Page 112 - The Resilient Organization

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How do you build organizational resilience beyond the leadership’s capa-
bility? The defining dimensions are resourcefulness, robustness, and adap-
tiveness. This chapter considers each issue in turn and describes strategies
that will enhance such organizational resilience. Sometimes the most useful
strategy may be counterintuitive—rather than hoarding resources for a safe-
ty cushion, perhaps the resilient response is to use a resource constraint as
a catalyst to develop an innovation capability.

ORGANIZATIONAL RESOURCEFULNESS:
RESILIENCE AS INNOVATION

If I were not so convinced of your Highness’s integrity, I should imag-
ine that you wished to gamble with the King of France’s forces with-
out having any of your own, to see at no risk what would happen.
—Liddell Hart (1968: 99)

How much do you need for a rainy day? This is the traditional question of
resilience. Illustrative are the recent calls for raising capital ratios in banks
that had fallen from 10:1 in the 1970s to 73.7:1 by 2008 (Ferguson, 2009).
This indicates very high leverage, which was a highly beneficial position
when the wealth creation strategy was working well. But when the strategy
failed, the financial crisis exposed a severe lack of resilience. It had been
recommended, for instance, that “precautionary reserves” be increased
“not in the ratio of the volume of business, but in the square root of that
ratio” (Olivera, 1971: 1095).
High resource leverage—using resources to their maximum capacity and
beyond—has often been seen as smart business. Such high leverage has been
seen to drive innovation, noticeably in the financial industry. Interestingly,

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