Business resilience is a firm’s ability to “bounce back” after being damaged by an internal or an external force.
There are many forces that act on a business every day. An example of an internal force would be the failure of an important design, production or quality process. Take for example, GM’s recent recall of 7 million small cars with faulty ignition switches resulting in 13 deaths. Not only is GM suffering from a product quality failure and the associated liabilities, but they continue to frustrate their customers by failing to fix the problem in a reasonable amount of time.
An external force is a natural or market condition that could adversely affect the business.
Thailand’s 2011 floods shut down much of their high-tech production sector and had crippling affects throughout many global supply chains. The impact of the flood shut down Western Digital’s hard-drive production and caused global hard-drive prices to climb 10%. What is worse for Western Digital, is that their competitor Seagate Technology, which built its plant on higher ground, realized an estimated 30% increase in their profits as a result of the hard-drive shortage.
Resilience is a Difficult Concept in Business.
The reason is that companies lack the ability to see the current state of their enterprise holistically and they cannot place their enterprise into potential scenarios to test their performance against internal and external forces. Companies spend millions of dollars storing and sorting mounds of data to find out how they are performing. But these efforts typically lack two things …
First, they lack the ability to visualize the data in meaningful and understandable ways.
Second, even if a business had a holistic data system that represented their enterprise, leaders lack the means to test the system through various scenarios.
Companies and organizations need both to maintain business resilience.
How Computer-Aided Simulations Can Help Your Company Stay Resilient …
1. Simulations help your company stay resilient by giving you a way to visualize data in a clear and meaningful way.
The bar chart and line graph still rule the numbers game, but may not be the most effective way to see how the elements relate to each other. Some are bucking the status quo by using computer-aided simulations.
With game style interfaces, these companies are modeling their systems in order to aid in their decision making. These systems help them not only to see data relationships, but also help leaders to stop looking into the past for answers about the future.
2. Resilience is maintained by giving leaders the means to test the system through numerous scenarios.
The ability to affordably model the internal and external forces that act on a business and to see the effect on the holistic system, would be an excellent look into the future. Results from such a model could inform decision-makers and drive their investments more rationally. This is business resilience.
How much more informed would Western Digital have been if they had a more holistic view of the forces that could act on their business? This is how simulations can help your business stay resilient.
Globalization has enabled the creation of vast enterprises that are difficult to control because of their scale. For a business this large to maintain its resilience will require tools to help it see more holistically and to test its system’s ability to “bounce back” from internal and external forces at large.
These tools come in the form of simulations. Computer simulations provide a safe decision space, so any business can maintain resilience.
© Takouba Security, LLC.
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