Strong together: resilience through networking and collaboration
[Lecture by Prof. Wildemann on 5.3.2024 at the opening of the 31st Munich Management Colloquium]
In a time of far-reaching upheaval, uncertainty and complexity have increased significantly across various areas. This requires new strategies for dealing with these challenges, particularly in the area of stakeholder management. Companies are being encouraged to become more involved in social debates and offer solutions to social problems. In return, they want to obtain a "license to lead". Resilience is a key concept here, which describes the ability to withstand shocks and then recover quickly. In times of crisis, it is important to keep a cool head, be confident and actively deal with change. Employee involvement and increased cooperation with other companies play a decisive role in this. We are seeing a shift in objectives from profit maximization to crisis prevention. Trust and communication serve as drivers for successful corporate management. The motto for the coming years should be: Courageous - Together - Better.
Far-reaching upheavals - across all areas of experience - have become much more uncertain and complex. A few keywords such as digitalization, climate change, conflicts and economic cycles are enough to illustrate the changes. In this situation, the same problem, the same issue and the same resource are perceived from different perspectives.
In short: stakeholders have different interests. It is therefore necessary to think of an appropriate strategy for dealing with uncertainty and complexity
In business administration, it is proposed to use stakeholder models when modeling divergences of interest. In other words, it is about how actors arrive at joint solutions that are acceptable to both.
The motto "Stronger together" is associated with a greater assumption of responsibility and an increased need for transparency.
Stakeholder theory also refers to the ideal of the honorable merchant, i.e. the process of reciprocity of give and take in social exchange. It is therefore about creating shared added value for the stakeholder network. In contrast to a one-dimensional maximization approach, a complex, interactively oriented process of balancing interests must be developed, which is tantamount to a difficult balancing act.
The reconciliation of interests process
The stakeholder management concept is operationalized by issuing licenses. This means that the license to operate must be earned again and again by the stakeholders. In addition, the license to innovate and the license to compete must be worked out with all stakeholders in the network. However, this concept of three licenses is not enough. Consumers delegate responsibility for the social and economic sustainability of products to companies and grant them the License to Grow.
Overall social commitment
Companies must also get involved in debates on relevant future issues that offer solutions to problems affecting society as a whole. It is not enough to point to framework conditions, excessively high wage costs, energy that is too expensive and too much bureaucracy. It is important to meet social expectations beyond economic success in order to obtain a license to lead. This must be taken into account:
- The USA is no longer paying for our security - with the result that the state is heavily in debt,
- China no longer allows companies to achieve higher margins and
- Inflation is widening the gap between rich and poor.
This raises the question: How can a company be managed under VUCA conditions and survive surprises and shocks?
This raises the question: How can a company be managed under VUCA conditions and survive surprises and shocks?
Economists and natural scientists use 4 characteristics to systematize the effects of shocks:
- the Amplitude - i.e. the force with which a shock hits the system,
- the Frequency - i.e. the distance between the impacts,
- the Long-term effect - the duration of influence on the time axis and
- the Statistical patterns of occurrence - not predictable.
The next question is: will the companies recover quickly or will they disappear permanently in the event of shocks?
The solution concept is called resilience
Resilience is a term used in materials research. It stands for the ability to bounce back, in contrast to robustness, which is the ability to withstand. It is therefore about weathering a storm and recovering afterwards.
Instead of panic and fear, confidence and positive thinking
Panic is generated from the crisis-like accumulation of shocks. Fear of a loss of prosperity and fear for jobs. In the face of uncertainty, apocalyptic visions of the future are likely to paralyze us. In difficult times, it is important to keep a cool head and see what we can manage. We alone are responsible for overcoming fear. We need a balance of pessimism and confidence - positive thinking and mindfulness alone will not get us through.
Increase robustness and accelerate regeneration
We know: In times of crisis, market shares are redistributed and old structures within the company are broken up. That's why you need courage to move forward in these times. To quote Max Frisch: "Crisis is actually a good thing if it doesn't smack of catastrophe." This requires:
- a stable compass that is based on values,
- to bring people together and focus behavior on solutions,
- Finding ideas to manage costs, i.e. making and implementing them and
- Investing in the future.
Involve employees
To this end, employees must be actively involved in crisis management, strategic work must be intensified and decisions must be made quickly. Publicity must be generated for controversial situations.
Increased cooperation with companies
Resilience can also be increased through horizontal, vertical and diagonal cooperation with companies. The benefits are both strategic and operational. They range from better market access and efficiency gains to faster time-to-market for products. The ideas to better manage costs must be developed together with the employees. This process can be painful, as budgets have to be reduced and personnel adjusted. It is important to resolve the supposed contradiction between increasing productivity and employee satisfaction. Time is an important factor here.
Survival is more important than wealth
One conclusion from the resilience considerations is that people are less focused on maximizing profits and more on crisis prevention. Survival is more important than wealth. One example of the quantum leaps in costs today is the use of ChatGPT. Initial valid studies show: Knowledge workers who use Kl completed on average
- 12.2 percent more tasks
- were 25.1 percent faster,
- achieved 40 percent better results
than humans without the use of AI. Despite this potential, AI must be used responsibly. Companies must adhere to principles:
- Reliability & safety
- Rules
- Education
- Tools and processes
The resilience compass
In management books you will find the sentence: "Never Iet a good crisis go to waste." Taking an anti-cyclical approach always sounds like a brilliant idea ex-post, but you have to be able to afford it and, above all, have the courage to do it. Digitalization is a key area that enables low-capital growth in many sectors. It is helpful to analyze the investment rate in terms of growth, efficiency and risk aspects. When making investment decisions in times of crisis, it is important not only to set the direction, but also to coach employees and ultimately release the budget. A resilience compass can be helpful here. Resilience is not free, but it is essential for survival in the long term. It is about investing in security and the ability to regenerate. Trust is the basis for every activity. All of this comes under the heading of "purpose". There is no reasonable translation of this word into German.
Purpose is a mixture of goal, meaning, destiny and purpose in life
Purpose is something worth getting out of bed for in the morning. What is the idea behind it? These are the demands for moral legitimacy, protection of the natural foundations of all economic activity, compliance with social and societal standards and customer participation that all companies are confronted with today. Creating a culture of trust is an investment in the health of the company and health is measurable
- customer satisfaction,
- employee satisfaction and
- naturally on the key business figures.
Trust is the fuel that keeps companies active
This requires promises to be kept and concrete results to be delivered. In short: leadership is required. It's a paradox: when uncertainty spreads, the need for leadership, orientation and support grows. But every manager who pretends to know where the journey is heading is met with reservations. Communication is necessary to overcome these, because communication creates transparency and security. Communication thus becomes a management concept.
In times of crisis: try things out, make mistakes, constantly adapt
Willpower and resilience are essential for this. In the future, we will be confronted with shades of gray - there is no black or white. The only thing that will help here is a moral compass and the will to implement the necessary decisions. Because "business as usual" is not an option. The future is not a foregone conclusion, but what we make of it. In times of crisis, it is necessary to develop visionary strength. Mere management skills of the status quo can be the most dangerous course. However, the creation of structures of an organizational nature can help to take strategic considerations further. It is faster to run alone, but together the results are richer. That is why the thesis applies:
Courageous - Together - Better
Finally, I would like to cordially invite you to the 32nd Munich Management Colloquium. The MMK 2025 will take place on March 11 and 12, 2025.
