The future of resiliency is not resiliency
Zona Walton [ADP - Global Business Resiliency] and I spoke at a private conference last month. The title of our session was The Future of Resiliency. We explored the idea that the future of resiliency isn’t resiliency; that is, it will be something else.
Question 1: What is resiliency?
We started our session by collaborating with participants on the definition of resiliency. We all agreed, conceptually, on its meaning. In general, everyone said that resiliency is concerned with recovery, adapting, and protecting; that is, the ability to bounce back. The British Standard, BS65000 (2014) defines “organizational resilience” as “ability of an organization to anticipate, prepare for, and respond and adapt to incremental change and sudden disruptions in order to survive and prosper.”
Then we looked at how we apply resiliency to organizations, as well as how it has changed over the last thirty-years. Here are a few examples the group came up with:
The definition of resiliency has not change, but how we apply it has.
Question 2: Why does the application of resiliency continue to change?
The application of resiliency changes because our business and risk environments continue to change. We discussed two variables that drive the transformation of resiliency: complexity and change. We know the sources of complexity are accelerating. These sources of complexity include entities and events that are connected. The density and speed of their connection makes it difficult for us to see cause and effect and almost impossible to determine cascading effects. We also know that rapid and complex change are creating an environment of instability and continuing state of persistent threats. We all understood that our businesses would continue to operate across a spectrum of threats.
We asked ourselves what are the variables driving complexity and change. Here’s what we came up with [#1, #2, and #3 come directly from Out of the Mountains by David Kilcullen]:
- Population: At the start of the industrial revolution in 1750, world population was about 750 million. This population took 150 years to double, reaching 1.5 billion in 1900. It then doubled again in only 60 years, to reach 3 billion by 1960. This, of course, represents a sharp increase in population growth – one that occurred despite the enormous effect of the two world wars, which between them killed more than 70 million people. Population growth kept accelerating after 1960s, with the world doubling yet again in only 39 years , to reach 6 billion by 1999, and adding another billion in just one decade to reach a total (in 2012) of about 7.1 billion. This growth won’t continue indefinitely: global population is expected to level off at somewhere between 9.1 and 9.3 billion humans on the planet about 2050.
- Urbanization: As population has grown, urbanization has accelerated. In 1800, for example, only 3 percent of people lived in a city with 1 million inhabitants or more; by the year 2000, 47 percent of the global population lived in cities this size. In 1950, there was only 83 cities with populations over 1 million; b 2007, there were 468. By April 2008, the world has passed the 50 percent urbanization mark, and in December 2011, the world’s most populous nation, China, announced that it had reached a level of 51.3 percent urbanization. India, with the second-largest population on the planet, will not only overtake China’s population by 2025 but will also undergo a radical shift in settlement patterns, going from approximately two-thirds rural in 2012 to two-thirds urban by 2040. By 2050, roughly 75 percent of the world’s population will be urbanized. In more immediate terms, about 1.4 million people across the world migrate to a city every week.
- Littoralization: Urban growth isn’t evenly spread: rather, cities are concentrated in coastal (littoral) areas, within a few dozen miles of the sea. Already in 2012, 80 percent of people on the planet lived within sixty miles of the sea, while 75 percent of large cities were on a coast. Of twenty-five megacities (cities with 10 million or more inhabitants) at the turn of the twenty-first century, twenty-one were on a coast or a major rive delta, while only four (Moscow, Beijing, Delhi, and Teheran) lay inland. By 2010, of the world’s ten largest cities, all but two were on a coastline or coastal delta.
- Technology: Today’s Wall Street Journal Sunday paper has more knowledge in it than a lifetime of someone who lived 200 years ago. Data Explosion: 5 exabytes of content were created between the birth of the world and 2003; today, 5 exabytes of content are created daily. Data Explosion: 5 exabytes of content were created between the birth of the world and 2003; today, 5 exabytes of content are created daily. Every minute: Facebook users share nearly 2.5 million pieces of content; Twitter users tweet nearly 300,000 times; Instagram users post nearly 220,000 new photos; YouTube users upload 72 hours of new video content; Apple users download nearly 50,000 apps; Email users send over 200 million messages; Amazon generates over $80,000 in online sales. Google: 2000: 9b, 2005: 141b, 2010: 1t (2m per minute in 2012), 2015: 4m per minute (20 petabytes of information per day in 2014).
- Corporate Life Expectancy: Average Lifespan Fortune 500: World Economic Forum: The average life span of today’s multinational, Fortune 500-size corporation is 40 to 50 years. That means the company you’re tasked with leading has a 50/50 shot at making it past what we mere mortals call middle age. A further sobering statistic tells us that almost 50% of the Fortune 500 from 1999 had disappeared from the list just ten years later. Good to Great Reversal: Mr Collins has wisely grasped this nettle before any of his critics could sting him with it. As he readily admits, several of the firms praised in his bestsellers, “Built to Last” and “Good to Great”, have since fallen from grace.
- Leadership: Average CEO Tenure: May 6, 2015 - Fortune’s own CEO data indicates that the 500 largest companies in the U.S. have a median CEO tenure of 4.9 years, but there is quite a range. Bankruptcy filings in the first half of the 20th century averaged 0.15 per 1,000 people and grew at an average annual rate of 2.4 percent. As of 2004, the filing rate was 5.3 per 1,000 people, nearly 80 times the 1920 rate.
- Decisions: [from Decisive book by Dan and Chip Heath] A KPMG study of 700 corporate mergers and acquisitions – some of the highest-stakes decisions executives make – showed that 83% failed to create any value for stakeholders. When another research team asked 2,207 executives to evaluate decisions in their organizations, 60% of the executives reported that bad decision were about as frequent as good ones. For public companies, the average premium paid in an acquisition is 41%, which means that if the target company is valued by the stock market at $100 million, the acquirer will bid $141 million for it.
These trends (variables) guarantee our business will continue to operate across a spectrum of threats. These trends drive accelerated complexity and rapid change, which create an environment of instability and a continuing state of persistent threats. Byproducts of this environment include resource demand, civil unrest, demographic changes, natural disasters, extreme organizations, failing and failed states, rise of a global economic community, networked society, etc. The list went on. [These trends are the reason why GSOCs are so important]
Question 3: What is the current situation?
Here’s the situation: we live in a world of instability, persistent threats, and accelerated complexity; yet, we have less resources, time, money, and attention than in the past. We need to change faster and more abruptly than we are comfortable with. Foresight is more difficult. The criteria for best-in-class (i.e., follow the rules) or the definition for a good vs. bad resiliency program are unclear. There is no universal perfect or good answer.
Today’s leaders need to learn to operate in this unstable and persistent threat environment (i.e., nonlinear | complex environment) to be successful.
Question 4: How do we get there?
It’s not about “things” we can buy. It’s not about how fast we can recover. It’s not about being the biggest and strongest. It’s not about being ISO aligned or certified. It is not about redundancy, backups, cross training, plans, and exercises. It is about surviving and thriving in the environment we just described by ensuring our organizations have the three capabilities as part of their DNA. The future of resiliency begins with a changing our mindset. Organizations will need to move beyond resilience and incorporate three powerful capabilities:
- Agility [Ph.D. David Alberts]
- Power to the Edge [MIT Media Labs – Ito, Joi and Jeff Howe]
- IInsights and intuition [Ph.D. Gary Klein]
Agility, power to the edge, and insights and intuition are the three areas to focus on to transform our resiliency programs and initiatives to meet tomorrow’s need.
Question 5: How can we apply these capabilities, attributes, to our organizations?
As a group, we discussed five rapid ways organizations can apply these three capabilities.
- Investigations: After Action Reviews (AARs), case studies, pre-mortems
- Assessments: Risk assessments, business partner assessments
- Governance: structure, policy, performance indicators
- Scenario planning
- Capital expenditures
Question 6: How are organizations currently applying these concepts?
As a group, we discussed a number of examples of where organizations are applying these capabilities. Here are just a few examples:
- 3-D printing: 3-D printing will change manufacturing resiliency. The ability to ‘print’ equipment as needed could eliminate equipment failure risk. We will also be able to model specific threats.
- Security and intelligence centers: Organizations are mimicking what was once only a government capability of in-house security and intelligence centers. Organizations are looking to replicate functions that were once only performed by CIA, NSA, FBI, and other agencies. An example would be a Global Security Operation Center (GSOC).
- Think tank: Organizations are mimicking university think tanks like infamous MIT Media Lab. These in-house play-labs allow organizations to cut through the cloudy future to provide better foresight and see the edges of the future.
- Venture Capitalist and Private Equity: Organizations are building their own portfolio of investments.
- Biomimicry: Studying nature to solve problems and design.
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