Building Resilience in Your Organization
As another year winds down, it is customary to take a look back at the year’s events and reflect on the meaning of them. In many instances, 2023 has been the first year that I have heard people say that it is actually ‘post-COVID’ in their lives and businesses. Comments have ranged from relief to dealing with ‘normal’ issues to the struggles in rebuilding what was lost during the COVID Pandemic period. Some exhale a sigh of relief and state… “Oh! I made it!”, articulating a mixture of determination and surprise at having ongoing operations. The realization of having a measure of resilience in their businesses can be both an intended outcome and a shock at realizing it has happened.
So, what actually is business resilience? Is it an outcome or an intention?
In working with businesses, the concept of resilience frequently comes up. In the context of conversations, resilience comes to the forefront when discussing the business as a whole, and during conversations regarding processes and procedures, in operations and in many other areas of the business as it continues on a daily basis. This leads to the obvious conclusion that the meaning of resilience is not necessarily a single strict definition but more of a concept that can be used to structure a business to help steer it towards predetermined outcomes.
The Business Lifecycle
Researchers and authors have developed several models for the Business Lifecycle, typically being either in four or five stages. Some include a ‘Valley of Death’ in their models – the precipitous drop in income often experienced by new businesses between the early adopters coming on board but before early majority clients have started utilizing your business.
Utilizing a five-stage model adopted by the Oregon SBDC Network, we can state that the business lifecycle stages are:
IDEA: Thinking about an idea and testing the concept with others around you
LAUNCH: Going into business and dealing with the issues as they arrive until capability exists to plan ahead
EXPANSION: Growing the business
RENEWAL: A tug between finances, futuring, work-life balance, investment, strategic planning, and
EXIT: Transferring the business to new ownership.
Many models have the last stages as maturity and decline, indicating an inevitable senescence in the company and its operations or market share with the resulting viability of the company being in question. The use of the word ‘renewal’ is an indicator that it is not an inevitability that a company needs to senesce but that it can be revived and remain resilient in a changing economy. This can also be an inevitability depending on the resilience strategies in place at any given time. The point being that businesses (and organizations in general) need to have resiliency strategies in place and are performing in order to have resilience as an organization. Different strategies are needed for different stages of the business lifecycle and for the various areas of an organization. The strategies need to be planned, executed well, and choreographed in order to produce the results that are expected. As many owners invest into their businesses on an ongoing basis in order to get the business to scale up to become profitable, the resiliency strategies employed to create the increasing stability and value need to be in place in order for the ownership to recover the years of investments. Walking away from what is the largest investment in a lifetime for many entrepreneurs without recovering value is a tragedy needing to be avoided.
Resilience in Your Business
As an entrepreneur, manager or owner, you get to determine what resilience means to you. Is it a feeling, a statement of success that you get to fill out another tax return this year as you have done in the past, or perhaps it is goal setting and achievement with process improvement as the catalyst for the success?
Whatever resilience means to you, it did not happen in a vacuum. There are many factors that make up resilience in an organization.
As an entrepreneur and leader, you need to have the personal energy and stamina to be a positive force in your organization, regardless of the organization’s performance. This can be taxing, but the symbolism of upbeat progress is infectious to your employees and managers. As an entrepreneur and leader, you are the strategist, the idea person, the visionary who crafts the future through communicating ideas and developing the managerial talent to see the ideas become reality. No one else can do this, nor should anyone else be placed into the position of doing it, unless you have a Board of Directors and professional management fulfilling those roles.
Resilience means benchmarking performance and measuring outputs and outcomes, comparing the results from time period to time period to determine if progress is being made, and taking the time to determine if the operation is trending towards or away from becoming more resilient.
Arriving at Specific Actionable Items
Building resilience in organizations is a team sport. Vesting responsibility in management and supervisors to perform responsibly for the organization with a thorough understanding of the goals is a preliminary step in building resilience. Responsibility alone does not carry the organization to the goals, but teaming responsibility for the outcomes with the authority to manage the conditions to produce the desired outcomes does. Smart managers and owners rely on SMART goals to form specific outcomes that are desired to further the organization’s positioning, business operations and financial performance to achieve a more resilient organization.
Several variations of SMART goals are used, with one common SMART goal set being:
Is the goal stated succinctly, understandable and speaks to a specific outcome?
Can the goal be measured so that leadership knows when the goal is achieved?
Are we at the stage of development where we can achieve the stated goal?
Are we working on a goal that matters to the resiliency of the organization?
Can we achieve the goal in a reasonable allotted timeframe?
Once a goal set has been formed by the team, what needs to be accomplished next in order to achieve the goals? In many ways, goals are like targets. Targets are placed way out there and once you aim and start travelling towards them, it can be pure luck you actually hit the target unless you have a method to guide the trajectory of travel.
This is what you want isn’t it? Your team working in unison to achieve goals which solidify your organization, provide resiliency, and financial and market stability? Are you surprised by the thought of this being possible?
The next step is to build Standard Operating Procedures into your operations so that consistent uniform results are produced, whether they be personal services, product manufacturing, customer service interactions or consumer experiences in shopping, dining or entertainment. Each operation has specific protocols and procedures that are needing to be implemented so that the desired results are obtained in the most efficient manner. The desired results translate to goal achievement which rolls up to building a more resilient organization.
Standard Operating Procedures (SOPs) are written, reviewed by the people working in those positions, and codified as best practices in organizations which facilitate the desired end result. They are reviewed regularly, amended as necessary, used to train new employees into the company or organization, are specific and repeatable, and facilitate the lowest level employee in any position to be capable of providing consistent efficient outputs.
Combining or sequencing SOPs in operations provides many favorable outcomes from product quality improvements, reduction in position overlap and resulting conflicts, reduced training costs and higher employee retention, a defined career pathway for employees, as well as the desired efficiencies and cost reductions desired by ownership and management.
Co-developing Key Performance Indicators with SOPs will give management the necessary information to understand the effects that SOPs have on the operation. These are the management tools needed to make the corrections in the aiming of the processes and procedures travelled in the quest to complete the goals of the organization, or to hit the desired targets.
Making the Effort
Resilience in business is not going to happen without effort, attention, planning, execution, and great decision-making. It does not happen in a vacuum or by itself as an earned reward for opening the door each morning. It is an intention, a deliberate building of the elements needed to achieve the excellence in operations at all levels that allow for goal achievement as a natural course of doing business. It seems more intimidating at the outset than it actually is, and once a new pattern of work is established (a SOP!), the work involved is minimal as compared to the results obtained.
If you are at the point of being convinced that adopting goals, KPI’s and SOPs are a good idea, and areas to work on that reinforce resiliency are:
Employee management and hiring practices
- Position Descriptions
- Interview questions
- Onboarding procedures
- Acculturation of employees
- Standards articulation and enforcement
- Standardized discipline procedures
“Better operations * attract better talent * which builds better operations * which improves career pathways * which increases opportunities to hire better people”
Marketing outreach and sales conversion rates
- Researching markets
- Trends analyses – more or less resilient over time?
- Cost of acquisition of clients and customers
- Retention of customers
“Do you provide rewards to new customers or loyalty rewards for long-term customers?”
KPIs that measure actual operational elements that matter
SOPs to achieve the extraordinary through ordinary means
The gains in efficiency, the reductions in absenteeism, the reduction in workplace conflicts, and increased efficiencies in operations justify investments of time to build standardized work tasks that interact and streamline to tasks.
“Are you investing a small amount on the front end to realize large gains over time throughout your operation?”
Leadership and vision
Leadership attributes and incorporation of those into the daily culture or matrix of experiences each person realizes when they have contact with your company as an employee or customer unifies the goals
Creating a vision for the company that is achievable, measurable and uplifting helps set the culture in the direction you want the company to go and to be known for
“Question: Is it really that easy to build a vision to guide my company?”
As my dad mentioned to me decades ago: ‘Figure out how you are going to make money when your eyes are closed as well as open’
- Remember: Budgets are communications tools. Use them.
- There are only two ways to affect the bottom line
- Add to revenues to increase the top line
- Reduce expenses and make money on each transaction. [Losing only a little on each transaction can’t be changed with volume increases]
“Learn how to understand your financial statements and use them to manage your business. Review them critically against benchmarks each month. This is a great starter SOP.”
- Lowering the costs of doing business.
- What does this specifically mean to your business?
- Where can you apply efficiency principles?
- “It is time to adopt lean practices in your business”
The entrepreneur’s actions follow the business lifecycle
- Toughing it out at first
- Balance of work and life
Roles you play as owner change over time depending on the stage of development you are in and the tools you have built to manage processes within the company’s confines
Continuous skill development is needed to remain at the cutting edge and have the ability to lift the company along the way
“Leadership is personal and flows from the top down. Model the behaviors you expect in your company and enable management and supervisors to do the same.”
- A tool to create a culture of improvement
- A manner to keep ahead of competition
- An incentive to motivate employees
- A needed resource to build management skills in your workforce – you will not be successful in fishing for talent that fits your needs when you need it and at a cost you can afford on a continuous basis. You must have a talent development program.
A manner to build the capability to branch out to acquire markets, build volumes, introduce new products, etc.
“Keeping up with the changing technologies available, with the regulatory environment, and with strategy development for the future are three basic needs all businesses and organizations need to develop competencies with.”
Marshall Doak is the Director of the Southern Oregon University Small Business Development Center and a huge supporter of innovation and the community that forms around innovation in the economy. In private practice, he works with businesses that plan to transition to new ownership within the next five years, assisting them to build value that can be converted to retirement income when the business sells. He can be reached through: firstname.lastname@example.org or 541-646-4126.