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The illusion of control: Unmasking the Paradox of Readiness

The illusion of control: Unmasking the Paradox of Readiness

26th November, 2023

Mike Tyson famously said: “Everybody has a plan until they get punched in the face”. If one of the most famous boxing icons in the world conveys this sentiment, one would better listen. He knows one thing or two about being hit in the face…and hitting back right after. However, this begs the question: How ready are companies for a punch in the face? How prepared can a company be? And are we really in charge? As the world of competitive sports offers a profound analogy for life itself and delves into the very essence of human existence, it also raises deep questions about the illusion of control and the enigmatic nature of readiness in the business place.

The illusion of control

During my younger years, and as far as I can remember, “Black Swan” events seemed to occur… well… as the name suggests… very rarely. And like every good Risk Manager, I used to believe that with foresight, preparation, resilience and determination, companies could navigate those dynamic and turbulent operating environments and hopefully survive unscathed.

However, in the last few years, apocalyptic incidents have taken the world by storm and stress-tested even the most robust business continuity plans. These supposedly irregular yet extreme happenings are feeling more and more like a “regular Tuesday”.

In such a dynamic operating environment, and with all the different elements in flux, the notion of control seems more and more like an illusion shattered by the endless slew of unknowns. After all, how many redundancies are we expected to have before we run out of steam or, more critically, of funds?

Becoming Antifragile: The Ultimate Readiness

Accepting uncertainty as part of the game, being able to adapt, and staying prepared to respond to life’s blows are the ultimate testament to our resilience. Yet, antifragility goes beyond mere resilience. It implies that some systems, organizations, or individuals not only withstand shocks and stressors but gain from them. Just as our muscles cultivate strength through resistance and stress in exercise, antifragility suggests that we can flourish, grow, and advance when faced with adversities.

In a world where the underlying assumption is unpredictability and randomness, striving for antifragility becomes a noble quest. Instead of running away from these challenges, we can harness them as catalysts for personal and collective growth.

The anti-fragile mindset

Applying the antifragile mentality to business continuity planning is vital for promoting fortitude and adaptability in the corporate world.

1. Embrace volatility: “The only constant in life is change”. Once companies embrace the inevitability of change, adaptability becomes the name of the game.

  • Assess risks: Consistently evaluate the risks that your business faces. Identify potential disruptions from internal or external sources and assess their potential fallout.
  • Plan different scenarios: Build several scenarios to identify different outcomes. Once the range of possible disruptions becomes clearer, proactive strategies become much more defined.
  • Innovate: Promote a culture of innovation within your organization. Explore new theories and tactics, as innovation can be a formidable tool for adjusting to change.

2. Promote decentralization: Centralized Businesses could be vulnerable to disturbances because, by design, they depend on a single point of failure. On the other hand, spreading the resources and decision-making nodes in a more decentralized fashion would enhance response effectiveness in the face of hardships and unexpected events. Also, operations would be nimbler and quicker to recover from disruption—all critical elements of antifragile business continuity.

  • Activate redundancy measures: Establish redundancy mechanisms in principal business lines and service providers, i.e., commercial partners, data storage, production, and operational centers. The readiness and availability of robust backup plans ensure smooth and unfettered operations.
  • Optimize remote work capability: If we have learnt anything from the last few years, it is the importance of flexibility and operating remotely. Those abilities are priceless in situations where you genuinely need them. Invest in technology and processes that allow your employees to do just that.

3. Skin in the Game: Having a vested interest in the success of a venture (whether you are a business owner, trading partner, employee, or any other type of stakeholder) instils the strongest motivation for forward-looking business continuity planning. Valued stakeholders are more likely to promote and participate in proactive risk management.

This mutual responsibility is essential to ensuring effective disaster recovery when threats arise.

  • Establish a culture of shared responsibility: The best way to ensure business continuity is to promote a culture of shared responsibility between all stakeholders. An empowered workforce would ultimately lead to more vigilance and readiness within the organization.
  • Train and educate your teams: Nelson Mandela said: “Education is the most powerful weapon which you can choose to change the world”. Training your teams about responsibility, accountability, excellence, and continuous improvement ensures everyone knows their role in maintaining operations during disruptions.
  • Encourage adaptability: Foster a culture of versatility and resilience within your firm. Try to be receptive to calls for change and prepared to spin and pivot when that is required and necessary. Being open to receiving constructive criticism undeniably leads to an enhanced and improved framework.

4. Learn from Failure: Failure is the best teacher in any walk of life. In the business world, this is even more accentuated. After every incident, conduct a comprehensive deep dive into the event, its root causes, its unfolding and detection timeframe, its process owner, its proposed action plan, and the lessons learned.

  • Perform a post-incident analysis: After each disruption, perform a thorough post-mortem investigation. Recognize what performed effectively and what failed in your existing process. Make the necessary adjustments afterwards.
  • Perform regular drills: Conducting periodical drills and constantly testing the continuity plans not only helps employees understand the exact course of action but also can identify gaps in the process, errors in the setup, and areas for development.
  • Analyze your competitors: Monitor closely both rivals and peers. Tweak your approach based on their victories and disasters. Learning from others' mistakes is the cheapest and most guaranteed tactic to prevent the same outcome.

5. Diversify Your Business Interests: Investing 101: Do not put your eggs in one basket. The same applies to operations: Avoid over-dependence on a particular provider, supply chain, business line, or geographical market. The more you diversify, the more equipped you are to decrease vulnerability and disruption in your operations. If one side of the firm is under stress, having alternative sources would keep the company afloat.

  • Diversify your products/services: Grow your product or service offerings to target a more significant customer base. A varied portfolio establishing a countercyclical balance is the best mitigator to market fluctuations.
  • Diversify your geographical presence: Growing your business across borders, when possible, helps dilute the effects of regional economic downturns that are inevitably coming.
  • Diversify your finances: Diversify your organization’s sources and uses of funds. This will make you less reliable on any investment vehicle drying up for one reason or another.

6. Foster a culture of continuous improvement: According to the “Kaizen” mentality, seeking long-term success hinges upon improving continuously, albeit in small increments. “Kaizen” encourages effectiveness and excellence in firms by seeking small, regular advancements to existing processes to eliminate waste.

  • Always scan the Horizon: Establish a dedicated process for horizon scanning. This involves continuously monitoring various sources of information, such as industry publications, news outlets, government reports, social media, and expert opinions, to identify emerging risks and trends.
  • Build a support network: Engage in industry associations, conferences, and networking events to exchange insights with peers and experts. Monitor changes in customer behavior, preferences, and expectations, shifting market dynamics, customer demands, and emerging market trends. These networks can provide valued insights and even sometimes a much-needed lifeline during difficult times.
  • Embrace Challenges: Instead of dreading business disruptions, consider them opportunities to refine your continuity plans. Embracing challenges means consistently stress-testing your business continuity strategy, identifying weaknesses, and refining it to ensure it remains effective in the face of new and unexpected risks.

Conclusion:

In a world defined by tectonic shifts and constant motion, the concept of antifragility reminds us that life’s ebbs and flows need not be ruinous to our corporate environment but rather regenerative and constructive experiences. By embracing volatility, decentralizing our operations, promoting a culture of inclusiveness and responsibility, learning from failure, diversifying our business interests, and fostering a culture of continuous improvement, we can survive the storms and harness them as fuel for development and progress.

So maybe we do have control after all… or this is only the dreamer in me speaking.

About the Author
Tarek Z. Aoun, CFA

Management Consultant

Tarek is a Management Consultant with Meirc Training & Consulting. He holds a Bachelor of Arts in Economics from the American University of Beirut (AUB) and is a CFA® Charterholder. In addition, Tarek has obtained several certifications in banking and finance, such as Islamic Finance qualification, Business Conduct, Risk in Financial Services, and Securities from the Chartered Institute for Securities & Investment (CISI).

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