Organizational Resilience and Resilient Leadership

We learnt about resilience on an individual level in class; in this blog post I would like to explore more on organizational resilience- the ability of an organization to bounce back from crisis and adversity.

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In the last decade, we have seen many crises unfolding on the global stage like the Global Financial Crisis, and acts of terrorism from ISIS and other terror groups. In addition, we have also seen natural disasters such as Japan’s terrible tsunami and monstrous hurricanes in Southern America. Companies that operate or have clients in the affected region were shaken by these external shocks. While we see some corporations like Lehman Brothers collapsed completely, others like Toyota has emerged from trying times to become stronger and better. Why is this so? Much of this has got to do with the “culture of resilience” in an organization.

Lehman

News on Wall Street meltdown in 2008

 

The period from 2008 to 2012 was perhaps the hardest times in the history of Toyota. First, the financial melt down in 2008. Then, in 2009, it was forced to recall millions of cars due to engineering fault, which led to a brand image crisis. This was followed by the tsunami in 2011 that destroyed their production plants and material supplies.

JAPAN-QUAKE

Thousands of flood damaged Toyota cars post-tsunami

 

Despite facing such calamities over the years, Toyota remains as the market leader in automobile industry till date. However, many things have changed in Toyota ever since its recall crisis.

Then, Toyota President Akio Toyoda gave an unprecedented apology to the public and admitted that the company had become too big and distant from its customers. This sent a message to all employees to accept their mistakes and shake off the complacency and arrogance that had plagued the firm. Since then, there was a gradual but concerted effort in rebuilding faith among its customer base, cutting previously burgeoning costs and overhauling its product development which now centers on quality.

Toyota (1)

Recovery of brand equity after second recall

When faced with a difficult situation, Toyota’s management leads the company in acknowledging the negative and emphasizing the positive (fun fact: its brand message happens to be “moving forward”). President Toyoda was key in developing a culture of organizational resilience in Toyota from his “resilient leadership”. Toyoda personally led a global quality task force to ensure that the recall crisis would not happen again. His leadership and conviction had the ability to influence the organization in the direction of resilience and to increase group togetherness and dedication to the mission. He did this by demonstrating four core attributes of optimism (believing Toyota will not only survive but emerge stronger from the crisis); decisiveness (acting quickly and recalling cars voluntarily); integrity (apologizing and offering compensation); and open communications (establishing internal and public channels to make sure everyone has the latest information).

Toyota-president-Akio-Toy-001

Toyota President Toyoda apologizing for the recall fiasco

Hence, just as individuals can learn to develop personal traits of resilience, organizations can also develop a culture of resilience. This culture is built largely upon “resilient leadership”.

In today’s business environment, crisis has become something of a normalcy. As such, companies need resilience to build a lasting firm. One important part of this is operational resilience- recovering from threats to your day-to-day operations- by having the ability to respond quickly. Also, perhaps more importantly is strategic resilience- adapting to the broader threats in the business environment. This involves being alert to the disruptions in the marketplace, and having the self-awareness and humility to change direction. This was demonstrated well by Toyota.

Resilience (1) Sources:

https://hbr.org/2011/06/building-a-resilient-organizat

http://edition.cnn.com/2013/01/29/business/toyota-tops-us-europe-automakers/

http://www.bloomberg.com/bw/articles/2012-10-16/what-makes-a-company-resilient

 

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