from x-events to resilience how to build a resilient business model · 2014. 6. 16. · natural...

From X-events to Resilience How to Build

A Resilient Business Model

Leena Ilmola

International Institute for Applied Systems Analysis (IIASA)

The Global X Network

Structure of my presentation

I. About resilience – what is that?

II. Elements of corporate resilience

III. Resilience measurement

IV. Resilient business model

2

I ABOUT RESILIENCE

3

What do we mean with resilience?

Awareness

Adaptation

Agility

Active learning

Capability to succeed in the environment that is dominated by uncertainty.

Performance

Time

Theory behind our proposition for definition

• Ecosystems theory – Holling C.S. (1993) Resilience and stability of ecological systems How adaptation builds complexity – Holling C.S. (2001) Understanding the complexity of economic, ecological and social systems.

Ecosystems 4, 390-405 – Gunderson, L.H., Holling C.S. (2002) (Eds.) Panarchy. Understanding transformation in Human and

natural systems, Island Press, Washington D.C. – Folke C. (2006) The emergence of a perspective for social-ecological systems analyses Global

Environmental Change 16 pp. 253-267) – Resilience Alliance www.resalliance.org

• Complex Adaptive Systems theory – Anderson, P (1999) Complexity Theory and Organization Science, Organization Science, VOL 10, No.3,

May-June 1999 pp 216-232 – Berger P.R. & Luckmann T (1966) The social construction of reality, Doubleday, New York – Holland J. (1995) Hidden Order: How adaptation builds complexity, Addison-Wesley, Reading MA – Luhman N. (1995) Social Systems, Stanford, Stanford University Press

• Innovation theory – Reinmoeller and van Baardwijk (2005) http://sloanreview.mit.edu/article/the-link-between-diversity-

and-resilience/ – Cho, Mathiassen, Robey (2007) Dialectics of Resilience Journal of Information Technology – Liisa Välikangas, A. Georges L. Romme, (2012) "Building resilience capabilities at “Big Brown Box,

Inc.”", Strategy & Leadership, Vol. 40 Iss: 4, pp.43 – 45

5

http://www.resalliance.org/

http://sloanreview.mit.edu/article/the-link-between-diversity-and-resilience/

















II CORPORATE RESILIENCE

6

Based 6 INDEPENDENT SUBSTUDIES

Introduction to resilience, its implications to the company. Own perception of strengths and weaknesses of resilience.

Identification of internal flexibility and the values that are guiding organization in the shock situation.

1.SELF ASSESSMENT TEST

2.CULTURE RESILIENCE TEST

3a.GAME CHANGERS TEST

3b. SHOCKS TEST

4. STRUCTURE TEST (NETWORK)

5. COMPLEXITY TEST

Strengths of current strategy from resilience perspective. Potential vulnerability.

A portfolio of concrete resilience development actions.

Weak nodes of existing operations. Systems description of the operations.

”Fit to existing markets” -elaboration

7

INSIGHTS AND RESILIENCE ASSESSMENT 1st insight based on resilience review

•Resilience is a result of how well functions are working together, (one function alone cannot solve resiliency) • Resiliency is a Board Level responsibility

1. RESILIENT CULTURE

9

The Acculturation model

Future

+

+ -

-

Now

Frustrated

Positive perception of a firm

now, but negative

expectations for the future

Alienation

Negative perception of a firm

now, and negative


Follower

Negative perception of a firm

now, but positive


Driver

Positive perception of a firm

now, and positive


Acculturation model by Berry 2005

Drive is essential for resilience

Future

+

+ -

-

Now

Driver

Positive perception of

Cassiidian now, and positive


DRIVE Typical for high drive culture High quality participatory planning Reality rules: Empowered people do not obey rules and plans Trust Diversity

Culture study perception about current situation and future all companies (Casti, Perchter, Berry) Analysis of actions in disruptive cases (Schein)

What generates trust in the future

0.0

20.0

40.0

60.0

80.0

100.0

120.0

AN% AF% FN% FF% DN% DF%

ALIENATED, FOLLOWERS AND DRIVERS THEMES NOW AND FUTURE

culture operations structure environment strategy resources

Data: Culture study perception about current situation and future, all the companies (Casti, Prechter, Berry)

AN%= themes that alienated group used when describing the reason for their perception of the current situation (now) AF% = themes of alienated people when they described future

FN= Followers now, FF= followers future, DN=followers now, DF=Drivers future

What makes culture resilient 2nd insight

Drive is essential for resilience > empowerment, speed of reaction, commitment Strategy is essential for the future expectations Resilient culture: • Pragmatism • Development

orientation • Diversity • Trust

2. STRATEGY RESILIENCE

14

Strategy resilience

Basic Assumptions of the Strategy

Competitors from other fields are not able to enter the market

Customer seg. X and Y demand will be steady for the next 10 years

Business is global Economic growth We are essential part for the whole (value chain, company)

WHAT IF …… Different business models are introduced

Segment will disappear

New regulation Long lasting decline

Restructuring

Strong understanding of client needs

Agile fast reactions

Technology X knowledge

Strong Trust

Brand, recognition

We never leave customer into trouble

Supports Strongly ------------------------- > No Impact ----------------------------------------> Lethal Impact

Key Competitive Factors

15

Strategy resilience

Basic Assumptions of the Strategy







Restructuring




Strong Trust

Brand, recognition




16

Strategy resilience Basic Assumptions of the Strategy







Restructuring




Strong Trust

Brand, recognition




17

Strategy as a source of resilience 3rd insight:

Key strategic features that increase resilience • Culture related strengths (not

directly market driven) are not sensitive for the speed of change

• Agility, fast reactions, speed • Strengths lies in supporting

capabilities that are not directly technology or customer specific

• Strong customer focus, partnership

Key strategic features that decrease resilience • Client segment specific focus • Specific technology focus • Strong customer focus,

partnership • Dependence on externalities:

owners radical actions, new type of competitors

Basic assumptions that increase vulnerabilities: • Growth related objectives (basic assumption that is possible) • Strong perception of externalities’ behavior • We have to focus on our core competence (working with similar kind of clients) • Our competitive factors are very strong

3. STRUCTURE

19

Structure and resilience – Process step 1

Sales has the key role in this process.

16

-Ju

n-1

4

Systems theory, Parmenidas Eidos approach, data: fictive example based on case studies 20

Structure and resilience Process step 2

16

-Ju

n-1

4

Changes in the environment have negative impact on clients, except on segment S. Now the process is driven by sales, competitor and client segment B


Now the response to the market change requires R&D, but the partner is already involved with the competitor.

16

-Ju

n-1

4

Structure and resilience – Process step 3


Structure as a source of resilience 4th insight:

Structural features that decrease resilience: • One of the nodes/agents

will have too dominating role

• There are systems “Blocks” or “gate keepers”

• Same drivers are driving all of the customer segments

• Slow feedback loop internally > slow reaction to the market change > external drivers are driving the system

4. OPERATIONS RESILIENCE

24

Recruitment philosophy

We look for specific skills

We recruit smart people

There is a lack of candidates so we cannot apply a recruiting philosophy

35%

65%

25

Firms reward active, efficient and goal oriented employees

26%

30%

11%

48%

19%

22%

22%

56%

26%

4%

19%

0% 20% 40% 60% 80% 100%

Experts

Those participating actively

Team builders

Efficient people

People with global business skills

People with exceptional…

People with a wide perspective on…

Goal oriented

Those good with numbers

Those with interests beyond their…

Those with good people skills

Insta/Cassidian/Ruukki combined (All responses) (Mean: 5.724, Deviation: 2.927) (Responses: 27)

26

Share of personnel able to do other jobs in the company than their current one?

0%

4%

19%

23%

19%

35%

0% 20% 40% 60% 80% 100%

0%

10%

20%

30%

40%

Greater than 50%

Insta/Cassidian/Ruukki combined (All responses) (Mean: 4.615, Deviation: 1.243) (Responses: 26)

27

When losing two major suppliers, do firms have the ability to react in time in order not to have major

disruption in business?

27%

35%

39%

0% 20% 40% 60% 80% 100%

Yes

No

I do not know

Yes No I do not know

28

When the largest partner is not able to deliver, what is the impact on production

(1 = Little Impact, 5 = Shut Down)

4%

11%

26%

44%

15%

0%

20%

40%

60%

80%

100%

1 2 3 4 5

1 2 3 4 5

29

Example of Resilient portfolios

0 1 2 3 4 5 6 7 8 9 10 11 12

Utilize stocks at nearest location

Transparency in all our work, responsible action

supply smaller - price higer

Storm durable products

Secure the functionality of the order-to-cash process

New bio based primer to use

Marketing with partners

Marketing of solar and wind

Electricity from Russia

Cut down the production by 50% in Raahe.

Catasthrope roofing-solutions

Be open about risk

Portfolio size

0123456789101112

Utilize stocks at nearest location

Transparency in all our work, responsible action

supply smaller - price higer

Storm durable products

Secure the functionality of the order-to-cash process

New bio based primer to use

Marketing with partners

Marketing of solar and wind

Electricity from Russia

Cut down the production by 50% in Raahe.

Catasthrope roofing-solutions

Be open about risk

Portfolio size

12 11 10 9 8 7 6 5 4 3 2 1 0

1. 2.

3. 4.

5. 6.

7.

8. 9.

10. 11.

12.

Resilient portfolio of 6 actions: 11, 8, 12, 5, 1,

6

Analysis method - Robust Portfolio Modeling 30

0 1 2 3 4 5 6 7 8 9

Collect ip addresses of critical partners

Create personal power generator

Better co-op with internet operators

Be transparent with communication audit results

Remote access utilization in emergency situat

Ask for power generators from defence forces

Internal update policy to to critical systems

Use phone, fax to ensure minimum communic.

The key is back-up of of all critical material 0%

0%

0%

0%

0%

0%

0%

0%

0%

14%

14%

14%

14%

14%

14%

14%

0%

0%

32%

27%

27%

32%

27%

23%

23%

5%

5%

50%

36%

39%

48%

36%

32%

32%

14%

14%

66%

45%

48%

61%

45%

42%

42%

24%

26%

79%

54%

57%

75%

54%

52%

52%

37%

40%

89%

63%

65%

87%

63%

63%

63%

52%

54%

96%

74%

74%

96%

74%

74%

74%

70%

70%

100%

86%

86%

100%

86%

86%

86%

86%

86%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Portfolio size

0 1 2 3 4 5 6 7 8 9 10 11

Send our experts to Sweden and other european countries

Virve network is taken more wider use as today

Guarantee hot line service

Know network service level in Nothern countries

Provide additional equipment to the rescue teams

Help Desk service by phone

Boost Cyber security knowhow selling to power companies

Geographical distribution of activities

Promote TETRA as non-vulnerable communication solution

Backup postal service for data distribution

Create a "VIP" DNS system of your own in Cassidian 0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

9%

9%

9%

9%

9%

9%

9%

9%

9%

9%

9%

9%

9%

31%

31%

25%

9%

13%

19%

19%

19%

16%

14%

18%

47%

51%

34%

16%

24%

27%

27%

20%

22%

18%

30%

59%

65%

47%

23%

36%

35%

35%

23%

30%

23%

41%

71%

72%

59%

31%

47%

43%

46%

30%

37%

32%

51%

80%

76%

66%

43%

58%

54%

55%

42%

42%

43%

61%

87%

77%

73%

55%

69%

65%

63%

56%

50%

59%

71%

92%

82%

78%

68%

78%

73%

70%

67%

62%

76%

80%

95%

85%

83%

80%

85%

80%

78%

80%

76%

91%

91%

91%

91%

91%

91%

91%

91%

91%

91%

91%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Portfolio size

1. Use external resources

2. Build trust 3. Backup for critical

issues 4. Develop

services/products to uncertainty demand

5. Be open for disruption

31

What makes operations and resources resilient 5th insight

• Assume volatility • Recruit rather smart than

those with one specific skill • Reward those with interest

beyond their own scope and those with wide perspective and capable of replacing others

• Cherish ability to innovate for uncertainty

• Assume and make plans for disruptions

• Encourage into reactive learning as responding to disruptions or when rehearsing for them

III ABOUT MEASUREMENT

33

How to measure resilience?

Do you want to be a pioneer? Please join to our Piloting Partners! Contact [email protected] 34

IV RESILIENT BUSINESS MODEL What does all this imply on the business model level?

35

Business model elements

36

Resilient Business Model Elements No investments in infrastructures,

partnering

Multiple capabilities,

multipurpose resources,

Culture

Redundancy

Customer is a co-creator,

one process for multiple

purposes

On demand, cost

generated when service

produced

Hybrid innovations

Based on co-creation,

trust

Diverse segments with diverse

needs

Internet, SOME

Multiple streams from diverse set of

services Do you need any

profit?

Crowd financing

37

A business model example 3D printing

Fast designs for multiple

purposes

No limits

Customer is a co-creator,

same printer for multiple

purposes

On demand, low

production, storage cost

Do when you want and what you do want!

Brand, trust

Diverse segments with diverse

needs in your network.

WWW, SOME

Multiple streams, designs, technology,

raw materials Do you really

need any profit?

Designers as financers?

38

What is an ExO?

• In 10 years, it's predicted that 40% of the Fortune 500 Companies will no longer exist.

• Innovation – P&G 300 days from idea to product

– Exponential Organization 29 days

• Business model: – Staff on demand

– Community & Crowd

– Algorithms

– Leased Assets

– Engagement

39

If this is true for your organization….

1. We mostly use on-demand contractors in addition to a small full-time core team

2. We emphasize agility - even mission critical functions are outsourced

3. We use on-demand assets even in mission critical areas

4. Our community is decentralized, communication is “many to many” and drives peer-to-peer value creation

5. Most core processes are self-provisioning and executed outside the organization via a scalable platform

6. Objectives and key results have full transparency - everyone can view each others' performance)

7. We use experimentations and A/B testing and short feedback loops; for all core functions

8. Failure and risk-taking are expected, pervasive, measured and even celebrated across the organization

9. Small, multi-disciplinary, networked, self-organizing teams are the primary operating structure

10. All key decisions are decentralized (except purpose, culture and vision)

… then you are resilient Modified from http://exponentialorgs.com/survey

40

Final – what do we want to say

SOURCE OF RESILIENCE IS A

BUSINESS MODEL

41

Thank You! Please contact: [email protected]

42

from x-events to resilience how to build a resilient business model · 2014. 6. 16. · natural...

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