Based on data from the Bureau of Labor Statistics, 20% of businesses fail within their first year, 50% within five years, and 65% within ten years. Even industry leaders aren’t safe from the risk of decline as systemic changes threaten their functional, operational, and strategic continuity. To illustrate this point, note that only half of the companies in the Dow Jones Industrial Average, a stock market index of the 30 most prominent companies listed in US stock exchanges, at the turn of the century are still in it today.

Organizational resilience can be defined as the ability of an organization to anticipate, cope with, and adapt to a significant adverse event. It is worth noting a few key points in this definition: The first is the fact that there is no resilience without adversity. Second, there is both a “bounce back” and a “bounce forward” effect with resilience as many resilient organizations emerge from adversity not only as good but better than they previously were. Finally, because adversity comes both with force and when you least expect it, proper anticipation is an essential part of what defines a resilient organization.

Now, what is it that helps organizations anticipate, cope with, and adapt to adversity? As it turns out, the strengths of a mindful organization are also those that make for a resilient organization. Here are seven characteristics that help increase organizational resilience.

To anticipate adversity, resilient organizations must:

1. See with clarity what is in the present moment. Often warning signs present themselves ahead of an adverse event, but not every organization notices them. Mindful organizations possess strong situational awareness, increasing the likelihood they anticipate threats before they occur. 

2. Avoid delusion and stay focused on what is core. During ‘good times’, organizations can be lured into frivolous ventures – investments where they do not offer a strong, differentiated value proposition tied to its core competencies.

3. Cultivate a margin of safety. Resilient organizations approach the world with equanimity, remaining in a state of calm composure, neither panicking during times of turmoil nor falling into irrational exuberance during times of growth. In this state of mental discipline, the resilient organization maintains the financial resources required to weather adversity when it comes.

To cope with adversity, resilient organizations must:

1. Face suffering together. Narcissism is negatively correlated to successful coping, as narcissistic individuals focus their actions (or reactions) on preserving their own interests as opposed to that of the organization. Resilient organizations, on the other hand, have employees that prioritize the welfare of the whole and are more likely to move quickly and in unison to address emergent threat.

2. See the good and hold suffering with compassion. It’s not just financial, operational, and technological resources that matter during a crisis. Emotional resources have proven to be equally important. Included in this is the ability to stay positive amidst adversity, not to deny the difficulty at hand, but rather to hold it with compassion for those who suffer and to see the good where it inevitably continues to exist.

To adapt to adversity, resilient organizations must:

1. Hold mistakes lightly as beginners do. Times of change introduce an influx of new challenges while reducing the availability of information and time to react. This naturally leads to mistakes. Resilient organizations do not approach failure with judgment; rather, they see these as learning opportunities.

2. Embrace change and approach it with non-attachment. Organizational resilience researchers often call this the organization’s ability to ‘usher liminality’. Liminality is defined as the state of being in the threshold of or between two stages or phases. In the context of change, it means the ability for an organization to let go of the past, accept the present, and move the organization into a new future.

Photo Credit: Jed Adan on Unsplash

References

Chamber of Commerce. (2024, July 24). Small business statistics. https://www.chamberofcommerce.org/small-business-statistics/

Hepfer, M., & Lawrence, T. B. (2022). The heterogeneity of organizational resilience: Exploring functional, operational, and strategic resilience. Organization Theory, 3(1). https://doi.org/10.1177/26317877221074701

Hillman, J. & Guenther, E. (2021). Organizational resilience: A valuable construct for management research? International Journal of Management Reviews, 23(1). https://doi.org/10.1111/ijmr.12239

Vakilzadeh, K., & Haase, A. (2021). The building blocks of organizational resilience: A review of the empirical literature. Continuity & Resilience Review, 3(1), 1-21. https://doi.org/10.1108/crr-04-2020-0002