Resilience and How to build it
Glossary
Human talent: this refer to the members of the human resource that have an indispensability complex due to their unique contribution
Resiliency: this is the ability of a business to thrive in spite of setbacks.
Setbacks: these are external and/or internal challenges that face business and are potentially ruinous.
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Working Capital: this is the minimum liquidity necessary for a business to remain afloat.
Abstract
The modern business is like a democratic government whose beneficiaries root for its success but are merciless when it fails. Setbacks will always come but they must never be allowed to be the path to ruin. Resiliency from the perspective the instant essay relates to how a company can continue to operate successfully in spite of the setbacks it encounters along the way. This resiliency will be based on the company’s ability to seal all loopholes that may lead to failure. Among the key loopholes highlighted include human talent, customers, and working capital. As long as this survives, a company will thrive in spite of any setbacks.
Introduction
Negative contingencies and adversities will always be part and parcel of entrepreneurship, thus the ability to overcome them is core to success in business. It is not just enough for a company to survive when bad things happen. Since adversities come often, surviving would be the only thing the business would ever do. Instead, the business needs to be able to thrive and prosper in spite of the negative occurrences (Thomson, 2017). This is the main concept of resilience in business which has been defined as the ability to recover, adapt and maintain pace when setbacks hit a business. To understand how to build up resilience, it is important to have a firm understanding of where resilience is needed most in the business. The most important asset of any business which is also the hardest to find is human talent. This is where resilience must be created most. Second to this is the markets whether customers or clientele. This is the second fundamental area of resilience. Finally, there is finance which gets attacked by most setbacks yet the company cannot operate without a minimum working capital. If a business develops this tripartite resilience, it can overcome and thrive in spite of any setback.
Findings and Discussion
Building Human Resource Resilience
When setbacks happen, one of the hardest hit within any business is the human capital more so those involved in the segment where the setback hit. In most cases, this is either top management of influential experts (Rose, 2017). One of two things usually happens, either the involved parties will resign or get pushed out of the company. Unless the involved party is in infamy due to some individual wrongdoing, leaving is always the wrong choice both for the company and the individual who leaves. It is possible for a single individual in a global company to be indispensable (Cooper et al, 2014). In 2009 when Steve Jobs seemed always ailing, the stock of Apple Inc. one of the largest companies in the world moved from US$200 a share to stagnate at about US$100 a share. This means massive losses for investors, yet Jobs was way past his prime (Rose, 2017). Most modern companies and businesses have one or several Steve Jobs some of whom are not even noticed until they leave and cannot be replaced. To ensure that their departure must not happen in case of setbacks, businesses must develop a culture that avoids pointing fingers when something goes wrong. Instead, they should develop a culture where the person who seems most culpable for an error spearheads the process of resolving it. This will make the affected party more motivated to stay and fix the problem (Rose & Krausmann, 2013).
Developing Customer Resiliency
Modern businesses make their products based on customer needs with customer satisfaction being a key goal. Today’s customer is the most informed in history and, therefore, the most powerful. Even a secondary issue such as an overseas contractor is guilty of an infraction that can alienate a large chunk of a company’s customer base. It is for this reason that every company must always be prepared for setbacks that can alienate customers (Rose & Krausmann, 2013). To achieve this, every business must strive to develop a loyal customer base, mainly by creating customer satisfaction through differentiation. This reduces the options for the customers making them more inclined to stick with a company in times of crisis. Secondly, customers can forgive an error, no matter how grave, but not a cover-up. Honesty as at all times is key to resiliency from the perspective of the customer base.
Financial Resiliency
No business can operate without financial risk since starting a business in itself is taking a risk (Thomson, 2017). The greatest lesson that came with the 2008 financial crisis is that there are no sure things in investment. Even the seemingly overly stable enterprises are fallible. Financial resiliency can be developed in a concept that casinos run on. A casino is not allowed to have any winnable amounts that it cannot be able to pay at the moment when the bet is being made. Therefore, no matter how sure the investment is, the company must never overstretch its financial resources to an extent that it relies on a singular happening. This does not mean that the company must always have financial reserves. However, a line of credit strong enough to keep the company running must always be retained. Inordinate risks must be avoided so is rushing to financiers in the middle of a crisis (Thomson, 2017).
Conclusion
There are three fundamentals to the survival of any company. The first is the internal human talent made up of the most important segments of the workforce. Traditionally, this mainly referred to the chairman of the board or the CEO. The definition has expanded to include lead innovators and specialized members of staff. The second is the customer as there is always a minimum number of customers that a company cannot exist without. The third is finances as there is a minimum amount of working capital that a firm cannot operate without. If a company gets affected in these areas repeatedly by setbacks, it might not be possible for the company to survive. The definition of resiliency in a business must, therefore, be extended to mean that each setback, no matter how massive will not inordinately interfere with this three segments. As long as people keep working, customers keep buying and the company remains liquid, setbacks will come and go but the business will not only remain intact but also keep growing.
Recommendations
Setbacks in business are the norm, rather than the exception. They must, therefore, be factored in planning and extenuation procedures put in place. The best time to handle a setback is before it happens. Therefore, every time the company has a project, it is important to figure out the worst case scenario. If the company cannot survive this worst-case scenario more so from a financial perspective, then the risk is not worth taking (Thomson, 2017). There is a manifest difference between investing and gambling. Secondly, everyone can make a mistake but not be defined by it. The main difference between an error of judgment and a bad idea is mainly determined by outcomes, not processes. Good human talent must not go to waste, or worse still to the competition because a mistake happened (Cooper et al, 2014). Finally, there is a very thin line between a business and a democratic government. Both of them operate through the trust of their stakeholders. The most powerful among these are customers and stockholders. In this day and age, there are no permanent secrets. When something goes wrong that the stakeholders need to know, the best mitigation procedure is admissions. A cover-up can never be considered as a mistake but a choice.
References
Cooper, C. L., Liu, Y., & Tarba, S. Y. (2014). Resilience, HRM practices and impact on organizational performance and employee well-being. International Journal of Human Resource Management , 25 (17), 2466-2471. doi:10.1080/09585192.2014.926688
Rose, A., & Krausmann, E. (2013). An economic framework for the development of a resilience index for business recovery. International Journal of Disaster Risk Reduction , 5 , 73-83
Rose, F. (2017, June 03). The end of innocence: What happened after Apple fired Steve Jobs. Retrieved October 31, 2017, from https://www.wired.com/2011/08/the-end-of-inno/
Thomson, J. (2017, June 09). Risk is inevitable. Resilience is everything. Retrieved October 31, 2017, from https://www.forbes.com/sites/jeffthomson/2017/06/07/risk-is-inevitable-resilience-is-everything/#3ffa9027480b
