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<ul><li><p>HBROnPoint</p><p>F R O M T H E H A R V A R D B U S I N E S S R E V I E W </p><p>A R T I C L E</p><p>How Resilience Worksby Diane L. Coutu</p><p>New sections to</p><p>guide you through</p><p>the article:</p><p> The Idea in Brief</p><p> The Idea at Work</p><p> Exploring Further. . .</p><p>P R O D U C T N U M B E R 1 7 0 9</p><p>Facing disaster,</p><p>some companies snap.</p><p>Others snap back.</p></li><li><p>T H E I D E A</p><p>Just one day after Hurricane Andrew devastated southeast Florida in 1992, UPS wasdelivering packages to customers in the areaeven those living in cars because their homeswere destroyed.</p><p>How did UPS manage this feat amid suchchaos? It had resiliencethe ability to bendand bounce back from hardship.</p><p>Like creativity, resilience is a human mystery.Well never fully understand it, but we canlearn itand we must. As Dean Becker, CEO of Adaptiv Learning Systems, said: More than education, . . . experience, [and] training, a persons level of resilience will determine whosucceeds and who fails. This maxim is true forindividuals and organizations.</p><p>How Resilience Works</p><p>The orie s posit that resilient people andorganizations possess three characteristics:</p><p>Facing down realityResilient organizations have sober, almost pessimistic, views of those aspects of realitynecessary for survival. They regularly ask, Dowe truly understandand acceptthe realityof our situation? Staring down reality, thoughgrueling, enables organizations to train them-selves to survive before the fact.</p><p>E X A M P L E :After the 1993 World Trade Center attack, MorganStanley realized that working in this symbol of U.S.commercial power made it vulnerable to terrorism.It launched a micro-level preparedness program,establishing fire drills and multiple recovery siteswhere employees could work if disaster struck. Itsclear-eyed view of reality (and good fortune to bein the second tower) paid off: On September 11,2001, Morgan Stanleys employees began evacuat-ing their south-tower offices immediately after thenorth tower was struck. The company lost only 7 ofits 2,700 WTC employees.</p><p>Searching for meaningResilient companies call on enduring values to find meaning in hardshipto build bridgesbetween current difficulties and a better future.Those bridges make bearable even the mostpainful present.</p><p>E X A M P L E :UPSs valuesexpressed in its Noble Purposehelped it rally after an agonizing strike in 1997.</p><p>HBR OnPoint 2002 by Harvard Business School Publishing Corporation. All rights reserved.</p><p>CEO Mike Eskew said,It was a hugely difficulttime, like a family feud. [But] whatever side peoplewere on, they shared a common set of values.Those values . . . never change; they frame most of our important decisions.</p><p>Shared values are more important for organi-zational resilience than a payroll filled withresilient individuals. If resilient employees areall interpreting reality differently, their deci-sions and actions may conflictthreateningtheir organizations survival.</p><p>Ritualizing ingenuityInventive tinkerers, resilient organizations usewhatevers handy to overcome hardship. Theyimprovise solutions without obvious tools andimagine possibilities where others are con-founded. Though they often have strict rulesand regulations (thus appearing less creativethan other companies), their discipline actuallyincreases their resilience.</p><p>E X A M P L E :UPS considers improvisation a core skill. The company empowers employees to do whateversnecessary to deliver packages on time. Says CEO Eskew,If that means they need to improvise,they improvise. Otherwise, we just couldnt dowhat we do every day. UPSs rules (e.g., driversalways put their keys in the same place) freeemployees to focus on the fixes necessary to function under extreme pressure, as they did after Hurricane Andrew.</p><p>T H E I D E A A T W O R K</p><p>I N B R I E F</p><p>1</p></li><li><p>hen I began my career injournalism I was a reporterat a national magazine in</p><p>those days there was a man Ill callClaus Schmidt. He was in his mid-fifties,and to my impressionable eyes, he wasthe quintessential newsman: cynical attimes, but unrelentingly curious and fullof life, and often hilariously funny in asandpaper-dry kind of way. He churnedout hard-hitting cover stories and fea-tures with a speed and elegance I couldonly dream of. It always astounded methat he was never promoted to manag-ing editor.</p><p>But people who knew Claus betterthan I did thought of him not just as agreat newsman but as a quintessentialsurvivor, someone who had endured inan environment often hostile to talent.He had lived through at least threemajor changes in the magazines lead-ership, losing most of his best friendsand colleagues on the way. At home, twoof his children succumbed to incurable</p><p>illnesses, and a third was killed in a traf-fic accident. Despite all this or maybebecause of it he milled around thenewsroom day after day, mentoringthe cub reporters, talking about the nov-els he was writing always looking for-ward to what the future held for him.</p><p>Why do some people suffer real hard-ships and not falter? Claus Schmidtcould have reacted very differently.Weve all seen that happen: One per-son cannot seem to get the confidenceback after a layoff; another, persistentlydepressed, takes a few years off fromlife after her divorce. The question wewould all like answered is, Why? Whatexactly is that quality of resilience thatcarries people through life?</p><p>Its a question that has fascinated meever since I first learned of the Holo-caust survivors in elementary school.In college, and later in my studies asan affiliate scholar at the Boston Psy-choanalytic Society and Institute, I re-turned to the subject. For the past sev-</p><p>eral months, however, I have looked onit with a new urgency, for it seems to methat the terrorism, war, and recession ofrecent months have made understand-ing resilience more important than ever.I have considered both the nature ofindividual resilience and what makessome organizations as a whole more re-silient than others. Why do some peopleand some companies buckle under pres-sure? And what makes others bend andultimately bounce back?</p><p>My exploration has taught me muchabout resilience, although its a subjectnone of us will ever understand fully.Indeed, resilience is one of the greatpuzzles of human nature, like creativityor the religious instinct. But in siftingthrough psychological research and inreflecting on the many stories of re-silience Ive heard, I have seen a littlemore deeply into the hearts and mindsof people like Claus Schmidt and, indoing so, looked more deeply into thehuman psyche as well.</p><p>Copyright 2002 by Harvard Business School Publishing Corporation. All rights reserved.</p><p>H B R at L a r g e</p><p>Confronted with lifes hardships,</p><p>some people snap, and others snap back.</p><p>by Diane L. Coutu</p><p>how</p><p>Resilienceworks</p><p>W</p><p>2</p></li><li><p>The Buzz About Resilience</p><p>Resilience is a hot topic in businessthese days. Not long ago, I was talking toa senior partner at a respected consult-ing firm about how to land the very bestMBAs the name of the game in thatparticular industry. The partner, DanielSavageau (not his real name), ticked offa long list of qualities his firm soughtin its hires: intelligence, ambition, in-tegrity, analytic ability, and so on.Whatabout resilience? I asked. Well, thatsvery popular right now,he said.Its thenew buzzword. Candidates even tell ustheyre resilient; they volunteer the in-formation. But frankly, theyre just tooyoung to know that about themselves.Resilience is something you realize youhave after the fact.</p><p>But if you could, would you test forit?I asked.Does it matter in business?</p><p>Savageau paused. Hes a man in hislate forties and a success personallyand professionally. Yet it hadnt beena smooth ride to the top. Hed startedhis life as a poor French Canadian inWoonsocket, Rhode Island, and had losthis father at six. He lucked into a foot-ball scholarship but was kicked out ofBoston University twice for drinking. Heturned his life around in his twenties,married, divorced, remarried, and raisedfive children. Along the way, he madeand lost two fortunes before helping tofound the consulting firm he now runs.Yes, it does matter, he said at last. Infact, it probably matters more than anyof the usual things we look for. In thecourse of reporting this article, I heardthe same assertion time and again. AsDean Becker, the president and CEO ofAdaptiv Learning Systems, a four-year-old company in King of Prussia, Penn-sylvania, that develops and delivers pro-grams about resilience training, puts it:More than education, more than expe-rience, more than training, a personslevel of resilience will determine whosucceeds and who fails. Thats true inthe cancer ward, its true in the Olym-pics, and its true in the boardroom.</p><p>Academic research into resiliencestarted about 40 years ago with pio-neering studies by Norman Garmezy,</p><p>now a professor emeritus at the Uni-versity of Minnesota in Minneapolis.After studying why many children ofschizophrenic parents did not sufferpsychological illness as a result of grow-ing up with them, he concluded thata certain quality of resilience played agreater role in mental health than any-one had previously suspected.</p><p>Today, theories abound about whatmakes resilience. Looking at Holocaustvictims, Maurice Vanderpol, a formerpresident of the Boston PsychoanalyticSociety and Institute, found that manyof the healthy survivors of concentra-tion camps had what he calls a plasticshield.The shield was comprised of sev-eral factors, including a sense of humor.Often the humor was black, but none-theless it provided a critical sense of per-spective. Other core characteristics thathelped included the ability to form at-tachments to others and the possessionof an inner psychological space that pro-tected the survivors from the intrusionsof abusive others. Research about othergroups uncovered different qualities as-sociated with resilience. The Search In-stitute, a Minneapolis-based nonprofitorganization that focuses on resilienceand youth, found that the more resilientkids have an uncanny ability to getadults to help them out. Still other re-search showed that resilient inner-cityyouth often have talents such as athleticabilities that attract others to them.</p><p>Many of the early theories about re-silience stressed the role of genetics.Some people are just born resilient, sothe arguments went. Theres some truthto that, of course, but an increasing bodyof empirical evidence shows that re-siliencewhether in children, survivorsof concentration camps, or businessesback from the brink can be learned.For example, George Vaillant, the direc-tor of the Study of Adult Developmentat Harvard Medical School in Boston,observes that within various groupsstudied during a 60-year period, somepeople became markedly more resilientover their lifetimes. Other psychologistsclaim that unresilient people more eas-ily develop resiliency skills than thosewith head starts.</p><p>Most of the resilience theories I en-countered in my research make goodcommon sense. But I also observed thatalmost all the theories overlap in threeways. Resilient people, they posit, pos-sess three characteristics: a staunch ac-ceptance of reality; a deep belief, oftenbuttressed by strongly held values, thatlife is meaningful; and an uncanny abil-ity to improvise. You can bounce backfrom hardship with just one or two ofthese qualities, but you will only be trulyresilient with all three. These three char-acteristics hold true for resilient organi-zations as well. Lets take a look at eachof them in turn.</p><p>Facing Down Reality</p><p>A common belief about resilience is thatit stems from an optimistic nature.Thatstrue but only as long as such optimismdoesnt distort your sense of reality.In extremely adverse situations, rose-colored thinking can actually spell di-saster. This point was made poignantlyto me by management researcher andwriter Jim Collins, who happened uponthis concept while researching Goodto Great, his book on how companiestransform themselves out of mediocrity.Collins had a hunch (an exactly wronghunch) that resilient companies werefilled with optimistic people. He triedout that idea on Admiral Jim Stockdale,who was held prisoner and tortured bythe Vietcong for eight years.</p><p>Collins recalls: I asked Stockdale:Who didnt make it out of the camps?And he said, Oh, thats easy. It was theoptimists. They were the ones who saidwe were going to be out by Christmas.And then they said wed be out by Easterand then out by Fourth of July and outby Thanksgiving, and then it was Christ-mas again. Then Stockdale turned tome and said, You know, I think they alldied of broken hearts. </p><p>In the business world, Collins foundthe same unblinking attitude shared byexecutives at all the most successfulcompanies he studied. Like Stockdale,resilient people have very sober anddown-to-earth views of those parts ofreality that matter for survival. Thatsnot to say that optimism doesnt have its</p><p>may 2002</p><p>How Resi l ience Works H B R AT L A R G E</p><p>3</p></li><li><p>place: In turning around a demoralizedsales force, for instance, conjuring asense of possibility can be a very pow-erful tool. But for bigger challenges, acool, almost pessimistic, sense of realityis far more important.</p><p>Perhaps youre asking yourself, DoI truly understandand acceptthe real-ity of my situation? Does my organiza-tion?Those are good questions, partic-ularly because research suggests mostpeople slip into denial as a coping mech-anism. Facing reality, really facing it, isgrueling work. Indeed, it can be un-pleasant and often emotionally wrench-ing. Consider the following story of or-ganizational resilience, and see what itmeans to confront reality.</p><p>Prior to September 11, 2001, MorganStanley, the famous investment bank,was the largest tenant in the World TradeCenter. The company had some 2,700employees working in the south tower</p><p>on 22 floors between the 43rd and the74th. On that horrible day, the first planehit the north tower at 8:46 am, and Mor-gan Stanley started evacuating just oneminute later, at 8:47 am. When the sec-ond plane crashed into the south tower15 minutes after that, Morgan Stanleysoffices were largely empty. All told, thecompany lost only seven employees de-spite receiving an almost direct hit.</p><p>Of course, the organization was justplain lucky to be in the second tower.Cantor Fitzgerald, whose offices werehit in the first attack, couldnt have doneanything to save its employees. Still, itwas Morgan Stanleys hard-nosed real-ism that enabled the company to bene-fit from its luck. Soon after the 1993 at-tack on the World Trade Center, seniormanagement recognized that workingin such a symbolic center of U.S. com-</p><p>mercial power made the company vul-nerable to attention from terrorists andpossible attack.</p><p>With this grim realization, MorganStanley launched a program of pre-paredness at the micro level. Few com-panies take their fire drills seriously. Notso Morgan Stanley, whose VP of securityfor the Individual Investor Group, RickRescorla, brought a military disciplineto the job. Rescorla, himself a highly re-silient, decorated Vietnam vet, madesure that people were fully drill...</p></li></ul>

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