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Business leaders and risk

Business leaders are struggling to balance risk with opportunity, threatening the long-term survival of their firms, according to a study by BSI (British Standards), with Cranfield School of Management. The report, “Organizational Resilience: A summary of academic evidence, business insights and new thinking by BSI and Cranfield School of Management”, assesses half a century’s accepted wisdom on best-practice management, identifying a need for firms to embrace risk if they are to survive and thrive.

According to the study conflicting management advice has left senior executives reluctant to intervene, with organisational paralysis leading firms to potentially sleepwalk into disaster. The report consolidates half a century of management thinking and 181 academic papers – from over 600 initially screened – into a single approach. BSI commissioned the report in the wake of finding that less than one third of CEOs are confident in leading their firms to long term success.

Prof David Denyer, author of the study, says: “Great businesses are built by leaders prepared to take the bad with the good. They recognize the tension between consistent defensive behaviours that stop bad things happening, and progressive, flexible ideas that allow the good to prosper. Put simply, senior leaders must manage the tensions between control, action, performance and innovation if organizations are to be truly resilient – and this requires paradoxical thinking.”

Prof Denyer highlights the benefits of pairing agile thinking with robust systems. Successful firms do not look to achieve “zero risk”, but rather experience “zero trauma” from business setbacks, adapting to ensure future success. It suggests a framework for adopting good practice across a business. Effective leadership is essential for implementation, according to the report, with executives urged to manage the tension between defence and progression, consistency and flexibility.

Howard Kerr, Chief Executive of BSI, adds: “Today’s volatile business environment creates strategic tensions to which the appropriate response is rarely clear. Top executives interviewed for our report recognise that preparing for the unexpected is essential for long-term success. The Organizational Resilience Tension Quadrant identified in this report, provides leaders with clear guidance on how to take measured risks to unlock success.

“A resilient organisation is one that doesn’t merely survive over the long term, but flourishes. We believe that mastering Organizational Resilience offers the best opportunity for companies to pass the test of time, unlocking future prosperity and longevity. Those that learn to spring forward and not stagger backwards, reap dividends for their company, employees, investors, government and society in general.”


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