Resilience is just as much about governance as it is about culture

The key differentiator for companies today is Resilience, and I think it is imperative that companies go beyond its cultural dimension, and also truly embed it into their governance structures.

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One of the most extraordinary, and gut wrenching stories I heard this year came from a journalist from the New York Times. He described a scene in a Ukrainian hospital, where the entire power of the facility was blown out because of the Russian precision bombing of the electricity infrastructure. A specialist who was at that time performing an open heart surgery on a young child, was able to continue working on the patient, with 6 assistants lighting the operating table with flashlights.

The patient lived, and for me this was one of the truly heroic stories of robustness. How individuals, but also organizations can continue to work under extreme pressure, extra-ordinary circumstances, in a world that seems to have gone completely bonkers.

Robustness and resilience

Many companies have shown extreme robustness during the pandemic, and even more so in the Never Normal aftermath that followed. But Robustness is not enough. Now, more than ever, organizations will have to show maximum Resilience: the ability to absorb, to bounce back or rather take the energy of the obstacle and 'bounce forward'. To absorb the energy of the Never Normal, and use that to your advantage in an increasingly fluid and volatile world.

Large organizations typically demonstrate remarkable robustness. They can take quite a big beating before they crumble or fall. But they typically do NOT demonstrate exceptional resilience. That, in my opinion, will be the biggest re-learning companies will have to master.

Resilience is typically something that one associates with culture. True, a significant element of resilience will lie in the capability of individuals to rise to the occasion, showcase agility and flexibility, and demonstrate a mindset that will foster and develop that resilience. Absolutely.

But that resilience should not just be reflected in the cultural aspects of organizations. For years I have been an advocate of building resilience and balance into the governance structures and mechanisms of organizations.

Culture and governance

The larger companies become, the more they tend to build guard-rails and mechanisms of 'control'. In many markets, certainly regulated markets like healthcare and finance, those are crucial, and companies must develop these control mechanisms to ensure that the company acts in the right, proper and legal manner. But a significant part of these large organizations then becomes dominated by control structures, and therefore loses a consequential capacity for innovation. That is dangerous in general, lethal in volatile times.

In the past I was so naive as to propose a 'disruption committee' as a counterbalance to the typical 'risk committee' found in many boards of large (publicly traded) organizations. Having served for two years on the board of a European commercial bank, I now understand that this was probably a bridge too far. But that bank has developed a new 'technology & innovation committee', where not only non-financial risk is discussed, but primarily the innovation opportunities that lie ahead, the cost and consequences of NOT innovating, and the true possible rewards of the Day After Tomorrow.

2023 will be a challenging year, in many regions of the world, and Robustness will prove to be an absolute must here, but it will certainly not be enough. The key differentiator will be Resilience, and I think it is imperative that companies go beyond its cultural dimension, and also truly embed it into their governance structures.

That is what will separate the Phoenixes from the Dinosaurs.