Remarks by Judith Rodin at the November 2015 BSR Annual Conference
November 5, 2015
I want to thank Aron Cramer and his incredible team for putting together another inspiring, productive, exhausting week. But as you know BSR’s good work is more than just excellent conferences. They are an incredible partner for so many of us in thinking through how we can bring together public-private partnerships to solve large, pressing challenges and build better businesses in the process.
Building resilience offers us one of those dual opportunities. This week you’ve heard from the crème de la crème of resilience thinking and doing. You’ve covered a range of topics, from building resilient businesses, to becoming resilient leaders, to thinking about resilience in the face of climate change.
You’ve heard from CEOs, CSOs, and even CROs—the first cohort of chief resilience officers who are leading cities in the 100 Resilient Cities Network, pioneered by The Rockefeller Foundation. And you’ve networked among your peers, sharing insights, best practices, and a few war stories along the way. If there is one mantra to sum up these proceedings, the next poster for your office wall, it may be the words of business strategist Andrew Winston who wrote:
“An extreme world calls for extreme change.”
And we are indeed living in an extreme world. Crisis has become the new normal. Thanks to the combining forces of globalization, urbanization, and climate change, not a week goes by that we don’t feel some disturbance that affect our businesses or the economy or geography that surrounds them. Maybe it’s an attack on our systems: a data breach or technology glitch. Maybe it’s a disruption in our communities: standing here in San Francisco, our minds go immediately to earthquakes and forest fires, but we are also seeing the effects of the slower burning stresses—drought, air pollution, and wealth inequality—on the communities and businesses here.
Other crises come from the inside: a massive product recall with no alternative sources for backup material like Lululemon faced a few years ago, or the scandal Volkswagen is currently caught up in. You might not think of these as resilience challenges, but they are. And any one of them could take a business, or even an industry, down.
In some weeks, it’s all of these disruptions. But if we spend so much time putting out fires and responding to emergencies, we miss out on new opportunities to grow our businesses, to unleash new innovations, to reach the full potential of our careers and our companies. And while it’s true that small challenges are good tests that can lead to transformations, businesses should be taking deliberate, planned, proactive risks, rather than be in the position of reacting.
Resilience thinking gives businesses the upper hand. When you invest in resilience building, not only do you spend less time and energy responding and reacting, you see dividends—resilience dividends—in the form of greater consumer loyalty, higher employee morale, and yes, greater profits.
There are three ways that companies can achieve these resilience dividends.
First, organizations must begin by building resilience from the inside out. This means more than just establishing business continuity plans, it requires embedding resilience at all levels of the culture. A textbook case study is Toyota Motor Corporation. Before the Japanese earthquake in 2011, the automaker had learned from past crises
and established disaster response task forces in every operation unit. But leadership did more than that: it had taken care to build the kind of culture that empowered its employees and its suppliers to gather and share information quickly, make decisions, and do what needed to be done to get car parts to manufacturers and deliver cars to customers—during good times and in times of crisis.
When the earthquake struck, Toyota’s leaders not only called into action the disaster response task forces that had been established, the company’s president, Akio Toyoda, delegated his authority to the people on the ground. Despite a production loss of about 370,000 vehicles, within a month all of Toyota’s major plants in Japan were running.
By the end of June, 90 percent of production had been restored. And in two years, Toyota had regained its top position, while other businesses in Japan still, even four years later, are struggling to recover. So start with building a culture that promotes greater resilience.
Second, the private sector can benefit from a hugely untapped market for innovating resilience products and services. Some companies have made resilience building one of their new business lines. For example, Veolia, is a company dedicated to helping customers solve their environmental and sustainability challenges. In Boston, for instance, Veolia’s innovative underground energy system recaptures and reuses environmentally-friendly thermal energy or “green steam,” which is reducing greenhouse gasses equivalent to removing 80,000 cars from the roads and increasing air quality. But it is also powering nearly 250 customers in the central business district and biotech corridor in nearby Cambridge.
That’s the resilience dividend.
Other companies are innovating new product and service lines that answer the question: “What do people, cities, or businesses need to prepare for, withstand, and grow in transform in the face of shocks and stresses?”
For example, big data companies are innovating platforms to help cities analyze their resilience challenges. New Orleans is working with Palantir to understand and then fix more effectively with one solution Problems arising from the interlinked geographical overlap of crimes, poverty, school drop-out rates, and environmental hazards.
So, #2, your companies can innovate around resilience products and services, creating new market opportunities. Third, be a critical partner in building resilience in the cities and communities where you are located. Take the current drought crippling the West Coast. The tourism industry in Las Vegas is a huge consumer of water, but they’ve recognized they have a role to play in building the resilience of their region.
For example, the MGM Grand directed its restaurants to make a simple but important change: by thawing frozen meat in a meat cooler overnight (rather than under running water) one restaurant alone has saved 3 million gallons of water in a year and saw significant savings on their water bill.
That’s just one restaurant! Imagine the dividends if all of the restaurants on the strip made this one simple change? In this example, building resilience isn’t just about environment sustainability, but also yielding resilience dividends by advancing more inclusive economies—where everyone, including your customers, employees, and neighbors, have access to opportunities.
This is a theme I hope to explore further with Aron and share some of the good work BSR and The Rockefeller Foundation are doing in this area. But first, let me end by saying that while an extreme world calls for extreme change, it also presents an extreme opportunity: 60 percent of the jobs that will exist in ten years haven’t even been invented yet. Seventy percent of the urban infrastructure needed by 2050 has not yet been built. Thousands of products and services that will be a part of daily life haven’t even been imagined. Many of those jobs and those products will be a direct result of seizing opportunities to manage and limit disruption, build resilience, and thrive in an extreme world. And I have no doubt that the individuals who will be leading those boardrooms and who will create those product lines are sitting at these tables here tonight, ready to put what you’ve seen, heard and dreamed this week into practice come Monday.
The future of your business and our society may depend on it.