Abstract
Resilience is a word that is gaining increasing currency in the field of strategic management (Cascio, Foreign Policy 172:82–95, 2009) although not without some criticism (Rose, Environmental Hazards: Human and Policy Dimensions 6:1–16, 2007). Use of the word is evolving from its classical etymology and narrow engineering definition as bounce-back to the status quo ante. In life sciences resilience is taken to be evolutionary in nature. This understanding accords with the reality of living in dynamic networks, where our ‘bounded rationality’ (Simon, H.A. [1956] 1982. Reply: Surrogates for uncertain decision problems. In Models of bounded rationality, vol. 1: Economic analysis and public policy. Cambridge, MA: The MIT Press.) is increasingly dangerous to ignore. On these terms resilience is a realist concept for enabling bodies to bounce forward, innovating appropriately through learning from a past overtaken by events and exploration of the uncertainties ahead.
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Resilience is the enduring power of a body or bodies for transformation, renewal and recovery through the flux of interactions and flow of events. Decisive moments – crises proper – continually test for resilience; this process is evolutionary in nature. Resilience grows and decays as the innovative capacity to select activities from a variety of capabilities changes, enriched or not by learning.
The Evolutionary Meaning of Resilience
In this article, resilience is defined as the enduring power of a body or bodies for transformation, renewal and recovery through the flux of interactions and flow of events. The measure of resilience is how bodies bounce forward to thrive on change in dynamic networks rather than bounce back to a status quo ante overtaken by events. Achieving the former evinces strategic leadership; the latter may be expedient but can invite mismanagement. There are many hypotheses that flow from the definition offered here; all must be left open to falsification.
Resilience is not a new word but its meaning continues to evolve through time. Those changes, particularly in the last century, are of great importance to strategic management, present and future. The word resilience works at the nexus of natural, life and social sciences (Rutter 2007). In the strategic management of security – whether national, international, transnational or human – resilience is now a much-cited keyword (Cascio 2009). Its richest strategic significance is perhaps at the interface of economics and ecosystems (Simon 2005; Hodgson and Knudson 2010), where the risks and uncertainties of evolving networks abound (Dorogovtsev and Mendes 2003).
Frequent use of any word can multiply confusions (Rose 2007). For narrow specialists it may indicate interdisciplinary overstretch. So it is necessary to be precise about underpinning assumptions and the association of meanings invoked by the word ‘resilience’. Put in evolutionary rather than teleological terms the word can at least sidestep the trap of appearing to posit a grand unifying theory. In defining resilience it is also important to say what it is not. The strategic management definition is here described under three abridged subheadings:
Decision takers’ learning competencies;
Combinations of real capability options; and,
Transformational capacity for multi-innovation.
These lead to the provisional strategic conclusion that resilience is almost synonymous with competitiveness.
Decision Takers’ Learning Competencies
Dynamic networks can make the decisions and actions of us all – strategic. This is why, in the wake of the September 2000 fuel protests and in anticipation of the financial crises triggered in 2007 (Jenkin 2010; IEO 2011), the UK government endorsed the concept of ‘resilience to crises’ (MacIntosh and Granatt 2001). At the direction of then Prime Minister Tony Blair, resilience began to be sown wide and deep. Crises – as decisive moments – and network contagion had found the competencies of elites and the multitude wanting.
Orthodox approaches to risk work in only limited ways. Misusing these methods exacerbates the harm done, yet learning continues to lag behind strategic requirements. The reality of radical uncertainty has been well characterized (Keynes 1921; Knight 1921). Decision takers’ competencies can be enhanced by learning from scientific advances on several fronts, not least maths (Dorogovtsev and Goltsev 2008) and the uptake of these advances by popular social science (Watts 2004). Therefore, wilful ignorance perhaps underscores the agency problems that degrade strategic managers rather than any infestation of black swans.
Our ambivalence towards risk and uncertainty leaves us prone to irresilience. Ambivalence is easily tipped towards fear of losing the status quo. Rather than appropriate learning and unlearning, the uncertainty of self-organized criticality poised for cascading failures (Lewis 2011) adds to a sense of helplessness. This is unhealthy.
Contagion from super-spreading hubs (Haldane and May 2011) need not always mark a turn for the unendurable worse. Crises can be anticipated (Sornette 2009), their genealogy understood (Gorton 2012), and learning how to act decisively in such circumstances is feasible. It stems from our earliest experiences (Rutter 2012) and education (Tough 2013). The value of such learning becomes a mainstay to wealth creation (Beinhocker 2006) because healthy appetites for risk and uncertainty are fostered widely.
Dynamic networks require competencies for distributed decision-taking among diverse bodies not clones as hubs for irresilience. Leadership on these terms is less about leaders per se and more about an enabling ethos for continuous learning within and between organizations (Augier and MacIntosh 2010). Yet as Rutter (1993) warns, understanding the value of resilience does not necessarily make it readily producible.
Combinations of Real Capability Options
The resilience challenge for strategic management is to continuously produce capabilities fit for evolving environments. Capabilities can be understood as evolving ecologies of competencies and technology (MacIntosh et al. 2012). This links the definition of capabilities as ‘routines’ that ‘confer decision options’ (Winter 2000) with meta-capabilities – that is, ‘capabilities to acquire capabilities’ (Teece et al. 1997). In so doing, evolutionary capabilities can combine the healthy exploitation of cognitive energy savings gained through selecting and performing well-honed drills with the greater rewards of exploring for breakthroughs that lead to disruptive innovation. This in no way underestimates the perils of learning myopia (Levinthal and March 1993) and the bias against exploration (March 2006).
Allowing ‘exploitation to squeeze out exploration’ is a failure of strategic management but it does occur. To avoid such failure aspirations must be kept high (Winter 2000) with strategy and leadership achieving two objectives:
Integrating a wide variety of evolving capability options; and,
Deepening the capacity for innovation into more composable options.
Neither of these can be achieved by organizational introspection (Dosi et al. 2000). All enterprises are enmeshed in dynamic risky relationships. Crises just make that obvious as the inadequacies of technology readiness levels and training needs analysis emerge. ‘Transformation in contact’ (Dannatt 2009) with adversity is made harder if the mesh of competencies and technology is thin and patchy. The agility and versatility for surge and mutual aid break down well before the exhaustion of combinations of real capability options. The resilience to overcome these organizational pathologies is not just an issue for integrated emergency management or improved project and programme management. It is strategic.
Transformative Capacity for Multi-Innovation
Confusing resilience with irresilience is unhealthy. Being overcome by the strategic challenges ahead is all too easy, particularly as the perils of learning myopia resonate with the great stagnation (Cowan 2011) and the uncertain prospects for a great rebalancing (Pettis 2013). A revolution in strategic management may seem warranted but such reformation tends to be undone by counter-reformation (Augier and March 2011). It is vital to have good diagnostics for resilience in terms of both depth and breadth.
Some idealists have called for the encouragement of ‘de-growth’ (Daly 1996), some urge the greater uptake of leisure (Skidelsky and Skidelsky 2012), whilst others advocate mass open innovation (Jeroen et al. 2010). Strategic management will find insurmountable problems with these prescriptions. An evolutionary process (Whitehead 1978) of learning that affirms resilience as transformational (Allen 2010), because it is grounded in empiricist combinations of real capability options, is more pragmatic. It has taken leading ecologists in the adaptive rut of ‘panarchy’ 30 years to realize this (Holling 1973, 2001).
Some ecologists are now acknowledging the economics of innovation (Moore and Westley 2011). Inasmuch as the move from seeing innovation as a (fractured) pipeline to an ecosystem is important, there are impediments that need to be acknowledged. First, academia’s contribution to that ecosystem remains fragmented and largely entrenched at the invention end of a pipeline (Etzkowitz and Leydesdorf 2001). Secondly, irrespective of the unrelenting push of technological change at consumers, transformative research has been in deep deficit for decades (Braben 2004, 2008). Overcoming these impediments is vital to resilience and strategic management.
Composable design principles and diagnostics for enabling transformative research to enhance our capacity for multi-innovation is the ultimate measure of resilience.
The Value of Resilience
To endure involves becoming different (Prigogine 1997) rather than being the same. This quality of resilience cannot be effortless or risk-free, but it is vital. Selecting and enabling people with the cognitive competencies to deliver ‘strategic resilience’ (Marshalla and Ojiakoa 2010) helps. Resilience is not about buying protective measures to stop risk or actuarial insurance to displace it. Investing in resilience enhances the competitive fitness of bodies.
Strategic management increasingly recognizes that it must combine ‘profitability’ with ‘growth’ (Chakravarthy and Lorange 2010) to thrive in an uncertain world. Accounting standards that incorporate better measures of value (Pitelis and Vasilaros 2010) will be encouraging. Recent work on ‘shared-value’ (Porter and Kramer 2011) not only hints at healthier ways to reconcile competitiveness and cooperativeness but also the importance of more basic research into the value of resilience, for example, to be found in the advances of evolutionary economics (Foster and Metcalfe 2012). Strategic management worth the name will need these measures if, in the wake of the economic crises triggered in 2007, resilience is to grow rather than decay in the face of the even greater strategic challenges that lie ahead.
Enterprises or bodies that do not discover healthy combinations of capabilities through exploring and exploiting tend to fail sooner rather than later. Their irresilience becomes evident. Resilience lives with and seeks to learn from our bounded rationality (Simon 1955). Bodies that transform build resilience through the healthy uptake of innovation, both in response to and by shaping ever-changing environments.
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Macintosh, J. (2018). Resilience. In: Augier, M., Teece, D.J. (eds) The Palgrave Encyclopedia of Strategic Management. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-00772-8_511
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