Business Resilience
How can you develop business resilience?
My oldest brother practices the ancient Martial Art of Aikido. He was telling me of a session with a Sensei (Teacher) who was getting really frustrated by the class’ inability to perform a certain defensive move. Finally, he shouted “Look, this is simple! It’s just not easy!!”
So it is with business resilience. The concepts are actually very simple. In fact, I think you can boil them down to three questions:
- What could go wrong?
- What can you do to prevent things from going wrong?
- What will you do when things do go wrong?
There’s a great deal behind those three simple questions and it’s no easy task to answer them, and they must be answered if you want your business to be resilient.
What could go wrong?
Risk identification is the first step towards resilience. It is admitting that there are circumstances that could stop your business in its tracks.
- What might prevent you from using your place of business?
- What could disrupt your supply chain?
- How would you operate if one-third of your workforce were out with the flu?
- What if you suffered a cyber-attack?
- What if one of your key team members suffered a heart attack?
All these are important questions you must ask to develop business resilience. Then you must take this one step further and ask, “What could be worse?”
The Gulf Coast of the United States is no stranger to hurricanes. They’ve been happening long before the first humans ever arrived. What has never happened in recorded history is a hurricane that stayed for several days and dumped feet of rain on a region. The land quickly became super-saturated and areas flooded that have rarely, or never, seen a flood. The people of the Gulf Coast were prepared for a hurricane. They weren’t prepared for one that stayed because no one ever imagined one would. When you ask and answer the “What could go wrong” question, you must then ask and answer “What could be worse?” if you want your business to be resilient.
What can you do to prevent things from going wrong?
Risk mitigation is the next step towards business resilience. You have several options for mitigating risks:
- You can stop doing the risky activity altogether
- You can modify the way in which the risky activity is done
- You can transfer the risk of the activity (insurance)
- You can accept that some elements (the weather, for example) are beyond your control and plan for those times when those elements disrupt your operations
The first three options are straight forward. It’s the last one where most businesses fail. Part of the problem lies in basic human psychology. We seem to be “hard wired” to be optimistic which can get in the way of creating a resilient business. While optimism has its role in business, so does realism and the facts are that disruptions occur and businesses that aren’t prepared experience greater losses than those that are prepared.
In his book “The Power of Resilience”, Yossi Sheffi states that “Building a resilient enterprise involves two broad categories of options: building redundancy and building flexibility of supply chain assets and processes.”[1] You need to build redundancy and flexibility into your products and services for those elements over which you have no control. I’ll give you an example.
A former employer of mine lost its world headquarters due to storm flooding. Work for our business unit was transferred to other teams in India which had similar skill sets (redundancy) until the headquarters team, working from home (flexibility), was able to get online with the corporate intranet after power was restored to the region.
This is a simple (not simplistic) solution, and it’s not easy to accomplish. It takes time to identify where you need redundancy in your business processes. Your current processes may need to be modified to allow you to be flexible in how they are accomplished. Is it worth it? You need to weigh the cost of creating the option versus the expected payoff were a disruption to occur. Given disruptions we’ve seen in recent years due to natural disasters alone, the answer is probably “Yes!”.
What do you do when things go wrong?
That’s simple: implement your business continuity plan. Hopefully you have:
- Kept your plan up to date
- Exercised your plan at least once a year
If you haven’t done one or both of those two things, you’re going to pay a price. The information in your plan may be out of date which greatly reduces its utility in a disruption. If you haven’t exercised your plan, your team may be unclear as to what they are supposed to be doing to restore the business to normal operations.
Business continuity needs to be more than a plan. It needs to be an on-going program in your business that involves all departments. Identifying and mitigating risks needs to be everyone’s responsibility in your business. It’s the only way your business will become resilient.
Guest blog by David Discenza, President of Discenza Business Continuity Solutions, a business continuity planning and consulting firm serving small to mid-sized businesses in all industries. His website is https://businessresiliencesolutions.biz/. You can reach him by email at david@discenzabcs.com.
[1] Chapter 6 “An Ounce of Prevention”, Yossi Sheffi, “The Power of Resilience” 2015 MIT Press
If you want to increase your business resilience, start by checking out BCP Builder’s Online Business Continuity Plan Template.
