The Five Key Elements of Organisational Resilience

8/7/2019 The Five Key Elements of Organisational Resilience

1/7

Organisational Resilience Pty Ltd: 85 Guthrie Street, Osborne Park, Western Australia. 6017+61-(0)8-9446-2099

The Five Key Elements of

Organisational Resilience


2/7

www.organisationalresilience.com.au


Thank you for requesting our whitepaper. We hope you will find it both interesting and useful.

Section One

Section one discusses the role of resilience, and why it is becoming an important part of everyday business.

Section Two

Section two looks at the five key elements of organisational resilience which can be used to deliver improved

bottom line business results.

Section Three

Section three looks at integrated approaches delivering improved business performance and creates competitive

advantages.


3/7



Section One - The role ofresilience, and why it is becoming an

important part of everyday business.

This section discusses resilience in business today

and why it is becoming part of everyday business

life. Since 2009 Organisational Resilience Pty Ltd

has focussed exclusively on advising companies,

Government agencies and other organisations on

developing their resilience capacities.

Whilst risk management is not new, many

organisations find it difficult to achieve the ultimate

outcome Resilience.

Conducting risk and vulnerability assessments and

more importantly, using the data generated to

deliver meaningful outcomes that improve the

bottom-line results to an organisation remains the

holy grail. For many companies, risk

management is a requirement of regulation of some

type or another. Whilst this is a sound reason for

undertaking risk management activities in a

structured and formalised way, often businesses donot realise the ultimate value due to an absence of

courage and innovation by management.

Linking risk management to the business planning

and strategy framework is a key to delivering

business objectives, and creating a resilient

organisation, that gains competitive advantage by

developing adaptive capabilities.

Companies listed on the stock exchanges acrossthe globe now have obligations to identify and

manage risks on an ongoing basis.

In Australia Principle 7 of the Australian Stock

Exchanges Principles of Good Corporate

Governance and Best Practise Recommendation

states: A Company should Recognise and

Manage Risk: Establish a Sound System of Risk

Oversight and Management and Internal

Control.

In the United Kingdom: Guidance for Directors on

the Combined Code (1999) is also called The

Turnbull Report.

In The USA in response to the collapse of Enron,

Worldcom, and other corporations, the U.S.

Congress passed the Sarbanes-OxleyAct of 2002.

Whilst in Singapore laws such as the Companies

Act and the Securities and Futures Act, as well as

stock exchange regulations, make some corporate

governance disclosures mandatory.

The general duty of care requirements under the

Occupational Health and Safety legislation acrossthe globe has now placed greater responsibilities

and liabilities on managers and directors to ensure

work place conditions and work practices do not

endanger the lives of workers, whether they are

employees or contractors.

Organisations that build risk management into their

business as usual operations will inevitably find

improved business outcomes as a result of

developing a risk aware culture within the

organisation. When risks are identified and

assessed against business objectives, a clearer

picture is generated as to what events may occur

that will prevent or disrupt the organisations from

achieving its corporate and operational objectives.

These outcomes are becoming more commonly

known as organisational resilience.

All directors need to exercise a general duty of care

and in the case of publicly listed companies this is a

responsibility of fulfilling company listing obligations.More importantly the coupling of statutory

requirements for risk management with a desire for

business improvement, should deliver the best

results for an organisation.


4/7



Section Two Five KeyElements of Organisational Resilience

Organisational Culture

The organisation selects, motivates,

educates and supports people who have

the requisite skills to flourish in ambiguous

and uncertain environments - enabling

people to respond quickly, decisively and

effectively to unforeseen andunpredictable forces

The organisations workforce impassioned

by a strong sense of leadership

The organisation maintains a resilient

culture and values that builds a sense of

purpose, empowerment, trust and

accountability

The organisation has transparent support

functions to minimise emotional trauma

Interdependencies

The organisation maintains strong, broad

connection networks

The design and architecture of the

organisation is approached systematically,

and not in a piecemeal way

The organisations sound business and

technical architecture, ensures clear

thinking about function, and effective

organisational designThe organisation communication structure

is open and non hierarchical

Situational Awareness

The organisation is in tune with the

environment

The organisation faces down reality

The organisation understands risk and

potential disruptions (both positive and

negative)

Vulnerability ManagementThe organisation develops robust

processes for identifying and analysingvulnerabilities

The organisation has well developed

planning strategies

The organisation demands comprehensive

participation in stress testing and

exercises

The organisation has a clear

understanding of the capability and

capacity of its internal resources

The organisation has a clear

understanding of capability, capacity and

availability of external resources

The organisation promotes and

understands the criticality of

organisational connectivity as a key

performance enabler

The organisation promotes business wide

staff engagement and involvement

Adaptive CapacitiesThe organisation learns and adapts to newrisk environments, both sudden and

evolving

The organisation builds in flexibility,

redundancy and options

The organisation encourages innovation

and experimentation

The organisation operates without

boundaries and encourages distributed

settings that diffuse and disperseenterprise assets and operations

The organisation has the ability to not only

bounce back but to also bounce forward

with speed, grace, determination and

precision

The organisation has the ability to

recognise and react nimbly to

opportunities as they arise


5/7



Section Three Integratedapproaches deliver improved business

performance and creates competitive

advantages

The world is evolving at an ever increasing rate;

some people even believe that the advances in

knowledge and technology are making modern

society untouchable by disruptive events. This

belief is challenged by Debora MacKenzie, of the

New Scientist, who wrote As the networks that

connect us become ever more intricate and finely

tuned, modern civilisation is becoming increasinglyvulnerable 1. Mackenzie suggested that once

society develops beyond a certain level of

complexity it becomes increasingly fragile, where a

minor disturbance may bring everything crashing

down 2. In his book The Collapse of Complex

Societies, Joseph Tainter discusses a possible

cause of this being diminishing returns a situation

where an ever-increasing level of effort and

complexity is required to support the necessary

returns. As returns diminish and complexityincreases, society will inevitably reach a point

where complexity will outweigh the return, resulting

in the balance of societal resilience being

unfavourable.

Resilience is not a plan, or a checklist. The capacity

of resilience is found in an organisations culture,

attitudes and values. As Dr Erica Seville, of the

University of Canterbury, said, Resilience is not

something you do, it is something you are. Hencewe need to look beyond the tactical elements of

resilience. We need to look at those elements which

are non tangible, those elements which make a

truly resilient organisation.

Leading organisations are putting plans in place to

manage outcomes, rather than specific scenarios

and are creating a capabilities-based approach. An

organisation may not be able to anticipate every

scenario, but it may create response capabilities

that will be resilient no matter what the cause of

disruption. To have organisational resilience the

organisation needs to:

anticipate and understand emerging

threats;

understand the impact of threats on the

business, supply chain, the community in

which they operate and upon employees

lives;

develop and maintain supportive

partnerships with critical stakeholders in

their supply chain, sector and community;

respond to and recover from disruptions as

a unified whole of organisation team;

adapt to disruptions and react flexibly to

restore routine functions and strengthen

the organisation;

ensure staff members are willing and able

to support the organisation to achieve

objectives in times of adversity;

leadership must have clear direction while

enabling devolved problem solving.


6/7



Case Study A fire that changedan industry

About 8 p.m. on March 17, 2000, a lightning boltstruck a high-voltage electricity line in New Mexico.

As power oscillated, a fire broke out in the Royal

Philips Electronics radio frequency chip

manufacturing plant in Albuquerque. Personnel

reacted quickly and extinguished the fire within ten

minutes, a setback, no doubt, but definitely not a

calamity.

In Albuquerque, Philips staff grappled with the

aftermath of the fire. They soon realised thatcleanup would take at least a week, which meant

that customers would be affected, at least

temporarily. Nokia and its archrival, Ericsson,

accounted for 40% of the plants shipments. Philips

management decided that their orders would be

filled first when the plant returned to normal.

Recognising that Philips had a problem that could

affect the production of several million mobile

phones, Nokia took three key steps:

A team of executives and engineers

focused on Philips, seeking a major role in

developing alternative plans and pressed

Nokias case with Philips executives.

Philips responded by rearranging its plans

in factories as far away as Eindhoven and

Shanghai.

A second cross-continental team

redesigned some chips so that they could

be produced in other Philips and non-Philips plants.

A third group worked to find alternative

manufacturers to reduce pressure on

Philips. Two suppliers responded within

five days.

At the end of March, Ericsson finally came to

appreciate the gravity of the problem. However, for

reasons unknown, it still did not act speedily.

Nokias initial assessment of the problem and its

rapid and effective response averted a catastrophic

event. In the third quarter of 2000, its profits rose

42% as it expanded its share of the global market to

30%. Its quarterly statements and annual report for2000 did not even mention the fire.

On July 20, 2000, Ericsson reported that the fire

and component shortages had caused a second-

quarter operating loss of $200 million in its mobile

phone division. Six months later, it reported

divisional annual losses of $1.68 billion, a 3% loss

of market share. It also announced the outsourcing

of cell phone manufacturing to Flextronics and the

elimination of several thousand jobs.

In April 2001, Ericsson signed a Memorandum of

Understanding to create Sony Ericsson; the

informal negotiations that led to this step had

started at the height of the crisis in July 2000, the

deal was finalised in October 2001. Ericssons

problems spread across the entire organisation and

it was not until 2004, that it turned the corner, but as

a much smaller company. Compared to 2000, its

revenues had fallen 52%, total assets about 30%,and number of employees 52%.


7/7



Conclusion

Resilient organisations are hardened to survivedisruptions of all kinds. They are more competitive

on a day-to-day basis and react to changing market

demand ahead of their competitors. They consider

disruptions to be opportunities rather than

problems. Resilient organisations bounce back

ahead of the competition, when large-scale

disruptions affect a whole industry or an entire

region, and win increased market share and

customer loyalty.

Organisational Resilience

Pty LtdAre independent risk and resilience advisors,

operating internationally, from our base in Australia

utilising networks across Asia, the United Kingdom

Europe, Africa and North America. We reinforce our

work through innovative utilisation of the latest

technology including teleconferences; email; online

client workspaces and data vaults. Our

embracement of technology in this way ensures we

can practically and cost effectively support our

clients globally although we operate from a base in

Australia.

Our team of professionals boast a multidisciplinary

range of skills and experiences encompassing the

diversity of the entire risk management

environment. With each of our team members

specialising in specific risk management disciplines,

our services deliver value through distinctly evident

outcomes.

The Five Key Elements of Organisational Resilience

Documents

Transcript of The Five Key Elements of Organisational Resilience