The Resilience Dividend: Being Strong in a World Where Things Go Wrong

Judith Rodin

384 pages, PublicAffairs, 2014

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Building resilience creates two aspects of benefits: it enables individuals, communities, and organizations to better withstand a disruption more effectively, and it enables them to improve their current systems and situations. But it also enables them to build new relationships, take on new endeavors and initiatives, and reach out for new opportunities, ones that may never have been imagined before. This is the resilience dividend.

We can see how resilience pays dividends in many ways and situations—for example, the difference between how well two large retail stores fared during and after Superstorm Sandy. Fairway, a supermarket, and Ikea, the household goods supplier, occupy large buildings in the Red Hook section of Brooklyn and are situated within a stone’s throw of the bay and one another. The Ikea store, which opened in 2008, was built to be resilient. It was constructed on pilings, with a ground floor garage and the show floors and inventory on the upper floors; the building also has an emergency generator. When the storm hit, the Ikea building was not unaffected. Its elevators ceased to function when city power went out, some of its outside benches were torn away, and the parking lot was awash with floodwater and debris. But the store recovered quickly and reopened for business after the storm, and soon after it became headquarters for FEMA representatives as well as a neighborhood hub for the distribution of food, clothing, and other supplies for the thousands of neighborhood residents affected by the flooding.

Fairway, however, did business in a nineteenth-century warehouse building, which was seriously flooded in the storm. Fairway had to close its doors during the storm and did not reopen. It finally had to gut the building, renovate, and restock its entire inventory—a process that took four months. Fairway, a nearly $1 billion company, was able to survive the loss, although a smaller operation might well have failed. However, the hit was significant to the company as well as to the neighborhood, where it is the only full-service grocery store. Fairway had not made itself more resilient, especially necessary because it was in an old building.

Ikea, however, reaped the resilience dividend: its business was only briefly disrupted by the storm and it took advantage of a new opportunity—it strengthened its neighborhood connections by taking on a new and important role in the relief efforts. It can be difficult for a chain retailer to integrate itself into a community because ownership is distant, employees may not live in the area, and the company will have protocols for the way it engages with community activities. Ikea came into a different and improved relationship with its community, largely because of its resilience-building efforts. By contrast, Fairway lost business and lost its connection with the neighborhood during a critical time. (A telling statistic: 25 percent of businesses do not reopen at all after a major disaster.)

Resilience can also pay a great dividend in noncrisis situations—that is, when we are living in the foreloop. It can, for example, create a competitive advantage for a company or a city. This is what happened in Pune, India, a city that has made a considerable investment in resilience building in the past several years. The city is highly aware of the chronic stresses and vulnerabilities that can disrupt the operations of large companies that do business in India, including interruptions to basic services such as electric power and transportation, as well as an unreliable supply of educated, committed workers. Pune has taken many actions to build its resilience, including improvements to its transportation and utility systems and the integration of government and citizen groups—and not as a direct result of an acute crisis or disaster. Its degree of social cohesion is high.

Pune realized the dividend on this investment in resilience when Deutsche Bank chose to locate a large operations center there rather than in any of the several other Indian cities it had considered. The bank’s leaders could clearly see that it would benefit from Pune’s approach to resilience building. Disruptions were less likely to occur and, if they did, would be less likely to lead to dysfunction and difficult recovery. For Pune, the resilience dividend manifests in the form of an increase in jobs, greater opportunities for partnerships, a boost to its international reputation, and an enhanced sense of place—as a city that is attractive to sophisticated, world-class business organizations.

The resilience dividend can bring benefits that accrue to multiple groups within a system—just as Ikea’s dividend was shared with the neighborhood—and can result in wonderfully unexpected results. The global brewing and beverage company SABMiller, for example, realized a resilience dividend for itself, the people of a community where it was located, and the local ecosystem, as well.

Water is essential to SABMiller’s operations, and if supply is interrupted or the cost of supply varies, it can seriously affect its business. In Bogota, Colombia, SABMiller’s brewery purchases water from a local utility and found that the cost of water was rising precipitously. What was happening? SABMiller discovered that the utility’s cost of water treatment was going up because the amount of sediment in its river source was increasing as the result of the actions of upstream dairy farmers who were clearing land so their cows could graze. The process disrupted the river banks and freed soil, which traveled downstream. The situation could easily have led to a crisis—pressure on the utility and the potential loss of a major local business for Bogota.

SABMiller joined with the water utility and the Nature Conservancy to support and underwrite the dairy farmers in adopting new practices—specifically purchasing higher-producing cows, keeping smaller herds, and not disturbing vegetation on the riverbanks—in return for the farmers’ commitment to preserve their natural areas for the long term. Through this investment in watershed protection, the water utility saved $4 million a year. SABMiller saved money on water purchase. The dairy farmers developed more efficient farms. The ecology of the river system was improved.

The potential for achieving a resilience dividend should be an important factor in the plans and investments we consider in the foreloop. Ideally, any action we take to build resilience will do more than just reduce a vulnerability or mitigate a threat—it will also bring benefit to multiple groups in the form of economic, social, and infrastructure gains. Investment in the Metro system in Medellin helped reduce violence, created new economic opportunities, increased social cohesion, and greatly enhanced the city’s sense of itself as a model of resilience building for Latin America and beyond. The city has built its resilience and is now reaping the dividends.

The resilience dividend not only enables people and communities to rebound faster from disasters or deal with stresses; it spurs economic development, job creation, environmental sustainability, and social cohesion. It brings benefit to people, organizations, and communities when things are going right as well as when they go wrong.

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Although some disruption can create positive change, how much unintended disruption do we need to add to our knowledge and build our resilience? Much less than we now live with.

What’s more, intentional disruption—the kind that does not create crisis or disaster and that I am advocating for—is not a smooth or easy path. There will be plenty of struggle and anxiety as we deliberately take on the thorny challenges of new endeavors. Just ask the executives and engineers at BMW, who set themselves the challenge of developing—in just thirty-eight months—a super-lightweight, electric-powered vehicle that would meet social, political, and regulatory demands and would act as a standard for a whole new class of vehicles. It was a deliberate disruption taken in advance of the crisis that is surely coming as the demand for cars skyrockets in developing countries and the pressures on reducing emissions increase with equal urgency. According to the leader of the project, Carsten Breitfeld, there were “nights when we went to bed not sure how to go forward.”

Or ask Jeff Williams, manager of corporate environmental initiatives for Entergy, the big utility, about the process the company engaged in to develop a way to help ensure the economic viability of the communities the company serves along the Gulf Coast. To understand the vulnerabilities, risks, and assets of the communities they served throughout the region, Entergy partnered with America’s Wetland Foundation to fund and execute a comprehensive study and analysis of some seventy-seven counties and eight hundred zip codes. They found that the region could, in the long-term, face losses of 2–3 percent of the area’s $634 billion GDP from wind, sea-level rise, and storm surge alone, but that a $50 billion upfront investment in coastal infrastructure improvements of both the hard and soft variety—between now and 2050—could avert future losses of up to $135 billion. Although the necessary initiatives would entail disruption, it would be deliberate, it would be known, and it would result in a resilience dividend: new opportunities and benefits.

They took the information to communities throughout four states, hosting Blue Ribbon Resilient Communities forums that were open to local leaders, community representatives, and concerned citizens. “All of the conversations we had with our communities,” Williams says, “began by talking about shared values—enhanced prosperity, safety, quality of life.” Even so, he says, it was a “tough dialogue,” because habits would have to change and livelihoods would be affected.

As a result of the panels, each of the eleven communities that participated developed its own set of values and prioritized solutions for the threats they faced, while the Wetlands Foundation released a summary report outlining five recommendations for building resilience along the Gulf Coast.42 Developing the report, conducting the panels, and holding conversations with stakeholders across the region was a process of two years. “The hardest thing in the world,” Williams concludes, “is to be proactive.”

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There is no ultimate or end state of resilience. But, by working together to build resilience to the greatest degree possible, we can reduce our reliance on crisis as a driver of change and, instead, deliberately take the future into our own hands—for the well-being of our families, our communities, our cities, and, indeed, the planet we all share.

Reprinted from The Resilience Dividend: Being Strong in a World Where Things Go Wrong by Judith Rodin, with permission from PublicAffairs (http://www.publicaffairsbooks.com/) in 2014.Copyright © PublicAffairs. All rights reserved.

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