, not hierarchy. That was an early warning, giving organisations plenty of time to plan ahead and build up resilience. But it’s crucial to plan for different scenarios. The first 20% of the current century already saw events like the digital revolution, 9/11 and terrorism, more than one financial crisis and the Great Recession, Arab Spring, the European migrant crisis, Brexit and Trump, and two pandemics. And that’s without mentioning climate change.
Most of this was predictable and predicted. We just need to listen, understand, plan and act. The agenda for the Twenties is pretty clear:
- The digital revolution will continue to play out, probably much faster after the recent boost that might have been the inflection point from gradually to suddenly.
- The pandemic and its aftermath will keep us busy for years ahead.
- Climate change and the energy revolution will proceed and need to be tackled.
- Our financial systems and economies must be safeguarded and will see another round of crises (after the current one), for example through the burst of the carbon bubble.
- Migration will rise again to the top of the agenda.
- Trumpism and its sister movements won’t go away.
As a business, you better ask today what all this means for you.