Long-successful companies repeatedly demonstrate resilience in crises. Christoph Scholl and Stefan Renken say tradition does not always equate to inflexibility.
Since the outbreak of the COVID 19 pandemic, companies have been confronted with challenges that were unforeseeable in their complexity. Whether it's new recruiting demands or the recent inflationary pressures, the so-called VUCA era, as the U.S. Army War College calls it, will continue to confront companies with volatility, uncertainty, complexity and ambiguity and test their resilience. However, this crisis has also shown that some companies are more resilient to crises and change than others, and thus have a competitive advantage.
As students at the Harz University of Applied Sciences, we conducted a qualitative study on that topic in cooperation with enomyc at the beginning of 2021 with top representatives of traditional German companies. During the crisis, they put a focus on classic tasks such as cost adjustment without, however, accompanying them with a suspension of investments in innovative product adaptations. Those companies reacted to requirements in a much more complex way: Efficiency and effectiveness were questioned by traditional companies and adapted to new circumstances – an important factor in their resilience.
Originating from the Latin word "resilire" (to bounce back, rebound), the term has only become established in organizational research in recent years. Management professors Martin Christopher and Helen Peck define the term as "the ability of a system to return to its original state or move to a new, more durable state after being disturbed." Consequently, resilience should not be limited to a target state, but should be understood as the totality of competencies of an organization. Accordingly, resilience on the macro level consists of all internal functions that take place on the micro level.
Depending on the study, the average age of a company is estimated at around ten years. However, there are traditional companies that have proven their resilience throughout history across a wide variety of crises and have long passed their tenth birthday. However, there is no clear framework as to what constitutes a traditional company in concrete terms. So here, too, the only approach is via the dictionary, which locates tradition in the realm of something passed down through generations - behaviors, ideas and culture.
This definition captures common usage well, but cannot narrow down the question of how important tradition is to organizational resilience. The starting point was the assumption that the reasons for organizational resilience are found particularly in the business model, as the basis of all organizational structures and operations. Eleven C-level executives from companies with at least 100 years of history were interviewed. The detailed results of the research conducted by Harz University of Applied Sciences in cooperation with enomyc are currently undergoing a peer review process for scientific publication.
A brief look at the results in advance, however, clearly shows that tradition in the sense of long-term successful companies is not understood as a blockade by means of which old – and at some point perhaps outdated – structures can survive. In this context, tradition is a kind of "stabilizing environmental factor" that favors the company's chances of survival and adaptation in the course of various critical situations.
Tradition can be expressed through many aspects within a company. However, as the questioning of efficiency and effectiveness in a crisis shows, successful long-lived companies do not see this as having preserved something in fixed patterns of thinking. "Tradition" in that sense means that traditional companies are concerned with confidence in their own ability to act, with the flame of tradition itself. As historian and politician Jean Jaurès said, "Tradition is not the worship of ashes, but the passing on of fire."
Would you like to know exactly what makes traditional companies crisis-proof? Feel free to contact us. We look forward to exchanging ideas with you and will inform you as soon as our detailed results are published.
