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What does resilience mean in business?

Businesses need to consider various factors that can compromise their existence, especially in times of crisis. Addressing different fields of resilie

Ricardo Guerrero
April 26, 2024
What does resilience mean in business?

What does resilience mean in business?

In Ecology, resilience refers to the capacity of an ecosystem to bounce back from perturbations. In Physics or Engineering, a material can absorb energy, deform, and reformulate.

Resilience is the ability to recover quickly from failures or adversities and even evolve from those crises, making failure and resilience two sides of the same coin for society.

But what about businesses? Can organizations also be resilient? How can this be achieved?

Understanding business resilience

Businesses need to consider various factors that can compromise their existence, especially in times of crisis. Addressing different fields of resilience is crucial in this regard:

Financial Resilience

Financial resilience refers to coping with and overcoming situations that impact our income or resources such as divorce, natural disasters, recessions, economic crises, unemployment, disability, or health issues.

This type of resilience can be strengthened by having savings, health insurance, and a stable income that can compete in the job market. In addition, our potential, experience, network of contacts for financial and emotional support, skills, and knowledge can be used to get a job and achieve economic resilience.

Operational resilience

Operational resilience refers to an organization's capacity to withstand, absorb, or recover from situations that could harm or cause damage to its operations, or result in a loss of operational capability. 

This resilience extends to the people within the organization, the processes they follow, the technology they use, the relationships they have with their customers, suppliers, and government. Effective planning and agile action can help strengthen operational resilience and address potential weaknesses or threats within an organization.

Reputational resilience

Reputation resilience refers to an organization's ability to maintain a positive reputation despite experiencing crises, facing criticism, or being involved in scandals. This resilience is closely tied to the brand image and how the organization is perceived, including its values, positions, responsibilities, and obligations.

To strengthen reputation resilience, organizations can implement crisis action plans, clearly communicate their identity and positions, establish a marketing department with clear crisis response plans, and create a committee that defines policies, practices, and procedures to mitigate potential reputation risks. These measures can help organizations maintain a good reputation even during challenging times.

How to assess your business's resilience

These are some of the parameters we can consider to evaluate our business resilience, which can help us identify weak points to work on and reinforce together:

  • Recovery Time Objectives (RTO): The time it takes to restore certain essential functions after a crisis or disaster. The lower the RTO time, the higher our business resilience can be considered.
  • Incident Response Effectiveness: This is determined by the time it takes to react to a crisis. A rapid response time indicates an efficient response to minimize the impact of unforeseen events. This response time also extends to decision-making by leaders or individuals in relevant positions.
  • Dependency Mapping: Visual representations are created to show relationships and dependencies among different elements or components within a system or project. It is a way to understand which parts of the business rely on each other. You can learn how to create one here.
  • Cash Flow Adequacy: This metric measures a business's ability to generate sufficient funds to cover its operations and expenses. This indicator helps us determine if a company can withstand a crisis and manage unexpected expenses. You can learn the formula to calculate your Cash Flow Adequacy here.
  • Cost of Downtime: This refers to calculating the cost of operational interruptions, whether planned (service updates, maintenance, etc.) or unexpected (cyberattacks, natural disasters, human or system errors, power outages, etc.). It allows us to anticipate our financial capacity in case of events and make better decisions about where to invest to mitigate these costs or make cuts.
  • Financial Stress Testing: It involves simulating financial scenarios to assess a business's ability to withstand unfavorable financial events or major crises. It helps identify weaknesses in finances and allows for planning appropriate solutions.
  • Employee Morale and Engagement: This is a fundamental indicator that ensures the commitment and motivation of team members. This metric, often overlooked, is highly relevant because it determines the team's resilience in the face of adversity and their willingness to propose innovative solutions in safe spaces. Tools like our Failure Survey are ideal for assessing work environments and identifying areas for improvement.

Considering these metrics will allow you to identify which indicators need adjustments and measures to improve them.

Strategies and best practices to build business resilience

Here are some ways to build better business resilience:

1. Checklists and Guides: Having a resource that employees can turn to when dealing with a challenge is always helpful. There are several examples of such resources: dynamic role descriptions, regularly improved and updated workflows and all-hands meetings that review quarterly goals and OKRs to bring clarity and focus.

2. Training: It helps team members develop a group understanding through sharing best practices, facilitating cohesion and positive team coordination. It is important to provide training to all teams, as some best practices apply across different company levels.

3. Debrief Sessions or post-mortems: After facing any challenge or experiencing a setback, it's important to create a space for reflection and analysis of the situation and the learnings that can be drawn from it. This allows team members to share their expertise and support each other. Often, this process leads to an action plan for the team to move forward.

4. Work Culture: Team culture is key to building a resilient business. The team leader or supervisor is responsible for creating the right atmosphere for their team.

5. Open Space: Sharing bad news and reporting early warnings openly is a hallmark of a healthy work culture, which we refer to as a workspace of psychological safety. These open spaces can be created in any medium, including one-on-one meetings, team meetings, and Slack channels.

The role of leadership in fostering resilience

Leaders play a crucial role in promoting resilience by setting an example and instilling good practices from the top down.

1. Reconsidering negative thoughts: Do you tend to overthink as a leader? It’s key to reframe adverse situations in less negative ways while remaining realistic.

2. Focusing on what can be controlled: Focusing our attention and efforts on what is within our control in any situation is essential; otherwise, we might miss great opportunities to get ahead.

3. Seeking for help: Sharing and talking with trusted individuals can provide new perspectives and solutions when dealing with complex issues within secure relationships. Being open and transparent as a leader takes courage and vulnerability, but it sets a great role model for the team.

4. Facing change and setbacks: Taking on personal challenges help us build confidence and gradually push our limits.

The importance of resilience during a crisis

In times of crisis, chaos ensues, circumstances change rapidly, and with that comes an opportunity. When things are changing so quickly, minds can change at the same pace.

The Common Knowledge Effect is the way of thinking that dominates organizational habits. It disappears when behaviors and processes that had always worked, stop working.

A crisis provides the opportunity -or the need- to do things differently. This urge offers an opportunity to unlearn old processes and routines and build a foundation of good new habits. Our mindset becomes malleable.

How to cultivate a resilient business environment

Being resilient can be a great individual skill. But how can we bring this to our work teams? We can do this in the following ways:

1. Find a sense of purpose: Finding a reason to go on is important to keep our spirits up. Feeling part of something bigger than oneself can make us more engaged and help us see how meaningful and useful the work we do is.

2. Take candid breaks: Putting everything on the table and discussing "the elephants in the room" is crucial for strengthening resilience. Openly sharing thoughts and feelings in safe spaces helps to have healthier dynamics in the workplace.

3. Share stories: A workplace that welcomes vulnerability fosters compassion and humility, leading to a participative team that trusts each other and seeks solutions to problems by sharing personal and meaningful stories.

4. Take on challenges: To improve team communication, create a safe space where each member can share their perception of the team and raise any existing problems. A facilitator can guide the discussion and encourage participants to take responsibility for their part in the problem rather than resorting to blaming and finger-pointing.

5. Show interest: Leaders should not wait for times of crisis to show interest in their team. Instead, they should constantly ask questions to learn about progress and gauge the internal environment. Doing so, they demonstrate their interest, identify necessary adjustments to improve dynamics, and prevent potential problems.

6. Clarity and training: Clear role descriptions, job outlines, or guidelines help teams feel ready to deal with crises. Having meetings where everyone participates to review goals provides clarity and focus. These actions develop a collective understanding of priorities while sharing best practices facilitates cohesion and positive teamwork.

In conclusion

Exercising our resilience on a personal and group level is possible, however, it requires a cross-cutting atmosphere where all kinds of issues can be discussed and tough questions can be asked.

Openly sharing bad news and reporting issues early are signs of a healthy culture; or as we call it, a space of psychological safety and resilience.

All our corporate Fuckup Nights experiences are focused on improving workspaces to build stronger corporate cultures. Through events featuring professional failure stories, diagnostic tools, and workshops, we help teams develop resilience and assertiveness skills to navigate crises and errors in the workplace.

Schedule a call with us to learn how we can strengthen your business resilience.

Frequently asked questions

What is resilience in simple words?

Resilience refers to the process and the outcome of successfully adapting to challenging life experiences. It's about flexibility and adjusting to internal or external demands and changes.

What is an example of a resilient business?

An excellent example would be the entertainment industry during the Covid-19 pandemic. Some switched to online events, digital concerts, broadcasts, e-commerce, and other creative solutions that have transformed the entertainment industry.

Editado por

Raquel Rojas

What does resilience mean in business?
Ricardo Guerrero
Media Editor & Newsletter Coordinator
Content & typos creator. He probably posted this blog by himself, and thinks it’s awkward to write his own bio. Fuckuppin’s mom.


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