The post-crash 21st century has seen many organisations, not just financial institutions, seeking to enhance their resilience. This is driven by their need to withstand an increasingly uncertain and complex future.
The financial industry alone is said to be investing more than $20 billion into ‘ways of working’. The ability to prevent unfolding difficulties from developing into crises is increasingly seen as an organisational necessity, yet it is often unclear exactly what this means or what managers can do in practice.
The challenge managers face in their pursuit of resilience can be understood in terms of uncertainty and complexity. Environmental uncertainty is associated with a lack of knowledge about how the future will unfold, leading to the resulting inability to pursue an appropriate organisational response.
Uncertainty, however, does not automatically trigger a crisis. Problems often occur when points of failure interact with each other, and the nature of the ‘coupling’ between these elements is of central importance. ‘Loose’ coupling implies that points of failure are relatively independent, and buffers or slack between them can limit the effects of interconnectivity.
Loose coupling provides ‘breathing space’ to contain failures and they can often be addressed individually, thereby preventing them from gradually destabilising the whole. In tightly-coupled systems, however, interdependencies between elements mean that incidents can build upon themselves and escalate rapidly. These are far harder to respond to effectively.
Read the full whitepaper ‘Organizational resilience – When rules find their limits‘ by Dr Elmar Kutsch, Mark Hall and Neil Turner