The Unexpected Part 4: Expect the Unexpected — How Business Architecture Can Help to Build Resilient and Adaptable Organizations

This is the fourth and final installment of a multi-part StraightTalk series on how business architecture can help organizations prepare for, respond to, recover from and build resilience for the unexpected. We’ve covered incident preparation, response, and recovery,* so now we will turn our focus to resilience.

*Here’s a handy diagram that summarizes everything we’ve covered so far:

diagram representing responses to pre-incident, incident and post-incident measures shaped and informed by business archtiecture

The unexpected happens. Expect the unexpected. The question in our ever-changing world is, how we can build organizations that are resilient and adaptable? We will explore this question using our most brilliant teacher as our guide: nature. 

So, what is resilience, really?

Resilience is “the capacity of a system, be it an individual, a forest, a city or an economy, to deal with change and continue to develop.” (Source Stockholm Resilience Centre).

Resilience is about continuing to operate, evolving, and moving forward relentlessly.

What can we learn about resilience from our natural world?

Nature has one important goal: to keep its operations running, so that life can continue indefinitely. To do so, resilience is not optional. And nature is resilient in brilliant ways that are beyond our full comprehension.

While it only scratches the surface, we will explore four big ideas for how nature achieves resilience.

  • (1) Closed-Loop Systems – The idea of a closed-loop system is that there is no concept of waste. Everything can be used and becomes “food” for something else.  Basically, waste = food. For example, let’s think about a forest. Plants and trees use energy from an unlimited energy source (the sun), and they use nutrients and water from the soil. They also consume carbon dioxide and release oxygen. Animals eat those plants, consume oxygen and release carbon dioxide for the plants. When the plants and animals die, they decompose into nutrients that return to the soil and it all begins again. From a resilience perspective, a natural and closed-loop system based is a great way to ensure your supply chain.
  • (2) Diversity and Redundancy – Nature achieves stability and health through diversity, not uniformity. In Nature banks on diversity – uniformity is a risk to the goal of continuing life. For example, let’s think about the human immune system. It cleverly uses redundancy by having millions of copies of leukocytes (white blood cells) before they are actually needed, to create a massive buffer against the unexpected.  And, it cleverly leverages diversity by having not just leukocytes but many different types of cells. This diversity can deal with a wide range of invaders to the body that it hasn’t even encountered before. The immune system is a powerhouse of adaptability and resilience. 
  • (3) Learning and Adaptation – Nature adjusts to the environment to improve the chance of survival. Organisms can adapt to their environments biologically or structurally, meaning they alter their body functions such as when people who live at high altitudes can function with lower levels of oxygen. Or, they can adapt their behavior, such as penguins that crowd together to share warmth. 
  • (4) Self-Organization – Self-organization is “spontaneous creation of a globally coherent pattern out of local interactions.” (Source: The Science of Self Organization and Adaptivity) In our human-made world, we often create things which are complicated, with many small parts, all different with their own precise role in a machine or system. However, nature is not complicated. Nature is complex, which means that its systems are made of many similar parts and their interaction produces coherent behavior where the whole is greater than the sum of the parts. For example, let’s think about a school of fish or a formation of birds flying. There are good reasons for this behavior such as avoiding predators and creating efficiency. In cases like these, there is not necessarily a fish executive or bird boss tells the others what to do, but rather each organism follows a set of simple rules that produce emergent properties that can’t be predicted from the individual rules. The result is greater than the sum of its parts. A principle of self-organization is that there is an absence of centralized control. This leads to resilience by creating a redundant distributed organization, so in the case of the unexpected, one part of the organization can make up for another. 

Cool ideas. How can organizations put them into practice?

Here are a few ways organizations can and have leveraged these big ideas.

  • (1) Closed-Loop SystemsThe opportunity for organizations is to shift the model from linear to circular. Our current model in business is generally linear. We take > make > waste. For example, we cut down trees, turn them into wood pulp, make paper, use paper and much of it may end up in a landfill. An excellent example of applying this closed-loop concept to business is industrial ecology or industrial symbiosis. This is where separate organizations decide to work together and the outputs of one organization become the inputs of another. Check out this amazing story about the Kalundborg industrial ecosystem where multiple public and private organizations work together and exchange 25 different resource streams. For example, some organizations produce waste heat which goes to a greenhouse and district heating, while excess steam produced goes to a biotech facility.
  • (2) Diversity and RedundancyThe opportunity for organizations is to shift from a narrow focus on efficiency to focusing on effectiveness and having some slack in the system. Having some slack in the system is not just valuable to prepare for the unexpected, but also for other business benefits such as giving employees time to serve customers in unexpected ways. Here’s a recent example of how 3M used its surge capacity and localized supply chains to increase the production of masks needed for the pandemic.
  • (3) Learning and AdaptationThe opportunity for organizations is to shift from attempting to control predictability to leveraging the unexpected. This means not just adapting to survive, but to thrive by leveraging challenges to create new opportunities. Here’s a recent example of how Canlis, a fine-dining restaurant reimagined their business model during the pandemic and began offering bagels, drive-thru burgers and a family meal delivery service. This adaptation has not only kept the business running but has probably increased their customer loyalty and brand recognition. 
  • (4) Self-OrganizationThe opportunity for organizations is to shift from complicated to complex – and from focusing on parts to focusing on the entire system. This is important for resilience because when products, machines, organizations, or systems are complicated, they are more likely to fail when something unexpected occurs. There are examples of organizations that are adopting principles of self-management, wholeness and an evolutionary purpose, as described in The Future of Management is Teal. One common misconception about self-management is that everyone is equal and decisions are made by consensus. However, the truth is very different. Self-management is about a whole set of interlocking structures and practices, so that decision rights and power flow to any individual who has the expertise, interest, or willingness to step in to oversee a situation. Fluid, natural hierarchies replace the fixed power hierarchies of the pyramid.

How can business architecture help organizations achieve resilience through these ideas?

Here are just a few examples of how organizations can leverage business architecture to facilitate decision-making, design and translation of these big resilience ideas into action.

  • The idea of closed-loop systems and designing for no waste can create sweeping changes to an organization. It requires designing or reimagining ecosystems, business models, and strategies. Value streams and capabilities can and should be extended to design and communicate how organizations work together to deliver value across organizational boundaries and who contributes what. Products can be redesigned using biomimicry techniques, products can be servicized and these changes ripple throughout the business and IT architecture and operating model. Value stream and capability-based metrics can be used to track waste and other measures.
  • For diversity and redundancy, capabilities (in a value stream context) help organizations to frame conversations around what they do, how they are doing it today from a people, process and technology perspective, and how they might reimagine new ways of doing it. Value stream and capability-based metrics can be used to measure organizational capacity and effectiveness.
  • Learning and adaptation may require an organization to adapt its business model, products, and services, and potentially its strategy. Value streams and capabilities can be used to identify how an organization can deliver value in new ways by leveraging its existing capabilities in new ways or creating brand new ones.
  • The idea of self-organization is a game-changing concept. It goes to the heart of how we design organizations and ecosystems from a business and technology perspective in terms of who does what, how we design for reuse, integration, alignment and much more.

Here’s a quick diagram that summarizes all of the above:

diagram showing relationship between nature and how business architecture helps build resilient organizations

It’s true that the mindset shifts required to act upon these big ideas from nature are tremendous, but the opportunity is to change our organizations by design – not by disaster. And for them to survive, thrive, and create a world that we all want to live in.

P.S. If you’re new to business architecture, StraightTalk has you covered. Start with Posts No. 1 (what), No. 2 (why) and No. 3 (more on why). To learn a bit more about how it’s created, check out Posts No. 12, No. 13 and No. 51. And for a bit more on how to use it and why it matters, see Posts No. 55, 56, 68 and 72.

More Good Stuff…

Leveraging Business Architecture to Build a Sustainable and Resilient Organization (Whynde Kuehn): A SlideShare on the topic from a presentation given in April 2020.

Rethinking Efficiency (Harvard Business Review): An important article which is now more relevant than ever. It’s time to rethink organizations’ relentless focus on efficiency and waste – and consider resilience as a competitive advantage.  

Just a few examples of organizations demonstrating resilience in action during the coronavirus pandemic:

Stockholm Resilience Centre: A great source of research and learning about resilience.

The Future of Management Is Teal (Strategy+Business): Real examples of self-organization in action. This excellent article asserts that organizations are moving forward along an evolutionary spectrum, toward self-management, wholeness, and a deeper sense of purpose. Also check out the book entitled, Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage of Human Consciousness.

How to Build a Company That Lasts 100 Years (TED Talk): An absolutely outstanding TED Talk by Martin Reeves on how to build a business that lasts, with inspiration from the human immune system. It’s a must-watch.

Puppies! Now That I’ve Got Your Attention, Complexity Theory (TED Talk): Another must-watch TED Talk by Nicolas Peroni, taking inspiration from animal behavior to explore what it means to be complex – not complicated. There are important lessons for organizations here. Simplicity leads to complexity, which leads to resilience.

The Unexpected, Part 3: Recovery — Leveraging Business Architecture To Recover From The Unexpected

This is the third installment of a multi-part StraightTalk series on how business architecture can help organizations prepare for, respond to, recover from and build resilience for the unexpected. The unexpected may include an incident caused by an organization (e.g., an accident or data breach) or one that has happened to it (e.g., a natural disaster).

In our first two installments, we covered response and preparation, so now we will focus on recovery. And, we brought in a guest star to help. Mike Clark is an experienced visionary leader and delivery-focused strategist with a proven track record in creating and designing global organizations that solve real-world business and societal challenges. This post is based on our recent interview with him where he generously shares his wisdom on how organizations can prepare for, respond to and recover from the unexpected as well as the role of technology, how business design is uniquely positioned to help, and much more.

Disclaimer: we’ve made some tiny adjustments for our typical StraightTalk-style: the gray headings represent StraightTalk asking the questions and our guest, Mike, responds in turn. The podcast is brilliant and contains many poignant insights, so make sure to check it out firsthand in 20-Minutes With Mike Clark: How Organizations Can Manage the Unexpected By Leveraging Business Design. The text below is abbreviated.

P.S. If you haven’t seen them yet, make sure to check out the first two installments in the series, in Posts No. 73 and No. 74 because we covered some important foundational topics like why business architecture is so valuable for this type of decision-making and what to do if you don’t have a business architecture when the unexpected happens.

First things first. What’s business design?

Mike’s interview focuses on business design in order to address a more comprehensive picture. We’re referring to business design as a collection of disciplines that work together from an outside-in human perspective and an inside-out organizational perspective to inform and translate changes to an organization into actionable initiatives. Business architecture is, of course, one of those disciplines that provide the scaffolding that connects everything, providing traceability from strategy through execution and offering aggregate views across an entire organization.

(P.S. You will recognize this perspective from StraightTalk where we have discussed the criticality of business architecture working hand-in-hand with other disciplines such as experience design in order to be successful. Good end-to-end strategy execution takes a village. Check out Posts No. 5, No. 3 and No. 50 for more information.)

As we reflect on how organizations globally respond to major incidents, what do you think our greatest opportunities are — including how we prepare for, respond to, and recover from incidents?   

Mike: “These are unprecedented times in some respects [a reference to the 2020 coronavirus pandemic]. No organization or society can prepare for what we are going through, or how long this is possibly going to take to turn around or what the impact will be on society. For this situation and others, it is now more about responding and recovering.

If we think about the opportunity from a business design perspective, it takes looking beyond business design as a profession and starting to look at it as a set of tools. And how do those tools become part of the bigger toolbox of leadership to help them understand the areas where the organization needs to respond and have the right elements in place. For example, are there parts of the organization that require more customer touchpoints and as a result, maybe we need to reallocate our staff? Or, are there parts of the organization that do not really work in a digital capacity and what does that mean? And ultimately what are the financial implications to the organization as it manages itself through these difficult times?

If we look beyond the coronavirus and just look at natural disasters in general, a lot of organizations do have business continuity plans which allow for this, but once you’re in the midst of an incident, it’s really about understanding where to focus your energies. And when the dust settles, where do you focus your energies in the recovery of the business from a balance sheet perspective and even more importantly, from the customer’s perspective. 

Let’s start with the phase of incident preparation. Preparing an organization to respond to incidents means that you have adequate scenarios in place, you planned out those scenarios, you know how to respond – and you designed the organization to be able to respond. This includes flexing when possible, but also scaling back when required. And again, business design plays a role in designing an organization to be that way: nimble and agile. Even if you can’t prepare the organization for the events that you find yourself in, at least you’ve allowed the organization to be flexible enough to be able to manage it.

Next, let’s consider the phases of response and recovery. There’s a massive opportunity for business design to play a role. But, I think the opportunity here is that it is not about the business architect per se, but rather the tools of business architecture and business design that will arm leaders to position their organizations to prepare for, respond to and recover from incidents, as well as guide and steer their organizations through difficult periods. 

I think that all leaders are business designers. In fact, we are all business designers. If you look at the book, Built to Last by Jim Collins, the leaders referenced in the book were business architects. They may not have drawn the blueprints, but they defined the organization to be scalable, flexible and positioned to respond and recover.”   

Relative to the opportunities you’ve laid out here, how can business design help organizations do these things better than they do today?

Mike: “We touched on the fact that business design plays a role across the three phases of preparation, response and recovery. There are examples where decisions in an organization sometimes get made at haste because in light of an urgent and uncertain situation, people try to do the right thing without really understanding how the decisions they make have an impact across the organization. A simple example could be closing a certain aspect of an organization because it carries the most cost but unknown to leadership, that part of the organization might be the single point of contact for certain customers. So, while the decision may save cost, it also cuts off a lifeline for certain customers. Business design focuses on the areas of the organization that offer the most value. Value can be to the customer, a stakeholder or any actor the organization engages with. It helps us to consider what the front line services and capabilities are that we need to make available or make sure they are the first ones that come back online.

Where business design becomes increasingly powerful is that it can go beyond being an architectural tool for architects and become a tool for the business to help make decisions. This quickly moves it from being a sometimes academic exercise to a data point among others that leadership uses to make key decisions.” 

This may require interaction with new stakeholders, so how can business architects best communicate with executives and people with financial perspectives?

Mike: “I’ve been really fortunate to operate as a business architect, a product designer and other roles, so I’ve had the exposure to what I would call commercial. If you look at business architects historically as focusing on the blueprints, the pictures, the capabilities – that’s all great stuff but executives are interested in the commerciality. This includes what moves the dial, what impact it has on the balance sheet, what it means for the profit and loss overall.

Executives don’t really care about the blueprint but rather the data that sits behind it. The pictures are just a way for us as architects to analyze and get to the answers. If you want to be successful in this space then you have to spend more time focusing on how you will present the answer versus showing how clever you are and how you got the answer.

So, immediately you move away from what I would call the traditional operational business architecture, which is just making sure that everything works such as the factory, the customer operations teams, the call center, the back office and so on. And, you are now suddenly in the front line, or what I would call the true business which is in essence how the business makes money. You are in the product world, the finance world and all the areas where these commercial decisions that actually run the machine get made. And the business architect now needs to understand how the organization makes money and be able to connect their knowledge of the operational areas and how the business is constructed to fit into the financial discussions.

Some of the commercial decisions that are made during a crisis can be a massive leap for some people, but massive opportunity for others because it can bring you to the leadership table as someone who can be trusted because you bring data points which enable management to make decisions that are meaningful.”

How can we design organizations so they can better respond to and manage incidents? Can we design them to be resilient and sustainable?

Mike: “I think we can and I think it’s about having a well-run organization. In Built to Last and other great books that are written about companies weathering storms, they were able to do so because their organizations were founded on flexibility, scalability, strong principles and ultimately strong business design. An organization that has strong people, strong capabilities, is flexible and agile, and has a good understanding of their balance sheet and their business model is better prepared to ride out storms. It’s about having flexibility to adjust the business model, and again here’s where business design comes in to help leadership construct an organization that is ‘built to last.’ One that actually has the scaffolding, the scalability and the ability to flex when required but shrink back when needed.

Business design can play a role not just in the operational areas of an organization, but also in the product areas. We want business architects to become the trusted confidants of all leadership areas in the organization so that when an incident does occur, they can be the one who pulls the data points together.”

What role should technology play in incident preparedness, response and recovery?

Mike: “I think it’s massive. I think we’re already starting to see artificial intelligence (AI) and machine learning already playing a role. For example, organizations use various scenario-based models and analyses to predict possible outcomes when they are planning where to put buildings. 

I think one thing that’s been really clear and incredibly impressive as we have gone through the current crisis is how organizations have enabled their staff to work from home. Just ten years ago this would not have been possible. The whole world is literally in a lockdown state, but yet we are all able to work from home (or at least the lucky ones), and organizations have done an amazing job to make that possible.

Technology like AI and machine learning can play a role for other aspects of society eventually as well, in terms of predictions and scenario planning for incidents. I think this will only continue, especially as it comes together with other technologies like cloud and the use of data. All of these things are coming together like a perfect storm which is guiding us as leaders and as human beings.”

How do you see business design helping organizations to implement and govern technology, especially ones such as artificial intelligence?

Mike: “Where AI gets really interesting is when it starts to expose that which an organization has never really had to deal with before. When you start automating processes, which we’ve done for years by the way, but more so when the machines themselves are being trained to make decisions or even to a point where they self-learn, then someone has to govern that. Saying that the computer said, “no” is not good enough. We have to understand how the computer made the decision in the first place. This means that people need to be trained differently.

There is also a question of what it means for social and economic models and if we introduce these types of changes, what does it mean for society? What about policies – do they have to change and become more fluid? Does an organization have to carry more risk? And how will the organization now manage a myriad of new stakeholders? What about the capabilities that AI is going to impact – will people need to be trained to manage the machines, because the machines now become new workforce members?

Another challenge is when leadership feels that they have to be doing something in the space. Every organization around the world has AI as a topic on their strategy. However, have they really thought through what it means to implement it successfully within the organization?

I think business design plays a role in guiding the adoption and implementation of technologies like AI. It is not the total answer, but plays a small part in helping leadership to understand:

  • Should we even be doing anything in the first place or are we doing it because we need to appear to be doing something?
  • If we move forward, are we going into it with our eyes open, understanding the true impacts to the organization?
  • Once we implement, how are we going to manage and govern it? What measurements are we going to put into place? Who is going to govern it on an ongoing basis and how do we manage the changes?

Business design plays a role from strategic planning and understanding the outcomes, to navigating through to the organizational elements that need to change, to ultimately supporting the organization as it manages the technology deployment going forward. AI will be a fundamental change to all of us, but I hope it to be a positive where it will free us up to do other meaningful work and even solve some problems that we haven’t been able to.” 

Anything else?

Mike: “I think that the traditional incidents are managed well, but business design has a broader role to play than we have been led to believe. When we use the tools of the profession in line with our day jobs, it won’t be just one individual that does this – it will be the collection of individuals who are using the tool kit of business architecture to guide and shape an organization through troubled waters and out to the other side where customers can feel confident again. It’s worth reiterating that business architecture is not the silver bullet on its own. It will be a set of data points used in conjunction with others. If you take one thing away from this, it is that we all have a role to play and regarding the tools that are out there – please treat them as such and use the outputs from them with your stakeholders. I think there’s a significant opportunity for organizations to not follow a plan but at least feel confident that they have a view of how their organization operates today and understand the impact of decisions.”

Here is a handy diagram to help visualize the Recovery or Post-Incident phase:

diagram representing responses to pre-incident, incident and post-incident measures shaped and informed by business archtiecture

P.S. If you’re new to business architecture, StraightTalk has you covered. Start with Posts No. 1 (what), No. 2 (why) and No. 3 (more on why). To learn a bit more about how it’s created, check out Posts No. 12, No. 13 and No. 50. And for a bit more on how to use it and why it matters, see Posts No. 55, 56, 68 and 72.

More Good Stuff…

20-Minutes With Mike Clark: How Organizations Can Manage the Unexpected By Leveraging Business Design (StraightTalk podcast): Just in case you missed that link right there in the beginning, make sure to check out Mike’s podcast, which was the basis for this post. He shares his perspectives on how organizations can prepare for, respond to and recover from the unexpected, as well as the role of technology, how business design is uniquely positioned to help, and much more. It is pure gold.

Guiding the Adoption of Artificial Intelligence with Business Design (Whynde Kuehn and Mike Clark): For much more on business design and business architecture + AI, check out this SlideShare by Whynde Kuehn and Mike Clark. They explore the balance between AI opportunities and implications, discuss how business design can be a crucial guide for AI, and provide key recommendations for moving into action. This SlideShare is based on the Cutter Consortium report published by the same name (access requires Cutter membership). Both the SlideShare and the report are tailored for executive audiences.

Preparing to Navigate the Unexpected: Leveraging Business Architecture for Better Business Continuity Planning (Gary Wright and Whynde Kuehn): This white paper explores how organizations can find opportunity in crisis and leverage the discipline of business architecture to provide context for, inform and accelerate decision-making when creating and evaluating business continuity plans.

How to Make Healthy Decisions With the COVID Perimeter Framework (Dr. Raj Ramesh and Whynde Kuehn): This animated video illustrates an approach for decision-making related to the coronavirus challenge. The authors present their COVID Perimeter Framework which helps guide healthy decision-making whether for individuals, healthcare professionals, businesses or government – based on principles of structured thinking and underpinned by business architecture. The intent of the video was not to be comprehensive but rather to provide a starting point for looking at such challenges.

Preparing Your Business for a Post-Pandemic World (HBR): A timely article with key questions to guide organizations as they bounce back from crisis.

Jim Collins: From Good to Great, Part 1 | Nordic Business Forum 2014 (Jim Collins at Nordic Business Forum 2014): A great video clip from Jim Collins with a giant lesson on why some companies become great while others do not. Hint: It doesn’t have to do with their circumstances. Check out Part 2 on leadership as well. Powerful.