Resilience - riding the waves of uncertainty
Kaylene Sampson, Senior Research Consultant, Resilient Organisations
My home town has been rebuilding from crisis for almost eight years. September 2018 marks the eight-year anniversary of the first of a series of devastating earthquakes to hit Christchurch, New Zealand. Since the first earthquake on 4 September 2010, thousands of aftershocks have rocked my city, including the 22nd February 2011quake which caused 185 fatalities and countless injuries alongside substantial damage to the city.
As I was adjusting to this new post-disaster city, the government began counting up the cost. The physical rebuild of the commercial sector was estimated at $16 NZD billion on top of the significant individual losses experienced through changes to the business environment. Media reports suggested that around two-thirds of New Zealand businesses were impacted. Loss of premises, supply chain problems, destruction of necessary infrastructure, low staff morale, changes in demand and diminished talent pools were among the challenges facing businesses up and down New Zealand.
A creative approach
In the new post-disaster environment, I saw the efforts of Christchurch businesses taking creative steps to adjust to their changed metaphorical and physical landscape. Some hospitality businesses reinvented themselves as mobile food outlets while others simply closed their doors, cognisant of the need to wait. Brightly coloured and modified shipping containers began to pop up all over the city. Serving everything from fast food to fashion, these relocatable retail outlets were a quick and agile solution to damaged buildings.
Some businesses increased their online presence in an attempt to address the dilemma and maintain turnover. As some residents exited and others migrated inwards, diversification of products or services was yet another solution to changing local circumstance. Parts of the construction industry partnered with the demolition industry, recognising the growth in demand for their new business partner as well as the likely halt on their own core business, at least in the short term. It seems creativity has become the new normal in much of recent Christchurch business activity.
Ensuring you can ‘hang out your shingle’
During business as usual most businesses sit in an approximate equilibrium; that is the demand for goods and services approximates the ability to meet it. However, what about a non-BAU environment? How does this equilibrium shift and how do businesses respond?
After a major disruption perhaps the most immediate and traditional concern focusses on ensuring you can continue to open your doors, ‘hang out your shingle’ and proceed.
Much of standard BCP efforts focus on ensuring that your operation will still be able to meet the needs of your customers. Being certain you have back up for critical infrastructure and having potential alternative locations are among the kinds of well thought out actions that address this concern. However, while maintaining operability is critical, the nature of impact can be unpredictable and complex, meaning that accounting for every likely scenario can be exhausting and costly. Additionally, focusing on operability is only half of the story; the other part relates to managing demand – the bit customers bring to the table.
Winners and losers
In the years following the Christchurch quakes customer demand was simply not uniform across all businesses. Around one fifth of the businesses we engaged with told us that initial decreases in demand were followed by a rapid and sustained call for their goods or services. While some owners reported that immediate demand was strong but short-lived, a small number of businesses experienced slow and gradual decline or perpetual volatility that preceded closing their doors permanently. It is perhaps unsurprising that a few as one in ten reported “no change” in the patterns of demand they experienced.
It seems that the nature of the disaster itself became instrumental in the kinds of goods or services the population sought out. Damaged buildings need demolition before builders can swing a hammer, and the influx of trades staff improved the turnover of fast food outlets and temporary accommodation. In short, the quakes produced clear winners and loser on the new business landscape in which demand changed in one way or another for almost all businesses. So, if that is the case, how can you be sure you are on the winning team?
The agile approach to business continuity
Disruption events come with both opportunities and challenges, much of which are unpredictable. Though stable or growing demand is a critical part of business recovery, there is great uncertainty as to how demand may change in a post disaster environment. In addition, from a continuity planning perspective, accounting for every potential scenario can be exhaustive and costly. Resilience thinking, in contrast, employs a more agile approach that will make you simply more adaptable to respond to the impacts of unpredictable events.
But what characterises resilient thinking? What enabled those businesses in Christchurch to get operational and to match their ability to operate with the level to demand that existed? Local businesses employed creativity in the solutions applied to unknown problems, built and utilised connections with people and resources, and engaged in leadership styles that created high levels of staff engagement where solutions to business problems were generated by team members who worked together to get the business through. In short, bringing resilience principles into the proactive management of your day to day operations, will position you well to ride the waves of uncertainty during times of crisis.