The Link Between Diversity and Resilience

New research shows that the most resilient companies are those that continually orchestrate a dynamic balance of four innovation strategies.

Most managers and academics agree that innovation ensures superior performance. But which innovation strategy or strategies best sustain that performance over time? That is, how can companies manage innovation in order to become more resilient? Resilience is both an applicable and an important concept for companies in turbulent times.

The concept of resilience originates in research on child behavior,1 which indicates that some children prove to be positive, focused, flexible and proactive — in a word, resilient —despite exposure to extremely challenging and stressful environments.2 There are several ways of conceptualizing and adapting the basic idea of resilience to the business world. Some business writers have focused on corporate attributes, while others have focused on issues such as risk awareness, risk protection and the reduction of vulnerabilities.3 In strategic management, resilience has been defined as a process capability; in order to reinvent themselves, companies need to overcome barriers to change and develop multiple sources of competitive advantage.4 We define resilience as the capability to self-renew over time through innovation. Using that definition, we have analyzed a set of resilient companies that have successfully adapted to diverse and turbulent changes over a period of two decades, trying to understand what makes them so capable of continued self-renewal. These companies include some of the world’s largest multinationals. (See “About the Research.”)

About the Research »

Read the Full Article:

Sign in, buy as a PDF or create an account.

References

1. N. Garmezy, “Attentional Processes in Adult Schizophrenia and in Children at Risk,” Journal of Psychiatric Research 14, no. 1 (1978): 3–34.

2. B. Gorman and L. Hoopes, “Hiring to Build Change Capacity: The Human Resource Role,” Human Resource Planning 22 (summer 1999): 8–10; and D.L. Coutu, “How Resilience Works,” Harvard Business Review 80 (May–June 2002): 46–52.

3. R. Starr, J. Newfrock and M. Delurey, “Enterprise Resilience: Managing Risk in the Networked Economy,” strategy+business 30 (spring 2003): 1–10.

4. G. Hamel and L. Välikangas, “The Quest for Resilience,” Harvard Business Review 81 (September–October 2003): 52–65.

5. B. Kogut and U. Zander, “Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology,” Organization Science 3, no. 3 (1992): 383–397; M.H. Zack, “Managing Codified Knowledge,” Sloan Management Review 40, no. 4 (summer 1999): 45–58; and W.S. Cohen and D.A. Levinthal, “Absorptive Capacity: A New Perspective on Learning and Innovation,” Administrative Science Quarterly 35 (March 1990): 128–152.

6. S.W.F. Omta, L.M. Bouter and J.M.L. van Engelen, “Managing Industrial Pharmaceutical R&D: A Comparative Study of Management Control and Innovative Effectiveness in European and Anglo-American Companies,” R&D Management 24, no. 4 (October 1994): 303–316.

7. G.S. Lynn, J.G. Morone and A.S. Paulson, “Marketing and Discontinuous Innovation: The Probe and Learn Process,” California Management Review 38, no. 3 (spring 1996): 8–37; G. Ahuja and C.M. Lampert, “Entrepreneurship in the Large Corporation: A Longitudinal Study of How Established Firms Create Breakthrough Inventions,” Strategic Management Journal 22, no. 6–7 (June–July 2001): 521–543; B.R. Barringer and A.C. Bluedorn, “The Relationship Between Corporate Entrepreneurship and Strategic Management,” Strategic Management Journal 20, no. 5 (May 1999): 421–444.

8. T.J. Allen, “Managing the Flow of Technology: Technology Transfer and the Dissemination of Technological Information Within the R&D Organization” (Cambridge, Massachusetts: MIT Press, 1984).

9. I. Nonaka, “A Dynamic Theory of Organizational Knowledge Creation,” Organization Science 5, no. 1 (February 1994): 14–37; A. Hargadon and R.I. Sutton, “Technology Brokering and Innovation in a Product Development Firm,” Administrative Science Quarterly 42 (December 1997): 716–749; and R. Gulati and H. Singh, “The Architecture of Cooperation: Managing Coordination Costs and Appropriation Concerns in Strategic Alliances,” Administrative Science Quarterly 43 (December 1998): 781–814.

10. J.H. Dyer and H. Singh, “The Relational View: Cooperative Strategies and Sources of Interorganizational Competitive Advantage,” Academy of Management Review 23, no. 4 (October 1998): 660–679.

11. K.M. Eisenhardt and J.A. Martin, “Dynamic Capabilities: What Are They?” Strategic Management Journal 21, no. 10–11 (October–November 2000): 1105–1121.

12. R. Florida, “The Rise of the Creative Class: And How It’s Transforming Work, Leisure, Community and Everyday Life” (New York: Perseus Books, 2002); and A.L. Saxenian, “Regional Advantage: Culture and Competition in Silicon Valley and Route 128” (Cambridge, Massachusetts: Harvard University Press, 1996).

13. R.A. Burgelman, “A Process Model of Internal Corporate Venturing in the Diversified Major Firm,” Administrative Science Quarterly 28 (June 1983): 223–244; A.H. Van de Ven, D. Venkatraman, D. Polley and R. Garud, “Processes of New Product Creation in Different Organization Settings,” in “Research on the Management of Innovation,” ed. A.H. Van de Ven, H.L. Angle and M.S. Poole (New York: Ballinger Press, 1989); and G. Hamel, “Bringing Silicon Valley Inside,” Harvard Business Review 77 (September–October 1999): 70–84.

14. E.O. Wilson, “The Diversity of Life,” reissue ed. (New York: W.W. Norton & Co., 1999); R.R. Nelson and S.G. Winter, “An Evolutionary Theory of Economic Change” (Cambridge, Massachusetts: Belknap Press, 1982); and G. Silverberg, G. Dosi and L. Orsenigo, “Innovation, Diversity and Diffusion: A Self-Organisation Model,” Economic Journal 98 (December 1988): 1032–1054.

15. S. Thomke, E. von Hippel and R. Franke, “Modes of Experimentation: An Innovation Process — and Competitive — Variable,” Research Policy 27 (July 1998): 315–332.