Why Resilient Companies Embrace Strategic Innovation

According to the American Enterprise Institute, 89% of the companies listed on the Fortune 500 in 1955 are no longer on the list.   Many no longer exist.   Of those 500 companies, only 61 still remain.   Those companies — names like Boeing, Kellogg, Procter and Gamble, IBM, and Whirlpool — have remained because of one thing — a willingness to do whatever it takes to remain relevant and resilient, including constant change and adaptation.   In their unceasing quest for market leadership, these firms have embraced the constant and relentless hunt for “what’s next”… for the next innovation that will advance their markets to the next stage.   When new customer needs and demands have arisen out of either changing fashion or technological evolution, these companies were right there to embrace new technologies, adopt new business models, and respond however appropriately to meet these needs and deliver new value and experiences.   They have not been afraid to experiment and innovate in order to remain the leaders they are today.
 

It is with this thought that I would like to suggest that long-term resilience and strategic innovation are joined at the hip.   Companies cannot – and will not – be resilient unless they adopt the understanding that a relentless pursuit of innovation is one of the key things that will guarantee they will be around for the next 50 or 100 years.   Strategic innovation is an absolute mandate for the type of resilience these 61 companies have demonstrated.
 

But resilience also has broader precepts than just delivering “the next great thing”.   Resilience Theory (the theory of resilient systems) has for decades been applied to both ecological systems (notably the work of Canadian C.S. Holling) and to social systems – individuals, families, and communities, with much written in both areas.   But what we care about here is the idea of resilience as applied to business organizations, a topic of discourse in the business community for the last 30 years or so, with books like In Search of Excellence, Good to Great, and Built to Last.   The characteristics of resilient business organizations were well reflected in Diane Coutu’s 2002 HBR article “How Resilience Works”. 

There, what we now think of as innovators were known as bricoleurs, and their trade as bricolage (so-named by the French anthropologist Claude Levi-Strauss).   Resilient organizations were said to be the product of three things… a staunch acceptance of reality, an ability to make meaning out of hardship through embedded values, and the ability to improvise.   Authors like Tom Peters and Jim Collins have added their thoughts to this list as well.
 

More recently, a new movement has arisen which I believe many businesses can draw inspiration from.   This is the 100 Resilient Cities movement (100RC).   According to 100 Resilient Cities’ website (100resilientcities.org):
 

• City resilience is the capacity of individuals, communities, institutions, businesses, and systems within a city to survive, adapt, and grow no matter what kinds of chronic stresses and acute shocks they experience.   100RC supports the adoption and incorporation of a view of resilience that includes not just the shocks – earthquakes, fires, floods, etc. – but also the stresses that weaken the fabric of a city on a day to day or cyclical basis.   Examples of these stresses include high unemployment; an overtaxed or inefficient public transportation system; endemic violence; or chronic food and water shortages.   By addressing both the shocks and the stresses, a city becomes more able to respond to adverse events, and is overall better able to deliver basic functions in both good times and bad, to all populations.

• Resilient systems withstand, respond to, and adapt more readily to shocks and stresses to emerge stronger after tough times, and live better in good times.   Resilience enables cities to evaluate their exposure to specific shocks and stresses, to develop a proactive and integrated plan to address those challenges, and to respond to them more effectively.   The qualities of resilient systems include being: reflective, robust, flexible, integrated, resourceful, redundant, and inclusive.   Enhancing the qualities the individual systems that make up a city will improve the resilience of the city overall.

I am of the belief that resilience in businesses is not all that different from resilience in cities.   Business resilience is the capacity of companies and their supporting business ecosystems to survive, adapt, and grow no matter what kinds of market stresses and shocks they experience over time, whether sudden or gradual, temporal or chronic.   But in order to be resilient, companies – like cities – must be proactive in developing a plan of attack.   And this plan of attack must be located not only in where their markets are today, but more importantly, in where their markets are headed tomorrow.   Strategies must be forward-looking and future-focused, with the anticipation of shocks and stresses along this future journey.
 

Here are what I believe are the seven qualities of a truly resilient business:
 

1. Being deeply attuned to the realities of their markets, both in the current state and in the likely states reflected in certain future scenarios.

2. Being anchored in a set of immutable values that begin with what it means for humans to work together to bring great value and experiences to other humans, wherever they are in the world.   And… always being reflective about their actions to know that those actions flow out of these values.

3. Embracing an optimistic sense of meaning and purpose for their future.   By definition, an optimistic sense of purpose has to stem out of a collective emotion of love and not fear.

4. Being inclusive and integrated… looking beyond “us versus them”, competitors’ actions, and other roadblocks standing in the way, to see a path toward a better future where “a rising tide raises all ships.”

5. Providing the robustness that only comes from “capacity redundancy”, which means that rather than pursuing the nth level of efficiency, the pursuit is for the headroom and elbowroom that teams need to deliver greater sustainable value to their markets.

6. Ensuring the flexibility and capability to respond rapidly to changing market situations, business climates, technology enablers, and other external factors.   This means being willing to constantly adapt.

7. Having an undying hunger for pushing the envelope of what is possible in the pursuit of great value and experiences.   This inherently drives the quest for “what’s next”.