Master the Art of Business
A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.
What Is 'Resilience'?
Resilience is having the toughness and flexibility to handle whatever is thrown at you. Resilience is a very underrated quality in business and other important areas of life. Resilience doesn't come with optimal Throughput. Flexibility comes at a price.
Preparing for the unexpected makes you more Resilient. Being able to adjust strategies and tactics may be the difference between survival and the end.
Planning for both Resilience and performance is the mark of a good management.
Josh Kaufman Explains 'Resilience'
Turtles aren't the sexiest creatures in the animal kingdom. They can't run fast. They can't fly. They don't have big sharp teeth or claws. They can't puff themselves up to look menacing or poison their enemies.
Compared to the raw power of a tiger or a falcon, turtles are rather lame.
What turtles do have is a variety of protective strategies-swim away quickly, use camouflage, snap with jaws, and if all else fails, retract into the shell and wait.
Creatures elsewhere in the animal kingdom are in big trouble if they're cornered by a predator. Turtles have a fighting chance-they win because they're the armored tanks of nature. They can also eat many different things and go into hibernation when times get tough.
That's why they live so long.
Tigers, on the other hand, rely on their strength, power, and speed to chase down their prey. When times are good, tigers are the kings of the jungle. If prey becomes scarce or they lose their hunting prowess due to age or injury, death takes them quickly and mercilessly-no second chances.
What the business world needs is more turtles and fewer tigers.
The world is a fundamentally Uncertain place. Unexpected things happen-some good, some bad. You never know when Mother Nature, Lady Luck, or a hungry predator will decide that today is not your day.
Resilience is a massively under-rated quality in business.
Having the toughness and flexibility to handle anything life throws at you is a major asset that can save your skin-literally and metaphorically. Your ability to adjust your strategy and tactics as conditions change can be the difference between survival and disaster.
Resilience is never "optimal" if you evaluate a system solely on Throughput. Flexibility always comes at a price.
A turtle's shell is heavy-they could certainly move faster without it. Giving it up, however, would leave them vulnerable in the moments when moving a little faster just isn't fast enough.
In an effort to chase a few more short-term dollars, many trade businesses trade resilience for short-term results-and pay a hefty price.
The big investment banks are a classic example.
Keeping cash reserves on hand to handle the unexpected has become "ultra conservative" and "inefficient"-it's become a "best practice" to Leverage the entire company many times over times to squeeze out a few more cents in earnings per share each quarter, leaving the business explosively vulnerable to a very small decline in revenues.
Operating a business with no cash reserves, no insurance, and high levels of debt may juice your returns for a few months or quarters, but the moment your revenues decline even by a little or someone decides to sue the business, you're sunk.
Leverage works just like rocket fuel-depending on how it's used, it can propel your business to dizzying heights, or make the entire operation explode.
Unfortunately, many of the advanced financial manipulation tactics taught in business schools implicitly trade Resilience for paper returns-and once-successful businesses pay the price by going out of business when times get tough.
Preparing for the unexpected makes you more Resilient.
On a personal level, investing in a home emergency / first aid kit, car kit, and extra resources like food and water isn't paranoid-supplies like these are cheap insurance for the intelligent, particularly in the winter months.
The same goes for actual insurance and savings for major risks. You may never need them, but you'll be glad they're there if you do.
Here's what makes a business resilient:
- Low (preferably zero) outstanding debt.
- Low overhead / fixed costs / operating expenses.
- Substantial cash reserve for unexpected contingencies.
- Multiple independent products / industries / lines of business.
- Flexible workers / employees that can handle many responsibilities well.
- No single points of failure.
- Fail-Safes / backup systems for all core processes.
Planning for Resilience as well as performance is the hallmark of good management. Resilience is certainly not sexy, mostly because the benefits suffer from Absence Blindness. It can, however, save your hide when things get rough.
Think less like a tiger and more like a turtle, and your business will be able to withstand pretty much anything.
Questions About 'Resilience'
- How resilient is your business? Your personal life?
- What could you do to increase your flexibility and toughness in the face of the unexpected?
"Placing a system in a straightjacket of constancy can cause fragility to evolve."
C. S. Holling, ecologist
Understanding Systems
https://personalmba.com/resilience/
Master the Art of Business
A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.
About Josh Kaufman
Josh Kaufman is an acclaimed business, learning, and skill acquisition expert. He is the author of two international bestsellers: The Personal MBA and The First 20 Hours. Josh's research and writing have helped millions of people worldwide learn the fundamentals of modern business.
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