Lesson #3: Build Resilience
This column is the third of seven installments based on Jean Bye’s 2022 Hoyt Memorial Lecture delivered at CastExpo in Columbus, Ohio.
Resilience is particularly important when adversity hits and you need to react quickly. Yet you cannot build it in the middle of a crisis. You must have it in place before a crisis. Dotson Iron Castings has certainly faced adversity. A couple of examples are:
- An 80% downturn in orders over four weeks in the 1980s that put us in a dire financial position.
- A fire that took out all our molding and sand capacity in 2017.
- Major equipment failures shutting us down.
- The COVID-19 crisis of 2020.
Any of these adversities could have had a severe, negative impact on the organization, but by having previously built resilience, we successfully navigated each of them. Five traits are needed to build a resilient organization.
First, you must be prepared. It is important to have thought about and documented plans to deal with the various scenarios that might happen. Be prepared by building strong relationships with employees, customers, and vendors. You can draw on those to support you when adversity hits. Also, have financial depth. Do not allow your organization to be on the edge financially. Having financial depth allows you to weather adversity with more options in your toolbox.
Second, build an adaptable culture with versatile employees. Employees who can quickly pivot and cover other areas or switch to a short-term strategy to get through a crisis and then go back to the longer-term strategy are critical to navigating a crisis.
Third, build a collaborative team. A collaborative team can make quicker decisions with increased creativity. That creativity is important in thinking outside the box.
Fourth, be infinitely trustworthy. One of my favorite books is “The Speed of Trust” by Stephen Covey. Having built trust into everything you do will allow you to move quickly, and moving quickly is essential during adversity. Part of being trustworthy includes balancing the best interest of all stakeholders.
Don’t just look at the short-term bottom line. Think about the needs of the employees, the vendors, the customers, bankers, and owners. Considering every group’s needs will add to trust. If your customers are used to you being trustworthy, they will trust you during a crisis.
Fifth, anchor to a purpose. Have a “why.” Rally the forces around the purpose with excellent communication. Live your core values—not just in adversity but especially in adversity.
During the 1980s when we were faced with the 80% downturn in orders, we were not prepared with enough financial depth and were quickly faced with an inability to pay our bills or pay our employees. However, we had built an adaptable and collaborative culture and trust. Our leadership team knew there would be no way to survive on our own. So, we enlisted the support of our employees—including union employees—to support a 40% decrease in wages. And to increase trust we promised them we would repay every dollar they missed in wages plus interest as soon as we were able. We issued IOUs every week to them. As soon as we could, we paid them all back with interest. They became an enthusiastic part of the solution. We went to our vendors and asked them to support our solution by accepting preferred stock in exchange for their accounts payable balance. We promised to buy back a portion of that preferred stock, with interest, on each of our future purchases from them. And we repurchased with interest every dollar we owed.
Being transparent, enlisting them as part of the solution, and doing exactly what we said we would do built trust and support. Without that we would not have survived. That trust and support continued for many years after.
Another example of a major adversity was the fire four years ago. It destroyed 100% of our molding equipment, sand distribution, mold handling, and surrounding infrastructure. We were down. How did the above five traits apply?
- We had a plan and we had relationships built on trust in the industry that allowed us to quickly identify key partners who would support production until we were back to full operation. We had both the insurance and the financial depth to be able to fund a first-class response over what would be an almost 6-month disruption.
- We had versatile employees who could immediately move their normal day-to-day to other tasks and take on post-fire challenges full-time. An example was Eric Nelson, who moved from managing operations and technology to spending 100% of his time on the rebuilding. His talents and ability to focus on just one task allowed us to get back to molding in just five weeks.
- Collaborative: The leadership team came together with a plan for recovery with no disagreement. The fire occurred on a Friday, and by Monday we were already moving forward full force with customer, community, and employee communications to assure them everything was being managed in their best interests.
- Trustworthy: We had already built trust that we would do what we said and that we would not let short-term dollars get in the way of doing what was right. We continued this by assuring our employees still had the opportunity to receive their paychecks—in some cases paying them to volunteer in the community. We assured our customers that we would pay the extra money to secure their parts from other foundries including rerigging tooling and expedited and direct route freight for both cores and castings. They followed our plan because they trusted us.
- We were anchored to a purpose that drew people to the challenge in several ways. That very weekend and without any knowledge of how we would do it, we picked a date of five weeks out to be pouring iron. We had no clue and others were telling us it would be impossible. We needed to purchase brand-new, custom-built sand distribution equipment and we had no molding machines—not to mention all the wiring, roof, and other infrastructure. But in picking that date and directing everyone toward it, they had a purpose.
All the vendors rallied around that date as well. It gave both a sense of the impossible, as well as the pride in accomplishing the impossible. That date gave everyone a common goal.
When there were setbacks—such as the Saturday it rained in through the new roof-in-process and flooded the plant—we had employees who heard about it and came pouring into the plant to help with cleanup. That would have been demoralizing if they hadn’t been working as a common group toward a common and engaging purpose. But we had the five week goal and we hit that five-week goal through incredible creativity, collaboration, and engagement.
It was nothing short of a miracle.
TAKEAWAY #3 – To be resilient, you must develop your plan and your culture before adversity occurs in order to draw on it during the adversity.