The Pitfall of Treating Resilience as a Means Rather Than an Outcome 
Resilience

/ The Pitfall of Treating Resilience as a Means Rather Than an Outcome 

/ Resilience should be the result of learning and adaptation, not the primary focus. Organizations should focus on innovation, flexibility, and customer value rather than competition. Shifting to integrated, recurring service models (e.g., subscriptions) and digital operating systems enhances organizational resilience by increasing customer retention and adaptability.

Mar 01, 2023 | by Carsten Linz

In light of the current global crisis, organizations are increasingly required to navigate a future that is uncertain and constantly changing. However, the excessive focus on resilience as the central response to such circumstances can be a pitfall. If resilience is treated as a means instead of regarded as the outcome of an organizational journey, this can lead to the development of toughness that risks stressing organizations beyond what is reasonable.

On the other hand, learning organizations win. By making learning the means, organizations can deal intelligently with extreme uncertainty, proactively shape the future, adapt and evolve organizationally. Four actions can enable organizations to navigate the challenges of the present more effectively and proactively shape the future:

  • Lead & Learn with an Infinite Mindset and Create Strategic Options: Successful leaders adopt an infinite mindset and develop a transformative purpose, which helps organizations to learn and drive innovation. In business, there are no fixed rules and players are changing, however many leaders still play as if it were a finite game where the goal is to win and beat the competition. This is a losing strategy because focusing on the competition defocuses innovation for the customer. Jeff Bezos, the founder of Amazon, coined this phrase: “If we can get our competitors to focus on us while we focus on the customer, we’ll end up being right.” Winners increase the likelihood of connecting the dots in the future by shifting from high, largely irreversible investments in a few large innovation projects (big bets) toward a portfolio of smaller investments into real options, hence room for maneuver. This allows the organization to reposition itself more quickly than competitors. Not all options will be exercised. However, those discarded are not wasted, but serve the useful purpose of insurance against an uncertain future.
  • Shift Business Models towards Resilience: To take full advantage of the opportunity provided by crisis, we need to challenge our basic assumptions about how to create, deliver, and capture value. Business model transformation is also a viable means to reach resilience, and companies with higher inclusiveness levels show higher resilience. This can be achieved via a move to platform or solution business models, which implies moving from standalone, often physical offerings with vastly independent transactions, to comprehensive and integrated offerings with recurring transactions. The higher the offering’s breadth and depth, the bigger the ecosystem around its customers, and the more premium services are integrated (e.g., free-of-charge shipping, unique content), the less reasons exist to change vendors. Furthermore, subscription-based monetization models increase the probability that the customer will continue the relationship with the same vendor and often leads to a chain of transactions. Companies that provide value-added services on their platforms and can rely on recurring revenue streams demonstrate resilience, such as Microsoft, Siemens, and AWS.
  • Establish New Digital Operating Models for Sensing Organizations: Traditional operating models are ill-suited for today’s highly uncertain business environment. Establishing new digital operating models that promote agility, flexibility, and collaboration across the organization is essential for long-term survival. To achieve this, executives must create a digital nerve center to holistically monitor short-term crisis responses and strategic redesigns. This requires moving away from isolated, knowledge-based planning and decision-making and building on a centralized, semantically correct data model that connects all key functions with real-time market and business data. Artificial intelligence is used to automate repetitive tasks, optimize processes, and generate insights that provide end-to-end visibility into the impact of decisions. Digital nerve centers recognize that genius comes from a collection of many people with different experiences and perspectives and enable seamless collaboration across functions and geographies. Such “intelligent” organizations are amorphous entities that change their structure over time to reflect the impulses in their environment and continuously evolve toward new, dynamic, and uncertain markets to develop innovative business areas. Their core competence is learning at the periphery of the organization.

In conclusion, life and business is a journey, not an event. Leadership in extremely uncertain environments requires building teams that can weather uncertainty and change requires creating systems for support and dialogue. This is in stark contrast to toughness but strengthens resilience.

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/ Effectively navigate the challenges of the present and proactively shape the future
Effectively navigate the challenges of the present and proactively shape the future

Source: bluegain Analysis [2023]

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/ ABOUT THE AUTHOR
  • Dr. Carsten Linz is the CEO of bluegain. Formerly Group Digital Officer at BASF and Business Development Officer at SAP, he is known for building €100 million businesses and leading large-scale transformations affecting 60,000+ employees. He is represented on boards including Shareability’s Technology & Innovation Committee and Social Impact. A member of the World Economic Forum’s Expert Network, Dr. Linz is also a published author who shares his expertise as an educator in executive programs at top business schools.

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