March 4, 2016

The Resilient State

Businesses and state governments may not be in the same boat, but they sail the same turbulent, unpredictable economic waters.  Established businesses with brand name products and services face constant, relentless pressure from low-cost competitors and aggressive startups. And states are constantly competing against each other to keep residents and businesses from relocating to other states or nations.

Businesses and state governments can meet their respective challenges by battening down the hatches and sticking to their business models and strategic economic development plans. Or, they can accept change, but figure out how to bounce back from its disruptive effects. As we noted in an earlier posting, Columbia Business School professor Rita Gunther McGrath recommended the latter for businesses, arguing that competitive advantage doesn’t last and businesses must learn to “surf through waves of short-lived opportunities.” We asked if the same point couldn’t be made for city and state economic development policies and programs. 

We ask the question again in light of Andrew Zolli and Ann Marie Healy’s 2012 book, Resilience: Why Things Bounce Back. These authors contend, “Volatility of all sorts has become the new normal, and it’s here to stay.” This is the case for people, organizations, and communities.

For example, consider the wake a major manufacturer leaves when it closes its plants and lays off hundreds of skilled workers. State economic development programs try to prevent such outcomes by offering incentives designed to lower costs and make businesses more competitive, but they happen nonetheless. “If we cannot control the volatile tides of change, we can learn to build better boats,” the authors state. “We can design—and redesign—organizations, institutions, and systems to better absorb disruption, operate under a wider variety of conditions, and shift more fluidly from one circumstance to the next.”

How do you make a person, business, or community resilient? Zolli and Healy recommend using feedback mechanisms to detect when an abrupt change is about to happen and finding new ways to tackle the problem. The ability to do the latter depends on whether the laws and policies allow flexible, innovative solutions. According to the authors,

resilience-thinking does not simply call us into a defensive crouch against uncertainty and risk. Instead, by encouraging adaption, agility, cooperation, connectivity, and diversity, resilience-thinking can bring us to a different way of being in the world, and to a deeper engagement with it.

Click here to listen to the authors discuss the book on NPR.