FROM RISK TO RESILIENCE: A LEADERSHIP STRATEGY

PREFACE

By my own reckoning, these blogs are intense. They are not directly about how important or essential supply chain and logistics are; nor do they discuss how good logistics is or can be practiced in order to handle pandemics more effectively. These are not a how to series.

They use SCL as the focal point for discussing contextual leadership in the face complexity, randomness, risk, flexibility, agility and non-rational decision making. In effect, they are about leadership, how to lead, the capacity to lead – when dealing with risk, ambiguity, uncertainty – beyond command and control processes.

Command and control ultimately fail to meet the challenge of a pandemic [as so obviously demonstrated worldwide] because they are incapable of handling ambiguity and uncertainty. At core command and control denies the uncontrollable realities endemic in complexity. Command and control are reductionist modalities, hiving off what can readily be dealt with and ignoring everything else. Complexity is much bigger, and risk in complex systems is “normative”, not an exception – that limits command and control to the core.

My fundamental assumption is that complex systems are what we live in and with, they are who we are – on many levels: micro-and macro-economic, national, social, business, global, personal. You cannot avoid or escape from complexity. Complexity is the crux of the matter when facing a pandemic. You have to capacitate yourself and your institutions to face and handle complexity in order to deal effectively with a sudden eruption like a pandemic. This is actually the lesson COVID-19 is teaching us. It is not about doing better or being better; it is about being strategic.

Currently, we are in reactive mode with regard to COVID-19. Being and becoming contextually intelligent is a way to be prepared to deal with complexity, ambiguity, uncertainty, and the flair up of a sudden risk event like a pandemic.

If we wish to put a fine point on it, I use Supply Chain Logistics as the avatar of complexity that has an impact on everything. We need to learn from Supply Chain Logistics how to handle complexity. It is not about learning how to handle complexity in order to deliver better supply chain logistics services. Think of these blogs as “leadership capacitation”. This is about strategy and strategic intent, not about better operations and processes.

Victor Deyglio
Founding President
The Logistics Institute

THE SCOPE AND NATURE OF RISK AND RESILIENCE

THE ROAD: The journey of one thousand miles begins with the first step [Laotze, Tao Te Jing]. The Covid-19 Pandemic Journey is indeed long and circuitous; there are many milestones we have passed and many more we need to overtake. We begin with RISK, but our destination is RESILIENCE, and along the way we pass through the stages of REACTION, RESOLVE, and RECOVERY.

RISK raises alarms, denotes danger – we are in trouble and cannot easily escape. We are afraid, confused, distressed. Apprehension agitates us personally, collectively and socially.

We REACT in panic. We are terrified and anxious. We become aggressive and hostile. We horde; we protest; we blame; we point fingers; we look for scapegoats; we feel victimized. We even victimize others as retaliation against the unknown, the foreign and alien. Conspiracy theories give vent to our fears: there are enemies under every rock, behind every tree, in every online posting.

We RESOLVE the abnormal by renaming it the new normal. We accept the abnormalities. Safety and security are priorities; lockdown and distancing are life styles; masks and sanitizers are necessities. New routines define a new normal: learning online, working from home, zoom meetings. Technology becomes our support: e-communicating with colleagues, neighbors, friends, and families.

We take steps to RECOVER: subsidies and bailouts. We remediate through alternate ways to act, interact, socialize and carry on. Schedules become routine: when to do laundry, when to go grocery shopping, when to exercise, when to work, when to meet online, when to cook dinner. We engage in new ways: e-blogs, e-concerts, e-books, e-news. We sing our gratitude out loud but at a distance.

Our destination is RESILIENCE. That requires a whole new way to think, decide, plan and act. It demands flexibility and fortitude to rebound, adapt, innovate and lead.

WHAT MAKES US RESILIENT?

Our destination is resilience. It requires a new way to think, decide, plan and act. It demands flexibility and fortitude to rebound, adapt, innovate, and lead. So what makes us resilient?

Generally, resilience is about adapting in the face of adversity, trauma, tragedy, threats or significant sources of stress. Resilient people are aware of situations, of their own reactions and of the behavior of those around them. Resilient people meet the world head-on with eyes wide open.

Being resilient begins by understanding the causes that give rise to adverse situations. Getting to the root cause allows us to remediate the impact of situations and think of new ways to tackle problems. Resilience deals with “the then”, “the now” and “the thereafter”.

The practical reality is that life is full of risks. While we cannot avoid problems, we can remain open, flexible, and adaptable. Whether we are talking about ourselves as individuals or about businesses as corporate persons, openness, flexibility, and adaptability are key ingredients of resilience. Yet, it is those very things that are hardest to integrate into our lives and the lives of our businesses because we seek stasis, normalcy, routine, structure, process and best practice. The struggle to be agile is constant.

Resilience is characterized by an internal locus of control. But we must be careful about what we mean by control. Control is an illusion; we cannot control most things, and pandemics, like earthquakes and tsunamis, are uncontrollable.

However, resilience is a conviction: we are convinced that the actions we take will affect the outcome of situations. It is the outcome, not the situation itself that is the locus of control. How we act and react in the face of a crisis constitutes resilience.

It is inefficient and ineffective simply to dwell on cause and effect thinking when facing a crisis. That leads to putting blame on external causes, and ultimately to a sense of victimization and the need to scapegoat imagined and real offenders. To what end?

More important is the power to make choices that will affect our situation, our ability to cope, and our future. The key to resilience is about what we can and need to do, not about who to blame.

When a crisis emerges, resilient people can spot the solution that will lead to a safe outcome. In dangerous situations, people sometimes develop tunnel vision. They fail to note important details or take advantage of opportunities. They act with “eyes wide shut”.

Resilient individuals calmly and rationally look at the problem and envision a successful solution. Anyone with the slightest experience in problem solving knows that the solution lies in the problem itself. By understanding the problem, we discover and discern the possible solutions. Problem solving 101 begins by defining the problem – aka, facing the brutal facts. From there we can envision the future.

Envisioning that future is what scenario planning is all about. Tunnel vision leads to panic; resilience leads to solutions. Resilient solutions are not fix-its; they are options, opportunities, possibilities in the face of volatility, uncertainty, complexity and ambiguity. Being resilient is being agile in thought, word, plan, strategy, deed, and execution.

Resilient solutions are supported collectively. We can never go it alone. Talking about the challenges, communicating with others, is the beginning of gaining perspective and insights, looking for alternatives and new solutions, and simply expressing frustrations and emotions. Social connectivity, even in the face of physical isolation, is essential to being resilient.

When dealing with any potential crisis, it is essential to view ourselves as survivors and avoid thinking like victims of circumstances. The survival mentality will lead to finding ways to solve problems and implement solutions. While situations may be unavoidable, we need to stay focused on positive outcomes as the impetus of resilience.

RESILIENCE IS A SET OF COMPETENCIES

While situations may be unavoidable, we need to stay focused on positive outcomes as the impetus of resilience. But resilience does not just happen. It needs to be built and honed. It is not an attitude, nor is it an attribute. It is a skill set. It involves competencies and capabilities. What we do to build resilience for ourselves as individuals we can apply and implement in the culture of our businesses.

An individual’s skill set is an organization’s cultural tapestry. What is the warp and woof of that resilience tapestry? There are 5 key threads to this tapestry.

  • Self-Awareness is multi-dimensional:
    – awareness of capabilities and capacities, including all structures and processes,
    – awareness of desires and abilities to act,
    – awareness of thinking patterns, plans and strategies, and
    – awareness of how these connect and play out in practice.

CODA: Self-awareness is a prerequisite for choice and control. If you operate outside of awareness, then situations control you. If you want to control situations, the first thing is to focus on self-awareness, as a person and as a corporate entity, in order to consider capabilities and capacities before choosing, deciding and acting. Self-awareness is the foundation of all other resilience skills.

  • Attention: attention or focus is like a muscle. It can be trained and developed. Being focused means
    – being in the here and now;
    – facing the reality of the situation;
    – facing the brutal facts.

CODA: Without focus, we tend to be either worrying about the future or regretting the past. That’s where stress, unhappiness, and panic come to play because they fixate on the past and the future rather than the present moment. The key is: What is happening and what do we need to do NOW?

  • Mindfulness is a tool for training attention, and not some philosophical or religious tenet. Moreover, it is a particular kind of attention: present-moment awareness that is receptive, accepting, appreciative and aware. Accepting the brutal facts of here and now opens up the possibilities for solutions and is core to any resilience program.
  • Letting Go Part 1 – Physical:
    – Remain calm.
    – Reduce agitation.
    – Stop panicking.
    – Analyze the situation.
    – Accept the reality.
    – Assess the impact.
    – Identify the constraints and limitations.
    – Plan solutions.
  • Letting Go Part 2 – Mental:
    – Separate yourself from your own thinking and the narratives playing in your head.
    – Create mental space, so that you differentiate your thoughts, beliefs and stories about the world [your biases and opinions], from the world in itself.
    – Change negative and unhelpful reactions that give rise to resistance.
    – Create positive space in your thinking, planning and strategizing that starts with acceptance but avoids resignation.
  • Accessing & Sustaining Positivity: It’s not enough to get rid of negativity and there is always danger of creating mental quicksand. But positivity is not simply the absence or even the opposite of negativity. Focusing on positivity and successful outcomes, beyond just survival and remediation, can displace the negative impact of risk. It is not about feeling good, but about being resilient.

At the heart of resilience is a belief in oneself—yet also a belief in something larger than oneself. Resilient people do not let adversity define them. They find resilience by moving towards a goal beyond themselves …by perceiving bad times as a temporary state of affairs. It’s possible to…define yourself as capable and competent…It’s possible to develop a sense of mastery.
Hara Estroff Marano, The Art of Resilience.

THE ART OF RESILIENCE

How do we practice the art of resilience?

  1. Know your boundaries. Resilient people understand that there is a separation between who they are at their core and the cause of their temporary suffering. The stress/trauma might play a part in their story, but it does not overtake their permanent identity.
  2. Socially Inter-act. Resilient people tend to seek out and surround themselves with other resilient people, especially when there’s a need for support. Collaboration gives us the space to work through situations. It entails active listening, encouragement without automatic solutions, and collective, even collaborative, resolve.
  3. Know your capabilities. Being “blissfully unaware” can get us through a bad day, but it’s not a very wise long-term strategy. Be in touch with your needs—knowing what needs to be done, what should be avoided, how to collaborate, and when to act. But prideful stubbornness without flexibility or honest self-awareness can be glacial: Always trying to be strong to stay afloat, yet prone to massive stress fractures in the face of unexpected changes in our environment.
  4. Practice acceptance. Pain is painful, stress is stressful. When we’re in it, we want the pain to go away. When we’re outside it, we want to take away the pain of those who are suffering. Yet we need to accept that stress/pain is a part of living that ebbs and flows. We must face this brutal fact and come to terms with the truth of the pain rather than ignore it, repress it, or deny it. Acceptance is not about giving up and letting the situation take over; it’s about leaning in to experience the full range of impact and trusting that we will bounce back.
  5. Silence. We are masters of distraction. We all react differently to situations. Some shut down and some ramp up. Stop the noise and chatter. Look at the situation without judgment or avoidance. Be open to possibilities and discover opportunities at the fringe and in the face of constraints.
  6. Don’t have to have all the answers. When we try hard to find the answers to difficult questions in the face of traumatic events, that trying too hard can block the answers from arising naturally in their own due time. There is strength in knowing that it’s okay not to have it all figured out right now and trusting that we will gradually know when we are ready.
  7. Menu of capabilities. We need to have lists of possible actions, plans and processes that support our strategies and alternative directions when we need them most. This is our resilience strategy.
  8. Team strengths: The most resilient know who to work with to design, develop and implement the resilience strategy. Know who will serve as a listening ear and who won’t. Our team helps us reflect back what they see when we’re too immersed and overwhelmed to understand our own abilities and capacities. Effectively support others and proactively seek support for ourselves.
  9. Consider possibilities. We can train ourselves to ask which parts of our current story are permanent and which can possibly change. Can this situation be looked at in a different way that I haven’t been considering? This helps us maintain a realistic understanding that the present situation is being colored by our current interpretation. Our interpretations of our stories will always change. Knowing that today’s interpretation can and will change, confirms that things can be better tomorrow.
  10. Get out of your head. When we’re in the midst of stress, our thoughts can swirl with dizzying speed and disconnectedness. Find reprieve by getting the thoughts out of our head and onto paper. Visualize what we are thinking about. See what may work and what may not work. Let our eyes develop scenarios that speak to our ears leading our minds to success.

So you want to be resilient. Here is what you have to do:

  1. Hold yourself accountable: don’t blame others or outside forces. Cultivate a healthy sense of personal responsibility, which allows you to tackle problems instead of wallowing in despair.
  2. Don’t complain: Occasional venting sessions are fine, but anyone with grit knows that complaining gets you nowhere. Resilience is all about having a good attitude.
  3. Be self-aware: If you’re going to navigate stormy seas, you’ve got to trust yourself. Resilient people cultivate self-awareness as the foundation of self-confidence.
  4. Accept your limits: The key to grit is accepting that you’re neither perfect nor limitless. You’ve got to accept your weaknesses along with your strengths in order to adapt to trying situations.
  5. Ask for help: Anyone with grit knows that asking for help isn’t the same as asking for hand-outs. Even the most successful people could use some assistance once in a while. Part of being resilient is being strong enough to ask for it. It takes self-confidence to be open to insights from others.
  6. Never wallow: Wallowing in your sorrows is just about the worst thing you can do in a bad situation. Resilient people know to grieve their losses, make a plan, and move on.
  7. Don’t compare yourself to others: Everyone has their own hidden struggles and their own definitions of success. Measuring yourself against your neighbor is futile and potentially harmful.
  8. Find humor in the absurd: Life is terrible sometimes, but you can’t let go of your sense of humor. You’ve got to be able to laugh at yourself and at the often confusing, painful nature of reality. It’s truly the best medicine for getting through tough situations.
  9. Can’t plan everything: You never know what life is going to throw at you next. People with grit accept this and are willing to be flexible. If you’re too locked into one path or one plan, you’re liable to fall apart when things go wrong.
  10. Cultivate a support system: Resilient people are usually not lone wolves. They have a trusted network of people whom they know and can depend on during troubled times.
  11. Take care of yourself: Grittiness isn’t just about enduring hardship. You’ve got to prepare for it too. In order to become strong enough to weather adversity, you’ve got to practice self-care and make yourself a priority from time to time.

Signs You’re Resilient — Even If It Doesn’t Feel Like It
by Aine Cain, in Business Insider (2016)

THE LESSONS OF COVID-19

Challenge: If you want to go quickly, go alone. If you want to go far, go together [African Proverb]

We are not all in this together unless and until we are all willing to work together. We need to implement resilience strategies and not just recovery plans. The new normal demands a radically different form of leadership. We need to learn from COVID-19. Let’s consider context.

Today’s global challenges are so far beyond our collective experience that they demand a radically different kind of engagement from senior leadership teams in the private sector. And, over time, a radically different kind of leader.

The World Business Council on Sustainable Development (WBCSD) has been exploring the implications and likely impact of Covid-19 and came to the following early conclusions:

NEGATIVE: Covid-19 has temporarily weakened what Milton Friedman called “the tyranny of the status quo”, creating a context in which radical, systemic change is suddenly possible.
POSITIVE: Covid-19 has the potential to be a catalyst for a transformation of the global economy: a profound shift in the rules, norms and institutions that govern markets, which could unlock a wave of exponential changes with positive consequences for people and planet.

Many companies were spectacularly poorly prepared to deal with a crisis like this. They went into the crisis carrying huge amounts of debt and with complex supply chains so tightly optimised for efficiency that there was no slack in the system to enable them to adapt. This lack of preparedness is not an unfortunate accident: it is an entirely predictable result of companies’ relentless focus on efficiency and short-term shareholder value maximisation.

With Covid-19 we are seeing an accelerated expansion of the sustainability agenda: from responsibility to resilience and regeneration. The value of building resilience is self-evident. Regeneration matters because it is only by regenerating our economies and communities, and the wider biosphere, that we will be able to achieve true resilience.

– John Elkington, We need a radically different form of leadership to come out the other side of Covid-19 [Ethical Corporation, April 15, 2020].

Context: As companies we have experience in being and building responsible organizations. As good corporate citizens we implemented CSR standards. We wear the cloak of Corporate Social Responsibility. It is good branding to be green.

However, CSR is not enough. The next steps start at regenerating and remediating the impact of crisis, but leads to becoming resilient. We need a strategy and not just a plan; we need radically to rethink what we do and how we do it in order to be resilient.

Among the lessons Covid-19 is teaching us, we recognize that

  1. Complex supply chains and logistics operations are essential services, and
  2. complex supply chains [are] so tightly optimized for efficiency that there was no slack in the system to enable them to adapt.

The new normal demands that we develop resilient supply chains, and not just work with robust supply chains. The distinction between Robust Supply Chains and Resilient Supply Chains was developed by Yossi Sheffi of MIT in the first decade of the 21st century and is adapted as follows:

While implementing and maintaining process efficiencies in global supply chain and logistics operations remain critical to the economic success of corporations, business sectors, and nations, they are limited in their ability to deliver sustained responses to sudden and significant shifts on a global scale. The efficiencies of lean processes minimize variability and capacity, constraining any opportunity to scale up and adapt, or accelerate and decelerate as needed.

The new normal for global supply chains and logistics must focus on managing risk and sustaining agile possibilities that are multi-dimensional – economic, social, corporate, personal – and are scalable and adaptable in the face of sudden and significant crises like the COVID-19 pandemic.

This is easier said than done. It requires strategic thinking as the new leadership model and not just process thinking fixated on cost reductions and increased margins. Strategic thinking is the call to action in the face of COVID-19.

Victor Deyglio
Founding President
The Logistics Institute

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