Continue the series: Can a business be efficient but fragile? and How climate disruption reaches your critical processes.
Operational resilience and climate disruption — part 1 of 3.
A growing business can usually identify its busiest teams, largest customers and most expensive equipment. Identifying its critical work is harder. Some of the activities that protect delivery, people and cash flow attract very little attention until they stop.
Approving a substitute material, maintaining a current specification or knowing who can authorise an exception may look like routine administration. Under pressure, each can determine whether the business continues to operate.
At E-Squared, we use a practical starting point: critical work is work whose failure, delay or loss of control could materially affect people, essential delivery, cash flow, compliance or the organisation’s ability to adapt. Understanding that work gives leaders a stronger basis for both growth and resilience.
Start with the consequences of interruption
An organisation chart tells you who reports to whom. It does not necessarily show how a customer promise depends on purchasing, production, quality checks, transport and invoicing working together.
Choose an important product or service and follow the work needed to deliver it. At each stage, ask what happens if the activity is unavailable, wrong or late. Include the effect on people’s safety and on obligations to customers and regulators.
Time matters. A delay that is manageable for an hour may become serious after a day. Another activity may tolerate a longer interruption, provided the organisation knows how to recover before a deadline. Agree those limits with the people responsible for the work, rather than assuming that every process deserves the same priority.
The dependencies that are easy to overlook
Our suggested starting questions cover five areas:
- People and knowledge: can someone else perform the work safely and reliably when the usual person is unavailable?
- Information and handoffs: are current specifications, records and instructions available to the people who need them?
- Decisions: who can approve an alternative, resolve an exception or stop unsafe work?
- Resources: which suppliers, systems, premises, utilities and funds does the activity depend on?
- Recovery: what would allow the activity to restart, and has that arrangement been tried?
These questions can expose connections that departmental reviews miss. Two teams may appear independent but rely on the same specialist, software service or access route. A replacement supplier may be available commercially but unusable until a technical approval is complete.
What research tells us about operational control
In a field experiment involving large Indian textile firms, Bloom and colleagues found that adopting improved management practices increased productivity by 17% in the first year. Improvements involved quality, efficiency and inventory, and the researchers subsequently observed expansion in production plants. The setting matters: this is evidence that management practices can affect performance, not a forecast of the results any other business should expect. Read Bloom et al., Does management matter? Evidence from India (2013).
For a growing business, the practical implication is to examine how work is managed alongside how much work is coming in. More demand can place additional strain on unclear responsibilities, incomplete information and decisions concentrated in a few people.
An ordinary approval can become critical
Consider an illustrative manufacturer whose usual supplier cannot deliver a component. Purchasing finds an alternative, but the approved specification sits in one person’s files. Nobody else is certain which tests are required or who can approve the change.
The immediate problem is a missing component. The operational constraint is the business’s ability to introduce a suitable replacement while maintaining its controls. Buying more stock might provide time; making the approval process usable could address a different part of the problem.
Research by Barrot and Sauvagnat found that natural disasters affecting suppliers transmitted output losses to their customers, particularly where suppliers produced specialised inputs. Their findings help explain why the ability to substitute an input deserves attention. The study examines disaster shocks; it does not attribute every such event to climate change. Read Barrot and Sauvagnat (2016).
Use one process to begin the discussion
Bring together the people who perform, receive and oversee one important piece of work. Record its required outcome, the consequences of interruption, its key dependencies and the person responsible for maintaining it. Then select one realistic disruption and walk through what would happen.
Where the discussion relies on “someone would sort that out”, identify the person, authority, information and resources actually needed. Give each unresolved issue an owner and a review date. The purpose is to make essential work easier to manage as conditions change.
Climate disruption makes this exercise increasingly relevant, but the same understanding also helps when demand rises, a colleague leaves or a system fails. Clear critical processes provide a foundation for growth and a more deliberate response to uncertainty.
Which activity would you put first?
Which apparently minor activity would cause disproportionate damage if it stopped in your business? We are opening a discussion about the work that supports operational resilience. Share your experience with E-Squared, or talk to us about making your critical work clearer and easier to manage.
