A resilient process is a process that can absorb variation that is GREATER than anticipated and still produce an output that is acceptable or approaches prior standards of what was acceptable.
You might anticipate a maximum of 15% absenteeism. How will your enterprise function if you have 70% absenteeism? Will you be able to turn a wheel?
You might anticipate 15% of your accounts being more than 60 days in arrears. How will your enterprise function when you have 60% of your accounts in arrears?
You might anticipate no difficulty in arranging for transportation of your incoming materials and your finished goods. Do you have a plan in the event that you can only arrange 30% of your transportation needs for three weeks?
You probably see the common thread. Resilient systems are able to absorb disruptions in critical inputs that are one or two orders of magnitude larger than what is "anticipated".
In some cases it is due to a pre-planning; plans to run in "degrade" mode.
In other cases it is the mental agility to substitute resources (In WWI machine gunners used urine to cool their weapons thereby avoiding being over run by the enemy).
In other cases it is the discovery of "buffers" as strategy.
In other cases it is a willingness to negotiate standards of acceptability with your customers.
"Resilient systems are able to absorb disruptions in critical inputs that are one or two orders of magnitude larger than what is "anticipated". "
ReplyDeleteUm, 2 orders of magnitude is x100. Unlikely anything natural or man made would survive that kind of challenge. Sometimes it's not even a good idea.
I remember Prof. Garby at CU telling me a story of the early Polaris program of which he was involved. Seems one of the rockets went out of control and didn't breakup. It should have, so they went back and made it less robust. Why? Because too strong was also too heavy and a lighter structure would have greater range or payload. Sometimes just good enough is best.
Even your business example is flawed. Any business that can sustain 60% past due receivables has issues (they also don't exist FYI). Too much retained earnings equate to failure to expand or or too high a profit margin leading to less goods sold or a failure to anticipate the direction the market is heading and the need to have diversified.
Actually your whole premise only works in the most basic of systems and perhaps not even them.
Yup. 2 orders of magnitude is X100.
DeleteOne example might be inflation. Businesses plan for 2%-to-4% per year. It is virtually inconceivable that inflation could exceed 400% a year. Except, Wiemar Republic, Venezuela, Argentina, Zimbabwe..... Another example might be of a business where the price of a key component quadrupled, say gasoline going from $2.50 a gallon to $10.00 a gallon. That would also be 400% inflation.
Regarding the past due receivables: That was fairly common during the Great Depression due to the lack of currency in circulation. Some regions created their own local currencies. Some businesses responded by temporarily accepting collateral backed promissory notes in lieu of cash.
The examples are extreme but I did put a wee bit of thought into them.
I appreciate your comments. It highlights where my writing/arguments are weak and needs beefing up.
One more example came to mind.
DeleteIn the summer of 2012 there was a fire in a plant (in Western Europe) that polymerized a special form of polyarylate 12. This formulation was used universally in North American motor vehicles for fuel lines. It was the only material that had sufficient chemical resistance, vapor resistance (evaporative emissions requirements), cold temperature impact resistance (fuel retention after cold weather crashes).
The evaporative emissions are a matter of complying with Federal law. It is illegal to sell vehicles that are not certified as compliant. The fuel retention after crashes was a matter of due diligence to defend against litigation.
The fire shut down the plant for an extended period of time. World wide production of that critical material went to ZERO. Nobody saw that coming.