- - Monday, November 17, 2014

ANALYSIS/OPINION:

THE RESILIENCE DIVIDEND: BEING STRONG IN A WORLD WHERE THINGS GO WRONG
By Judith Rodin
Public Affairs, $27.99, 384 pages

Resilience, as defined by Judith Rodin, the author of the important book “The Resilience Dividend: Being Strong in a World Where Things Go Wrong,” is the capacity of any entity, ranging from an individual, a corporation or a society, to pre-emptively prepare for sudden disruptions that were unpredicted, to recover from them and then to take advantage of new opportunities produced by the disruption for further growth and expansion.

It is the latter part of this equation that the author terms as the “resilience dividend.” Thus, although it is critical for the affected entities to return to “normal functioning” following a major disruption such as a catastrophic terrorist attack, earthquake, hurricane or financial collapse, one of the crucial benefits of the “resilience dividend” is that it enables organizations that are truly resilient to significantly transform themselves in a beneficial manner “even when disruptions are not occurring.”

While the concept of “resiliency” is not new, what makes Ms. Rodin’s book especially important is that, as she writes, today “building resilience is one of our most urgent social and economic issues because we live in a world that is defined by disruption.” Now, practically every month, “we see some kind of disturbance to the normal flow of life somewhere,” in the form (with my additions) of cyber-attacks (such as the large-scale hacking of customer accounts at major retail stores and banks), new strains of virus pandemics (such as the current mass outbreak of the Ebola virus in West Africa), violent storms or earthquakes (such as Hurricane Katrina, in August 2005, the Fukushima earthquake and tsunami in Japan in March 2011 and Hurricane Sandy in October 2012). In addition, one could consider economic breakdowns (such as the 2008 financial crisis in the United States and the ensuing eurozone crisis in Europe), as well as civil disturbances (such as the current racial tension in Ferguson, Mo., which threatens to spread to other municipalities).

While the world has always experienced such disruptions, Ms. Rodin believes there are some disruptive phenomena in particular that characterize the modern era and are distinctly different from their predecessors. These disruptive events are especially tied to urbanization (with the populations of the world’s major cities expanding at an exponential rate while their resources and infrastructure are being stretched beyond their limits) and globalization (with almost every aspect of our economies, including the Internet, affected by developments in other parts of the world, many of which are unpredictable, such as outbreaks of civil wars that threaten oil production in countries such as Iraq).

Among the numerous examples of the cascading impacts of the sudden and catastrophic disruptions discussed in the book is the 2011 Fukushima earthquake and tsunami as not only a humanitarian disaster (which caused some 270,000 refugees, with many of them homeless), but an economic disaster as well.

The Toyota Motor Corp. experienced extensive damage to its plants in Japan, many of which were operated by its suppliers and partners that “produced some 1,260 different parts that go into the assembly of an automobile, five hundred that are essential to keep production going.” Toyota was so disrupted by the disaster at the time that it lost production of some 370,000 vehicles, which lowered the company from its position as the world’s top automaker to fourth on the list.

Nevertheless, as discussed in the chapter “Leadership Emerges: Institutions and Individuals Step Up,” Toyota succeeded in quickly rebounding, owing to its sound pre-crisis resilient organizational culture and infrastructure, which proved crucial in quickly restoring production to within 90 percent of its pre-disaster manufacturing capability. By 2013, it had regained its spot as the world’s No. 1 automaker.

Ms. Rodin, currently president of the Rockefeller Foundation in New York, is especially suited to analyze these disruptive threats and to propose recommendations to upgrade resiliency to redress them. The foundation has adopted resiliency as one of its top funding priorities.

In the chapter “After the Crisis: Bouncing Forward,” the author recommends the establishment of new sets of response measures to upgrade our societies’ recovery from catastrophic impacts. While the immediate concerns of regions or organizations that experience severe disruption rightly focus on their post-crisis period, with relief, restoration and recovery of their populations and infrastructure of utmost importance, Ms. Rodin points out that a long-term perspective and commitment at all levels of society is required in order to establish robust systems that can mitigate the consequences of disasters when they occur. As she writes, rather than “wasting” a crisis by not addressing the fundamental problems revealed in the post-crisis period, “Not only do [resilient entities] bounce back to a functioning state, they bounce forward: they nurture natural systems, improve structures, and strengthen social ties” — thereby acquiring a “resilience dividend.”

In one of the book’s shortcomings, Ms. Rodin’s discussion of what it takes for societies and business corporations to build resiliency in anticipation of inevitable crises would have benefited from a template that outlines all the components that need to be taken into account in assessing an organization’s level of resiliency. This would be comparable to a credit-rating service’s rating of an organization’s “creditworthiness,” except as applied to its “resiliency worthiness.” The benefit of such a template, which is already being used in industry, is that it would enable the “resiliency scored” entity to identify shortfalls that might need to be remedied for improved resiliency against unforeseen crises or disasters.

Nevertheless, Ms. Rodin’s “The Resilience Dividend” is a must-read for all those concerned about proactively building a tough and rebounding capacity, “without waiting for disaster to push us into it.”

Joshua Sinai is director of analytics and business intelligence at the Resilient Corp., in Alexandria, Va.


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