How Can You Build Organizational Resilience if you don’t know what it is?
By Nigel Paine
The Nobel laureate Elinor Ostrom (1933-2012) spent her life working on the governance principles for successful, resilient Social Ecological Systems. She did meticulous field work around the world seeking out and exploring how common ownership systems worked across generations. She detected many strong traditions of enlightened self-interest, where the community itself was able to negotiate compromise and establish common agreements to sustain their environment and build long-term resilience.
From this research (Ostrom, E.1990), Ostrom deduced eight overriding design principles for successful self-governance. They have endured since she published them over thirty years ago.
It is true that these eight principles were extracted from her research into social ecological systems, rather than organizations, but nevertheless, there is value is discussing some of those principles here as there is obvious overlap. The overriding common thread that runs through them is the need for appropriate degrees of empowerment and autonomy, inside strong communities with common aims, shared learning, aspirations, and values. The parallels between organizations and social ecological systems are obvious. In some ways she defines and illustrates what resilience means inside any community structure and her principles point the way to how you can engineer them.
Her guidelines are helpful because they not only explain how it is possible to make organizations more resilient but demonstrate that this is a non-trivial process. She relies on complex systems thinking as the basis for action. Her work also banishes the conceit, that a group of resilient individuals automatically build resilient organizations around them.
Her principle 1 is the “presence of well-defined boundaries around a community of users.” And principle 3: collective-choice arrangements whereby “most individuals affected by the operational rules must be able to participate in modifying the operational rules.” (Martin-Breen 2011: 19).
Principle 5 recommends the establishment of graduated sanctions to ”maintain community cohesion” along with in-built conflict resolution systems (principle 6) (Martin-Breen 2011: 19).
These are the basic rules for ensuring communities thrive and, I would argue, are not simply the conditions related to social ecological systems alone. What Ostrom discovered was that when there is strong community identity and cohesion, built on shared values, networks of knowledge sharing and support are then created that transcend individual self-interest. These communities thrive whilst those with no shared values or shared knowledge, and a focus on individual competition, fragment when put under stress.
It is possible to see organizations, too, as collections of communities following a common purpose. And organizations can thrive when Ostrom’s principles are applied. That sense of belonging to a community where everyone feels a sense of ownership and agency is a powerful indicator for resiliency and survival. These processes for building resilience could be the trojan horse that allows new ideas to penetrate the traditional, hierarchical view of how organizations are structured, and go some way to undermine it.
The research indicates two directions of travel. On the one hand, there is an emphasis on building individual traits such as hope, efficacy, optimism, and resilience. These are known collectively as psychological capital (Avey et al 2008), because they appear to be indicators for coping with change and changing environments. The second area is research that focuses on the value of building up the strength of the community rather than the individual: allowing broad access to information, and developing ways to encourage collaboration, for example, as anchors for systems resilience (Juettner and Maklan 2011). This is akin to Wick and Roberts (1993) concept of highly resilient organizations having what they call a ‘collective mind’ based on highly developed social systems, strong communications and widespread knowledge sharing to promote high performance robust systems and reliability across the entire operation. Of course, we need both.
Added to those two sweeping principles are ideas related to sharing failure rather than just promoting success. Sitkin (1992) proposes that learning from success “fosters reliance on proven methods and ’success formulas’ which prevents experimentation and learning”, whilst learning from failure promotes resilience. (Linnenluecke 2015: 47)
Hillmann and Guenther, take the concept of resilience back to its original meaning (from the latin resilio ‘to rebound or spring back’ They conclude that:
“Organizational resilience is the ability of an organization to maintain functions and recover fast from adversity by mobilizing and accessing the resources needed. An organization’s resilient behaviour, resilience resources and resilience capabilities enable and determine organizational resilience. The result of an organization’s response to adversity is growth and learning.” (Hillmann and Guenther 2020: 31)
In other words, the key output of resilience in organizations is organizational and individual renewal, successful adaptation to new circumstances or new environments, and new and shared learning. In contrast, organizations that lack resilience, fail to adapt, decline rather than renew. They fail to learn obvious lessons. Vogus and Sutcliffe (2007) associate the word ‘brittleness’ as a counter point to resilience. Others mention rigidity. The key message is that a lack of flexibility or plasticity, fractures and destroys organizations, just as fixed mindsets kill individual resilience.
Organizational resilience can be developed. There is no formula because context changes the nature of what is required. However, it is a combination of building psychological safety and investing in the social capital for individuals, alongside and dependent on building shared values, a common mission, a willingness to contemplate and even embrace change and a sense of belonging and trust. This is firmly aligned with an equally important need to develop strong communities inside an organization. These communities are directly involved in shared learning, open discussions about success as well as failure, and the exploration of new opportunities.
Therefore, when we talk about resilience in organizations we are talking about a climate of continuous learning and adaptation to a changing environment. To achieve this, those communities need to be empowered to make necessary changes to the systems in which they work and redefine their own needs, to be self-determined: autonomous, competent, and connected. At this point the individual and the organizational needs merge.
Endnotes
Avey, J.B. et al (2009) “Psychological capital: A positive resource for combating employes stress and turnover.” Human Resource Management , 48(5), pp677-693.
Hillmann, J. Guenther, E. (2021) “Organizational Resilience: A valuable Construct for Management Research?” In International Journal of Management Reviews, Vol 23, 7-44
Juettner, U. and Maklan, S. (2011) Supply chain resilience in the global financial crisis: An empirical study. Supply Chain Management: An International Journal, 16(4), pp. 246-259
Linnenluecke, M.K. (2015) “Resilience in business and management research: A review of influential publications and a research agenda.” In International Journal of Management Reviews, 19, pp 4 - 30
Martin-Breen, P. Anderies, J.M. (2011). Resilience: A Literature Review. Available at: https://opendocs.ids.ac.uk/opendocs/handle/123456789/3692 (accessed 16th May 2023)
Ostrom, E. (1990). Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge University Press, Cambridge UK.
Sitkin, S. B. (1992). Learning through failure: The strategy of small losses. Research in Organizational Behavior, 14, pp. 231-266.