Resilience - A new paradigm for the 21st century
Resilience IMO is a huge topic. It has a broader scope than most people think and – even more important – it has become much more relevant for most of us than most people imagine. Thus, time to shed some light on this topic. Over the course of several posts in the future I will discuss several aspects of resilience. Of course, my main focus will still be IT. But in some places I will leave the boundaries of IT as this topic affects – and supports – us in many ways.
In this post, I will try to give you a first idea what resilience is and why this topic is so relevant.
Let us start with the obvious first question:
What is resilience?
Put simply, resilience means that a system can ideally withstand adverse external influences completely or at least recover from them quickly.
A “system” can be a lot of things, e.g. a human being, an IT system, an organization, a society, an ecosystem …
“Adverse influences” can also be a lot of things. It always depends on the context:
- For a human being, it can be stress or illness, for example.
- For an IT system, it can be an unexpected failure of a connected system or an overload situation.
- For an organization, it can be an unexpected market event like a competitor launching a very successful new product, or a supplier that cannot deliver as promised.
- For a society, it can be a new disease (think, e.g., COVID) or an unexpected political event.
- For an ecosystem, it can be an extreme weather or humans intervening in the natural flow of things (think, e.g., agriculture and the use of pesticides).
- And so on.
So, the topic is very big and broad.
Only one thing seems to be clear: Resilience is something desirable. We all want to be able to cope well with adverse external influences.
Unfortunately, this usually works out worse than it should and often enough not at all.
How not to be resilient
Let us take a look at the German car manufacturers as a prominent example, who are anything but resilient with regard to the chip crisis 1. And just two or three weeks after the Ukraine conflict started they are massively affected by it, too – because components from Ukraine are missing. They are hit by these adverse external influences with full force. That is the opposite of resilience.
But what makes them so non-resilient that they are so bad coping with those unexpected external influences? I mean, they are famous for their efficiency … and that is exactly where the problem starts.
The procurement strategy of the car manufacturers is known to be highly efficient. They have optimized their procurement costs over many years, down to the last tenth of a cent for a component. Along this way, they have also systematically optimized the procurement of their ever-increasing chip requirements until they eventually purchased the majority of their chips from a few manufacturers in Taiwan. Those manufacturers simply offered the best possible price-performance ratio. Best deal possible.
Figuratively speaking, they have put all their money on a single horse and expect that this horse will always be the first to cross the finish line. And their calculation already includes the prize money for the horse.
This can work as long as everything goes as expected. But when the unexpected COVID event upset the global supply chains, the horse unexpectedly went lame – and perplexity was great: Nobody could have foreseen that!
Efficiency vs resilience
If I look only from a (cost) efficiency point of view, such behavior is understandable: Buy all your components from as few suppliers as possible to keep your supply chain management costs as low as possible and pick those suppliers that offer the best price-performance ratio with respect to your quality demands.
But if look from a resilience point of view, then the predetermined breaking points of such a way of thinking become visible: The further I optimize a system (in the example, a car manufacturer including its supply chains), the more susceptible it becomes to disruptions of all kinds.
Of course, such a highly optimized system is very (cost) efficient. But this high efficiency comes at a price: Systems perfectly optimized for a given purpose become very rigid. Rigidity means that such a system cannot deal well with any deviation from the norm. This makes them very fragile. Even if just a small external disturbance occurs unexpectedly, the system immediately has a massive problem.
It has no way to cope with the deviation because providing such a way would mean reducing efficiency. All these ways that might have existed have been optimized away. Instead, huge investments were made to minimize variance, to make sure that everything always works as expected.
Unfortunately, the world does not necessarily defer to your expectations.
In need of a new paradigm
To be fair: This is not only a problem of the German car manufacturers. I see this kind of efficiency optimization everywhere and at all levels. I also see it a lot in IT. If I would get a Euro for every single time I heard someone use the words “efficiency” and “cost (reduction)”, I would be a rich man.
From my resilience point of view, this worries me a lot. In an increasingly complex and unpredictable world, we will encounter unexpected adverse situations more and more often. We won’t be able to cope with them with dumb efficiency thinking.
Instead, we need a new paradigm that helps us to cope successfully with the challenges of the 21st century. Single-minded efficiency thinking had its place in the industrial economy of the 20th century: It was a time of almost limitless growth in a quite predictable context (at least for the western countries). Optimizing for low variance and high efficiency was a suitable approach under these conditions.
But the situation has changed: Most markets have become post-industrial, we hit the limits of growth (no matter what the profiteers of the old system try to tell us), the political and economical situation has changed and we only start to understand the (negative) impact we have on the whole planet. The relative certainty of the second half of the last century has been replaced by growing uncertainty (again, for the western countries in particular).
We cannot predict anymore what will happen tomorrow. Fully controlling variance has become an illusion. Unexpected adverse situations will happen more and more often. The only way to cope successfully with unexpected adverse situations is to accept them, to embrace them, i.e., to improve resilience – even if we have to give up a bit of efficiency during the good weather periods to do so.
Resilience is more important than efficiency to successfully respond to the challenges of the 21st century.
For the efficiency advocates who just started to howl: This does not mean that efficiency becomes irrelevant. Efficiency still has a high value in many situations. But if we have to choose between efficiency and resilience, we should favor resilience over efficiency to improve our future viability in an uncertain world.
This is not only valid on a big corporate level or above. This ripples all the way down to departments, teams, processes, the systems they build and run – and of course the humans involved: Resilience on all levels.
Even if resilience is a very desirable property, very often we see little of it. One of the core reasons is the widespread efficiency thinking, sort of a legacy of the 20th century and its industrial markets. Single-minded efficiency thinking leads to highly optimized, yet very rigid and thus very fragile systems that break under the slightest deviations from the expected norm.
To cope successfully with the challenges of the 21st century, its increased uncertainty and higher probability of adverse external events, we need to improve resilience: Resilience as the new paradigm for the 21st century.
In the next posts, we will dive a bit deeper into what resilience means and how to implement it on different levels. Of course, we will talk a lot about IT systems and organizations, but we will also discuss the topic a bit on other levels. Stay tuned … ;)
Living in Germany, I do not know how well other car manufacturers deal with the chip crisis. The German news cover the German car manufacturers quite well because car manufacturing is a significant part of Germany’s economy. Thus, it is almost impossible for me not to notice if the German car manufacturers have a problem (remember: only bad news are good news, hence these problems are insistently spread via news). Non-German car manufacturers OTOH are not covered that much by German news. Hence, without explicit research (which I did not do), I do not know their situation. Thus, maybe also Non-German car manufacturers have the same problems. I just do not know. ↩︎