Resilience isn’t just about the plans, processes, and strategies that organizations put in place; it goes to the very heart of the organization itself. Robert Hall explains…
With COVID-19 still blighting many countries, war raging in eastern Europe, and recession stalking a third of the world’s economies, it is perhaps not surprising that people everywhere are nervous of what 2023 will bring. This is especially so for chief executives who are trying to make their organizations more resilient and sustainable in the face of the foreseen and hidden challenges.
From recent articles in the business press, it seems that there is a renewed focus on finding the best way forward in the minefield marked by volatility. The solutions will, of course, be varied but there is common recognition that a re-examination of the fundamentals is necessary to make corporations more adaptable to the period of significant change that faces us all. Adaptation – the key to resilience – is acceptance of the fact that many of the challenges are too big for any of us to negate alone so we need to work together.
Roz Brewer, CEO of Walgreen Boots Alliance, offers a valuable, personal contribution in The Economist where she calls the re-examination of the corporate environment a ‘rephrasing’. “Just as sentences must sometimes be rephrased for greater effect, so must companies.” (1) Roz means by this that we “approach our work in a different way that has clearer meaning.” The rephrasing can help improve resilience by enhancing our ability to respond and adapt. She focuses on rethinking corporate culture, to which we will return, but there are two other elements embedded in her article which are worth considering beforehand.
Purpose
The first of these is purpose but we need to be clear about terminology here. If a vision statement describes what the long-term aspirations and ambitions of an organization are then purpose is about why it’s on that particular journey and what opportunities it is seeking to realise. An illustration could be for the vision to be the ‘most resilient company in the market’ while the purpose could be ‘to generate a sustainable future by building back better after and between any disruptions (whether from shocks or stresses) while benefiting stakeholders, the wider community and the environment in which we operate’. Purpose defines goals and establishes a route map; it provides that lodestar by which to guide the ship. It also shapes core principles and values which, in turn, help cement culture. (2)
Purpose has traditionally been focused on shareholder value, with profit margins and internal benefits as primary if not sole drivers. In the resilience era, it is necessary to rephrase – even transform – this notion by looking more towards the long-term effects on people, customers, markets, investors, community, and the environment. In other words, it should adopt what has become known as a ‘whole-of-society approach’ in recognition of the many moving parts that go towards making an organization more resilient and sustainable. Purpose should show how society at large will benefit from the organization’s existence.
By way of an example, Unilever's purpose of ‘making sustainable living commonplace’ has been rephrased into a core aim of ‘doubling the size of the business through strong performance, while decoupling environmental impact from that growth, and optimising the company’s social impact’. (3)
Purpose-driven organizations (now defined by a Publicly Available Specification (4)) should offer a clear, common focus applicable across the whole organization, one that helps to engage and motivate employees, and prioritise competing demands. It also helps people feel personally and emotionally invested in the organization and allows them to watch, whether individually or collectively, for changes in the business and the wider market and be empowered to act. According to Roz, 80 percent of firms united by a common purpose have been found to outperform the general market, while 65 percent of candidates say they will accept a job offer only if they know and agree with a company’s purpose, vision and values.
The idea of profit with purpose, or at least social purpose, is behind the notion of stakeholder capitalism. The most influential proponent of this has been Blackrock’s chief executive, Larry Fink. He proclaimed in 2018 that: “companies need to earn their social licence to operate every day.” He added in 2022: “In today’s globally interconnected world, a company must create value for and be valued by its full range of stakeholders in order to deliver long-term value for its shareholders.” (5) These are not fuzzy ideas – albeit dismissed, like ESG, as woke capitalism by some – but genuine attempts to rephrase the notion of social value through responsible investment strategies. The more embedded an organization is in its stakeholder community, the more resilient it is likely to be.
It is entirely possible for a business to make a difference while making a profit but, with so many truly global challenges, the wider social purpose of organizations should be sought by employers and consumers alike. This can only be through good stewardship which ‘involves leaders thinking of themselves as transient caretakers, responsible and accountable for the wellbeing of an organization which does not belong to them and which they need to pass on in better shape than they received it rather than simply, and narrowly, as an owner of the shares. It involves thinking in terms of outcomes rather than simply inputs and outputs.’ (6)
Values
Behind any organizational purpose should be a well-defined and articulated set of values. These should be authentic, legitimate, and lived. These set out the principles and behaviours that are unique to the organization and by which standards can be set and measured. A set of core values or morals should also drive the individual human spirit and be central to a person’s identity. At a time when people and organizations are feeling anxious, if not lost, by world events then some rephrasing or even restating of a company’s values may be helpful. Again, Roz points out that 87 percent of consumers buy products based on values or because a company spoke out on an issue they cared about. This is not always easy as factionalism and partisanship are prevalent characteristics in many of today’s societies.
Values should underpin and guide general behaviour over prolonged periods. Typically, values such as integrity, innovation, reliability, equality, safety, and transparency are some of the usual terms applied. Some may become more prominent, or certainties can be challenged with changing circumstances. The COVID-19 pandemic, for example, has brought the value of health (particularly mental health) and wellbeing into the list if it was not there before. Similarly, climate change has brought the environment and sustainability into the mix. To this list, and relevant to the rephrased agenda, should be added values such as stewardship, community, and agility.
Interestingly, the military use the term doctrine to represent their set of values. Doctrine can be defined as ‘that which is taught’ and described as ‘the fundamental principles by which military forces guide their actions in support of objectives’. It is authoritative but requires judgement in application. It can also be described as ‘a common vehicle for expression and a common plane of thought’. War tests this perception to extreme. When rephrasing company values for greater resilience, it would be worth reflecting on what the basics are and whether they need to be vocally expressed in some form of corporate doctrine.
Culture
The glue that binds together purpose and values is culture. This is even more important that strategy; ‘culture eats strategy for breakfast’ runs the aphorism. Yet, like the word resilience itself, culture is hard to pin down or document and, therefore, often overlooked in the search for success. Culture resides in the quotidian exchanges between colleagues and in the hidden threads of routine decisions. It is reflected in the values, beliefs, morals, and customs that are codified by an organization and is increasingly coming under scrutiny by employees and stakeholders alike, including regulators.
Culture has a number of essential dimensions, namely, tone from the top (i.e. leadership messages), accountability (i.e. responsibility for managing their risks), effective communication and challenge (both up and down the organization), and incentives (i.e. alignment with objectives and driving the right behaviours). Ultimately, the leadership and management skills of executive management in championing these aspects are fundamental to ensuring a strong and healthy culture. They will guide behaviours and expectations on all sides. Setting behaviours, and especially changing them, can be a slow process. It takes time, persuasion, and encouragement. The journey can be set back more easily than it can be established. Bearing this in mind, it is perhaps surprising how few companies devote time and effort to this aspect of resilience.
In the process of rephrasing, it may be beneficial to re-examine and, if necessary, reformulate a culture statement, sometimes called a culture code, that can be a guide to which employees refer. Such a statement could be composed of various cultural aspects of the company, including the vision, purpose, values, standards, practices, expectations, and traditions. Workplace culture statements should be provided to all new employees in the onboarding process and they should be readily available for employees throughout their tenure. An example of a basic culture statement could be: ‘We're building a place of belonging. To create an inspirational company, we believe it is a place where employees can do their best work and be their best selves. We prioritise diversity and believe in a culture rooted in collaboration, growth, and mobility.’
Roz believes that “culture needs to be at the centre of success” and “culture and values will be key drivers of motivation for workers as we rephrase the corporate environment.” Post the pandemic, and with organizations facing new working patterns and practices, as well as challenges around the retention of staff, then it will be ever-more important that employees buy into the corporate purpose, values, and culture. To do so is sure to make that organization more resilient. A start can be made by rephrasing existing approaches.
The author
Robert Hall is an independent consultant and former Executive Director of Resilience First Ltd (2018-2022). His book ‘Building Resilience Futures’ will be published by Austin Macauley in early 2023. It looks at many of the aspects of resilience described above. Contact: robertcmhall33@gmail.com
References
- Brewer, R. It’s time to ‘rephrase’ how companies work, p120, The World Ahead 2023, The Economist.
- For two management consultants’ perspectives, see: McKinsey and Company article, More than a mission statement: How the 5Ps embed purpose to deliver value, 5 November 2020. ; Deloitte C-suite insights, How purpose delivers value in every function and for the enterprise, 2022.
- Quoted in: Roberts, E. Professionalising Purpose, Resilience First, 3 January 2023.
- PAS 808:2022, 31 July 2022, BSI.
- Fink, L. (2018) Letter to CEOs. (1) Letter to CEOs (2) 2022
- Sir Andrews, I. Operational Resilience: A Guide for Non-executive Directors, Chapter on Stewardship, Resilience First, 2021.
