Hi I'm John Byrd and this is the fourth of six short video lectures on sustainability thinking. We're doing these introductory lectures and a few more next week to give you a strong foundation about sustainability and how it relates to business. It's important that you have a very good intuitive sense of what sustainability and sustainable business is about. That'll make you a much more effective change agent. In this video, I want to talk about resilience. Resilience is emerging as an important aspect of sustainability. Now, there have always been surprises and unexpected changes. And with climate change and a growing population putting demands on water, food, and land there are probably going to be more in the future. Resilience is about enduring and recovering when big surprises occur. In part, it's about bouncing back, but it's also about adapting to new situations. Clearly to have a sustainable business, one that exists for a long time and has minimal impact, you will have to be able to deal with unexpected disruptions and maybe even catastrophic events. In the business realm this idea of resilience is partially addressed in the fields of business continuity and disaster recovery. Risk management also deals with resilience in some ways. Sustainability is linked to resilience in a number of ways. When we reduce material use and energy use, we help make the company less vulnerable to sudden commodity supply shocks or price increases. If a company behaves like I suggested in the long term thinking lecture, by being nice to stake holders, it'll have a network of people and companies that will help it survive a shock and get back on its feet. So sustainability thinking helps companies become more resilient. For the next few minutes I want to extend our thinking beyond sustainability, some of what I'm going to introduce is just good strategy in general. And some of that will loop back to sustainability topics that we've already talked about. There are many ways that you can reduce your company's vulnerability to disasters or disruptions. You can figure out where your company is exposed to extreme weather events, such as hurricanes, flooding, extreme heat, and so on. And take actions to mitigate or reduce the impact from these natural disasters. Sometimes it's having an emergency generator and a pump to remove water. Might also be having policies about when people should stay home and not risk traveling to try to get to work. Developing some sort of capabilities so people can work from home can keep operations continuing until things return to normal or you can adapt to the new normal. It also offers employees flexibility during the regular times. Over the longer term, so long term thinking, new facilities can be built in less vulnerable places and designed to better deal with anticipated changes in climate or water availability or changing demographic patterns or different transportation or energy opportunities. One of the things that people studying resilience always mention, is diversification. It's the same sort of diversification that investors use to reduce risk. The basic idea is to not put all your eggs in the same basket. If something goes wrong with basket, you lose everything. Here are a couple of examples of how companies can diversify. Suppose that your company gets a key manufacturing input from a single supplier. Suppose it's a rare earth mineral. If that supplier's mine gets flooded or nationalized or transportation routes break down or any number of other things. Your production comes to a halt. There are two ways to reduce your company's vulnerability to these types of supply shocks. You can diversify across several suppliers. If you have several suppliers, even if one can't supply your company it can continue to operate and hopefully grow. Another way to deal with having just one supplier is to hold an inventory of the material. Notice that this is contrary in many ways to having a super lean and efficient organization. Just in time inventory systems reduce storage costs and are standard operating procedures for super lean companies. But being lean means there is no buffer if something unexpected happens. There is a trade off between efficiency and resilience. This graph is from the Ellen Macarthur Foundation and shows that you have give up some efficiency bu thatt being too safe, too resilient isn't good either. What we just said about suppliers goes for customers too. There have been many, many manufactures that have tied their fortunes to a single super large retailer, you know who I mean. And they've suffered when that customer wanted better terms or decided to buy from some other company, so diversification is important for resilience. Another concept that comes up often in resilience discussions is redundancy. Redundancy is often seen in engineering, especially in airplanes, military hardware, and space vehicles where failure is not an option. Redundancy means having backup systems that can take over if the primary system fails. We aren't trying to go to the moon here, so for us redundancy might not be rocket science. Some things will be obviously, backing up important data, having spare parts for critical machines, having more than one person who can do a particular job. Encouraging employees to learn the basics of one or two other positions, means there won't be a time when things stop because that one key person is sick or cannot get to the office. Another concept that appears often in resilience discussions is ingenuity and improvisation. At the end of the day you cannot make changes to eliminate all risk. It's usually far too expensive to build so much redundancy that you're assured your company can always operate. Well what then? Then, you have to rely on employees to use their ingenuity, to improvise ways to keep things going. How can you encourage ingenuity? You have to have a culture that encourages employees to think independently, and a culture that's developed the loyalty that makes them care about the long term health of the organization. Then, when disaster strikes, they'll try to figure out how to solve the problem and get the company up and running again. This goes back to our long term thinking lecture and being nice to employees. Developing a culture that embraces innovation and respects people's contribution will allow employees to step forward and help when things are falling apart. Suppliers and customers might even contribute if you establish strong positive relationships with them. So looking ahead and preparing, maybe through diversification and redundancy, and establishing a culture that encourages employees to use their ingenuity to improvise, to solve problems. These are ways to create an enduring resilient company. Next, we'll look at systems thinking. Thanks.
