Paying Attention to Thresholds

In resilience science, understanding and noticing the thresholds of the system is important, because if you cross a threshold, your system significantly changes.

An organization, ecosystem, or community is said to be resilient when it can absorb disturbances or shocks and still maintain function. For example, when a freshwater catchment ecosystem has a flood surge that brings in salt water, it is resilient if, after the storm surge, the fresh water system still holds sway in its ecology. Freshwater catchment systems support plant and animal life that need fresh water to live.

What Are Ecological Thresholds?

Ecological thresholds are defined as breaking points in ecosystems. At a threshold, there is an abrupt change in an ecosystem quality or property. In our fresh water example, a threshold would be crossed if the salt water encroachment would take over the fresh water system turning it into a salt water catchment ecosystem. The result of crossing this threshold is the loss of resilience of the freshwater ecosystem and the loss of life that thrived in that ecosystem. Life in the post threshold salt water system would change to life that needed salt water to thrive.

Identifying Organizational Thresholds

In living organizations, paying attention to key thresholds becomes an essential business strategy. I believe there are two thresholds that are critical to the ongoing resilience of any organization. The first is the failure to invest to evolve. Change is constant in nature. It is dynamic. Our external environment is also in constant change and dynamic. As businesses we are continually being challenged to evolve. If we don’t pace the movement of our external environment, we become stagnant and invite other organizations in the same business we are in to erode our market share.

The second threshold is when we become too rigid in our beliefs, thinking, or products. When we stop learning and adapting, we fall into the rigidity trap. At that point, the organization begins dying. The threshold is the collapse of the business model that drives the organization. If we are smart and lucky, we can recover from a collapse of a business model if we rapidly reorganize our resources to invent our next iteration. However, letting your business model collapse before you reinvent yourselves is a painful way to stay alive.

When I work with organizations, I pay attention to two thresholds that indicate the adaptive health of an organization is in danger. They are both represented in the emotions, assumptions, and thinking patterns of the leaders in the organization. They fall into two categories: Failure to reinvest and rigidity:

When I am working with organizations and their leaders, I watch for the emotions, their thinking patterns, and their assumptions and worldviews. If the failure to invest or reinvest in their business exists, the organization is putting their future in jeopardy. Because they aren’t continuing to evolve their business, they aren’t prepared for their future.

This threshold is often found in fast-growing start-ups. The entrepreneur will invest in what is known – like increased sales or creating more product, but not invest in strategy or infrastructure like human resources, technology, or more sophisticated financial systems that will aid decision making. If leaders haven’t invested in strategic thinking, hiring the right talent, or infrastructure as the business grows, the business can’t support the increased revenue and growth that is occurring, causing it to lose business and fall back to a smaller size.

In resilience terms, the rapid growth was the disturbance and the business didn’t have the ability to absorb the growth and maintain function. So, its revenue fell back to its previous level of business. In other words, it temporarily crossed a threshold to a bigger business, but it couldn’t sustain itself as a bigger business because of a failure to invest or reinvest in the future. In the business literature, the challenge for small businesses that are growing is called crossing the chasm.

The chasm is the threshold between a small business and a midsize business. As a midsize business with more sales and revenue, they need more infrastructure and discipline to sustain their growth. I notice the thinking pattern, emotions, and assumptions that an organization demonstrates to let me know if they are approaching a threshold that I call “failure to invest”.

The second organizational threshold I pay attention to is rigidity. If there is a rigidity that starts to express itself in an organization, I see an attitude and mindset that needs to be noticed and examined. Rigidity, for me, is a sign that an organization’s business model is about to collapse.

A business model has a set of articulated assumptions of who your customers are, what your value proposition is for your clients, key activities, kind of relationships you have, your distribution channels, strategic partners, cost centers, and revenue streams. When an organization stops evolving, they put themselves in juxtaposition to the ongoing movement of the external environment. When this occurs, they become vulnerable to the collapse of their business model. I have seen organizations who had to redesign all their offerings because of their rigidity about their view of who their clients are. As a result, they missed a generational shift that was occurring in the attitudes of the younger generation of customers.

A collapse of an organization’s business model may not destroy an organization, but it does require a complete reorganization that can cause a lot of disruption and what is left doesn’t resemble what was. It is a threshold that was crossed, and the organizational ecology shifts to something else. The rigidity created a vulnerability in the organization that diminished its resilience!

In my experience, noticing when we fail to invest or become rigid in our thinking are excellent ways to help an organization remain adaptive. A living organization is always in relationship with the external environment. Living systems are always moving never static. However, the people in our organization can choose to resist information or feedback that tells them that they need to invest or adapt. Therefore, paying attention to when you are nearing these two kinds of thresholds in your organization can strengthen your ability to retain your organization’s resilience through triggering adaptive responses that help your living organization to evolve – just like nature.

Dr. Kathleen E. Allen writes a blog on leadership and organizations that describes a new paradigm of leadership that is based in lessons from nature and living systems. She is the author of Leading from the Roots: Nature Inspired Leadership Lessons for Today’s World (available for pre-order on Amazon) and President of Allen and Associates, a consulting firm that specializes in leadership, innovation, and organizational change. You can sign up for her blog on her website: www.kathleenallen.net