How Resilient is Your Organization?

The evening Superstorm Sandy came ashore in New York, I watched the flood waters rush into lower Manhattan from my hotel room in Beijing, where I was speaking at a health conference. I frantically tried to contact members of my team, many of whom lived in the hardest hit parts of New Jersey and New York. Our U.S. headquarters is based in Manhattan. But there was no answer; all the communications channels had been overwhelmed. There was nothing I could do but wait, and hope that the places and the people I cared about were okay.

For years, The Rockefeller Foundation had known that a storm of this magnitude could devastate New York City. In 2010, we helped developed recommendations to revise NYC's Coastal Storm Plan, and we had also funded a competition, later exhibited at the Museum of Modern Art, that presented design solutions for how the city could respond to rising sea levels.

We knew a great deal about the worst-case scenarios, and after Sandy, they began to come true. But The Rockefeller Foundation itself was among the lucky ones. We were disrupted for sure—our back-up systems took time to come online was and our office was closed for a week due to a power outage. But our staff worked from home and we were back in the office as soon as the lights went back on. This was critical since New York Governor Andrew Cuomo asked me to co-chair a commission to make recommendations on how to improve the resilience of New York's infrastructure in the face of future shocks and stresses.

This was not the case for many people and organizations throughout the region. Lives were lost or dramatically disrupted. People's homes were destroyed. And a year after the storm, only 36 percent of small companies impacted by Sandy, polled by the Federal Reserve Bank of New York, reported that they were profitable—39 percent reported operating losses and 25 percent were just breaking even.

Superstorm Sandy isn't an isolated incident—cities around the world, and the business and organizations operating within them, are at risk for a range of threats—from earthquakes, to acts of terror, to an economic shock on the scale of what we saw in 2008.

We at The Rockefeller Foundation were reminded of this twice in the last year, when two of our offices outside the United States experienced disruptions in the cities where they operate: a military coup in Bangkok and the terrorist attack at the Westgate shopping mall in Nairobi. These events, in addition to our expertise in resilience science, has fueled our approach to building more resilient organizations, cities, and institutions.

Here are three lessons we've learned along the way:

Put in place redundancy and self-regulating mechanisms that allow you to fail safely.

It's not a matter of if bad things will happen—with the increase in both frequency and intensity of shocks and stresses, it's inevitable that at some point your business or organization will be impacted. And with globalization, bad things travel faster. But we can mitigate how quickly threats spread, by enabling systems able to isolate threats, or decouple from parts of the system that have been compromised, so that impacts don't ripple across the organization. Even something as simple as a backup generator located in a non-vulnerable place may be the key to avoiding cascading failure or dysfunction during a crisis. Redundancy is also important in supply chains—a lesson fitness apparel company Lululemon learned when complaints started rolling in about sheer yoga pants that showed off more than the wearer intended. The culprit? Only one company supplied the fiber to the manufacturer, limiting the control Lululemon had over quality of the materials. The recall tarnished the company's reputation.

Invest in the resilience of the cities and communities where you operate.

Your organization is only as resilient as the cities or communities in which you and your suppliers operate—and factors you might think are outside of your control (land usage, the operation of transit lines) are bound up with your success. For example, last summer's flooding in central Europe submerged high-speed rail lines, keeping employees from reaching Volkswagen's plant in Zwickau, Germany and forcing the company to temporarily shut down car production. But you can take an active role in investing in the resilience of your community, whether it's through public-private partnerships for infrastructure, providing products and services that enhance resilience, or investing in programs that build social cohesion and inclusion to ensure colleagues can get help in times of need.

Resilience yields benefits every day.

Investing in resilience can yield direct benefits for the bottom-line in the form of cost-savings before and after disaster. For example, when a tornado struck and demolished a boutique electronic retailer in Minneapolis, the owner decided to make a change. Rather than returning to its previous model of one-on-one sales with inventory from the basement, the store held a tent sale, stacking all the boxes in the open and mark prices down to rock bottom. The response was enormous. The owner changed the name to Best Buy, now the biggest electronic retailer in the world. Best Buy's adaptive quality continues to enable it to weather a range of disruptions, from supply-chain debacles to online competitors.

These co-benefits are what we call the "resilience dividend"—and that's the big idea I'll be discussing next week at the Aspen Ideas Festival. And it's not just for businesses and other organizations—it's a concept that applies to cities, communities and entire sectors and economies.

How have you seen the resilience dividend work in your own organization? Let me know in the comments below.

Photo credit: Flickr user Don McCullough.