Summarized from The Quest for Resilience by Gary
Hamel and Liisa Valikangas, Harvard Business Review
Resilience - The ability to dynamically reinvent business
models and strategies as circumstances change.
Strategic Resilience – Continuously anticipating and
adjusting to deep, secular trends that can permanently impair the power of a
Historical factors for incumbency success
from competition by regulatory protection and oligopolistic practices
capital entry barriers
Companies had to work to get better but they seldom had to
get different – not at their core, not in their essence. Now continued success
no longer hinges on momentum but rather, on resilience – the ability to
dynamically reinvent business models and strategies as circumstances change.
Strategic resilience is not about responding to a one time
crisis. It’s not about rebounding from a setback. It’s about continuously anticipating
and adjusting to deep, secular trends that can permanently impair the earning
power of a core business. It’s about having the capacity to change before the
case for change becomes desperately obvious.
To thrive in turbulent times, companies must become as efficient
at renewal as they are at producing today’s products and services. Renewal must
be the natural consequence of an organization’s innate resilience.
The quest for resilience can’t start with an inventory of
best practices. Today’s best practices are manifestly inadequate. Instead, it
must begin with an aspiration: zero trauma. The goal is a strategy that is
constantly making its future rather than defending its past. The goal is a
company where revolutionary change happens in lightening-quick, evolutionary
steps – with no colossal write-offs, and no indiscriminate, across-the-board
layoffs. In a truly resilient organization, there is plenty of excitement, but
there is no trauma.
Any organization that hopes to become resilient must address
Cognitive Challenge: A company must become entirely free of denial,
nostalgia, and arrogance. It must be deeply conscious of what’s changing
and perpetually willing to consider how those changes are likely to affect
the current success.
Strategic Challenge: Resilience requires alternatives as well as awareness
– the ability to create a plethora of new options as compelling
alternatives to dying strategies.
Political Challenge: An organization must be able to divert resources from
yesterday’s products and programs to tomorrow’s products. This means
building an ability to support a broad portfolio of breakout experiments
with the necessary capital and talent.
Ideological Challenge: Optimizing a business model that is slowly becoming
irrelevant can’t secure a company’s future. If renewal is to become
continuous and opportunity-driven, rather than episodic and crisis-driven,
companies will need to embrace a creed that extends beyond operational
excellence and flawless execution.
Confidence in the future of a business depends on the extent
to which it has mastered three essential forms of innovation.
– A company needs an unconventional strategy to produce unconventional
financial returns. Industry revolution is creative destruction. It is
innovation with respect to industry rules.
– To reinvent its industry, an incumbent must first reinvent itself.
Strategic renewal is creative reconstruction. It requires innovation with
respect to one’s traditional business model.
– Resilience refers to a capacity for continuous reconstruction. It
requires innovation with respect to those organizational values,
processes, and behaviors that systematically favor perpetuation over
Why resilience matters:
- A company
that fails to adjust to its changing environment soon loses its relevance,
its customers, and, ultimately, the support of its stakeholders.
- A lack
of resilience may go uncorrected for a considerable period of time, while
constituents remain underserved and society’s resources are squandered.
organization fails when it deserves to fail, that is, when it has proven
itself to be consistently unsuccessful in meeting the expectations of its
is important because time enables complexity and to elaborate a simple
idea into a robust operational model. This is a reason to imbue
organizations with the capacity to dynamically adjust their strategies as
they work to fulfill their long-term missions.
Our institutions constitute the legacy of our collective,
purposeful selves. We hope they will do well and be well treated by our
successors. This hope for the future is a reciprocal responsibility – that we
be good stewards of the institutions we have inherited from our forebears. A
noble past, however, does not entitle an institution to an illustrious future.
Institutions deserve to endure only if they are capable of withstanding the
onslaught of new institutions. The best way of honoring an institutional legacy
is to extend it, and the best way to extend it is to improve the organization’s
capacity for continuous renewal.
While there is no simple recipe for building a resilient
organization, a decade of research on innovation and renewal suggest a few
Denial - even “unexpected” shocks can
often be anticipated if one is paying close attention
in future thinking - Make a habit of visiting the places where change happens
first. Spend time thinking through the second-and third-order consequences of
changes you have witnessed.
out the filterers – Make sure that future thinkers’ views are not censored by
the custodians of convention and their access is not blocked by those who
believe they are paid to protect leaders from unpleasant truths.
strategy decay – Know when a dearly beloved strategy is going from ripe to
Replication – Is our strategy losing its
Supplantation – Is our strategy in danger of being
Exhaustion – Is our strategy reaching the point of exhaustion?
Evisceration – Is increasing customer power
eviscerating our margins?
Variety – The larger the variety of actions available to a system, the larger
the variety of perturbations it is able to accommodate.
to broad-based, small-scale strategic experimentation instead of grand,
an experimentation process.
a broadly shared sense of direction rather than a tightly circumscribed
definition of served market or an allegiance to one particular business model.
counts is how the portfolio performs - the value of your successes when
compared with your failures.
Resources – Businesses must minimize their propensity to overfund legacy
strategies and overcome the politics of status quo fund allocation.
and fund the unconventional ideas and initiatives that might yield an even
higher return than existing programs and processes.
seed funding within divisions for internal innovators whose ideas are aimed at
transforming the core business in ways large and small.
that human skills are even more critical than cash and allow project teams
substantial amount of freedom in negotiating membership.
that transformational projects typically offer transformation opportunities for
personal and professional growth.
Paradox – An accelerating pace of change demands an accelerating pace of
that optimization is sufficient only as long as there is no fundamental change
in what is wanted by customers.
when working to resize costs to accommodate a deflationary economy and
unprecedented competitive pressure will not revitalize a moribund business
strategic variety, wide-scale experimentation, and rapid resource deployment in
employee training, performance metrics, and management processes.
as much energy to laying the groundwork for perpetual renewal as to building
foundations for operational efficiency.
Any company that can make sense
of its environment, generate strategic options, and realign its resources
faster than its rival will enjoy a decisive advantage. This is the essence of
resilience. And it will prove to be the ultimate competitive advantage in the
age of turbulence – when companies are being challenged to change more
profoundly, and more rapidly, than ever before.