The biggest lesson we can learn from the Covid-19 pandemic is that we need to avoid the polarized extremes of either tight coupling or full de-coupling in favor of loose coupling as a new form of globalization with a proper balance between localization and globalization to manage the paradox of global interdependence. This balance enables organizational resilience as a special organizational capability to prepare for, respond to, and learn from adverse events (crisis as an unexpected but severe adverse event) so as to bounce back for survival in the short run and also bounce forward for thriving over time.

The causes of the pandemic are related to the problem of tight coupling in interdependence exacerbated by an overconcentration of supply. The excessive tight coupling of diverse nations in the global network is to blame for the fast and wide spread of the pandemic along the global network due to the massive cross-border travelers, and the shortage of medical supplies due to the extremely interconnected supply chains for components across the world with “cut-to-bone” dependency on outsourcing, thus little local buffer for sudden shock. This problem was made worse by the overconcentration of global supply in China as the sole or biggest sourcing cite. Such interrelated problems appear to derive from the finance-obsessed business model rooted in the “liberal market capitalism” (e.g., US and UK), in contrast to that of “coordinated market capitalism” (e.g., Germany and Japan). Due to the short-term cost minimization, this finance-biased version of capitalism tends to hurt resilience at all levels.

We offer two solutions to address the problems of tight coupling and overconcentration. First, we must redesign the current configuration of global interdependence from a tightly coupled form to a loosely coupled one. At the organizational level, the effect of interdependence on resilience is about the balance between the need for interdependence and that for autonomy in both internal and external links. Second, we must also shift from overconcentration of global supply in one location (often rooted in tight coupling) to diversified sources, at both national and organizational levels.

Applying the view of loose coupling to the pandemic, a lower-order resilience in term of bouncing back for survival can take the measure of incremental innovation upon the agility and versatility of resources in the form of improvising and bricolage, such as business swap; cross-business cooperation, and also crowdsourcing for new products or services. Further, the higher-order resilience in terms of bouncing forward for thriving (taking the crisis as the great moment of “unfreezing” for transformation in several areas: (1) digital transformation; (2) greater regionalization and some localization of supply chains; (3) dual or even more sourcing; (4) balanced supply from both external and internal sources; (5) workforce cross-training; (6) redesigning organizational structure as distributive with three parts for co-opetition in an open-ended platform-enabled ecosystem: self-organized agile front-end team; modularized robust central-end hub, and open-minded foresighted back-end HQ (3-End Architecture).

Read the full article ‘Organizational Resilience for a New Normal: Balancing the Paradox of Global Interdependence’ published in Management and Organization Review here

Part of the Management and Organization Review Forum on resilience