Genentech, Northern Trust: How risk builds resilience
Resilience, according to my dictionary, is defined as "adapting to adversity."
I had the opportunity to reflect on this definition at this year’s BSR conference in November (my 19th!), themed "Resilient Business, Resilient World."
Intuitively we understand that resilience is a component of business sustainability; you must adapt to continue. But defining and encouraging resilient behavior in corporate culture is challenging. How do we measure, manage and foster it in employees? And how does a resilient workforce translate into company resilience?
The conference broached these questions during a session called "Workforce of the Future: Building a Resilient Corporate Culture."
The session examined resilience from the grounded perspective of three experts in sustainability and HR: Connie Lindsey, executive VP and head of CSR and Global Diversity & Inclusion at Northern Trust; Laura Hawkesford, ethical trading manager at Marks and Spencer; and Nancy Vitale, VP of HR at Genentech.
How is resilience related to risk-taking?
One comment that stood out for me was from Vitale. She spoke about Genentech’s encouragement of employees to take risks. Risk-taking is such a part of their culture that company leaders celebrate it, even when failure strikes.
Vitale told a story about Genentech’s development of an experimental cholesterol medicine that ultimately never met its goal in a clinical trial. Instead of lamenting failure, the leaders at Genentech took steps to celebrate the research team’s efforts, its bold research and smart risk-taking. At the highest levels of management, the team’s effort was praised.
Building cultural resilience is about rewarding these intelligent risks, according to Vitale — the bold choices that lead to innovation.
The challenge becomes striking a balance between encouraging risks that may enable growth and encouraging conservative choices that preserve stability.
Risk tolerance varies by industry
The dangers of a culture too comfortable with risks are clear. Look at the financial sector for an example of risky behaviors yielding both failed outcomes and lasting brand damage.
Desirable risk-taking is defined differently depending on industry. For example, Lindsey described the atmosphere at Northern Trust, which operates within a "risk business." Because anticipating and analyzing risk is part of making everyday decisions, risk tolerance is already part of company culture. She and her staff need not emphasize taking risks when it is so essential to growth and a part of employees’ jobs.
Instead, it’s important to distinguish between risk tolerance and unethical behavior. The Volkswagen and Petrobras scandals aren’t erupting just because of risky choices. They’re occurring because the risks taken are in conflict with legal and ethical codes.
Distinguishing between risks and ethics is therefore critical. Lindsey described Northern Trust’s efforts to create a culture of accountability and make it clear to employees that unethical behavior is not tolerated.
When risks go wrong, how do you build resilience? In other words, how do you foster resilience?
Vitale said a key component of prospering in the face of adversity is clarity of mission. For Genentech, that meant focus around being science-driven and patient-centered. Companies and employees often can withstand risks and failures by returning to the "north star" of the organization’s purpose.
Companies also can buffer failure’s impacts by planning for them. If you begin with the expectation that there will be failures, they will be easier to surpass. In Vitale’s business, there are significant risks when developing life-extending medicines for serious diseases. She creates a culture with these realities in mind.
All three women agreed a key to building resilience is support from the top. The value proposition for sustainability isn’t always clear in management’s language, according to Lindsey, but it is essential to communicate. Hawkesford echoed this point — articulating the benefit of social impact work in business terms is difficult but critical, especially when senior managers and factories want evidence of quick results.
Lindsey and Vitale both mentioned the value of having leadership model the risk-taking and resilience behaviors it wants to instill. The logic is straightforward: If the CEO is accountable, the employees will be too. In Vitale’s company, leadership’s willingness to be self-critical was key to undertaking a company-wide culture assessment and redesign.
Diagnose your organization
How do risk and resilience align with culture in your industry and in your business? To what extent is risk-taking encouraged or discouraged?
While the appetite for risk varies greatly between companies, a general principle remains: Building cultural resilience is firstly about diagnosing where you are, identifying values you’d like to achieve and planning ahead for failures along the way.