Institute For The Future

JetBlue - A Not 'Resilient Enterprise'

The recent JetBlue meltdown reminded me of some of the key lessons from a fascinating book by MIT Professor Yossi Sheffi, that I've been reading on and off to satisfy a thought strand I've blogged about here regarding the relationship between lightweight and traditional heavy infrastructure - The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage.

 

As Sheffi writes in a synoposis of the book at Sloan Management Review (subscription required):

 

Many companies leave risk management and business continuity to security professionals, business continuity planners or insurance professionals. However, the authors argue, building a resilient enterprise should be a strategic initiative that changes the way a company operates and increases its competitiveness. Reducing vulnerability means both reducing the likelihood of a disruption and increasing resilience. Resilience, in turn, can be achieved by either creating redundancy or increasing flexibility. Redundancy is the familiar concept of keeping some resources in reserve to be used in case of a disruption. The most common forms of redundancy are safety stock, the deliberate use of multiple suppliers even when the secondary suppliers have higher costs, and deliberately low capacity utilization rates. Although necessary to some degree, redundancy represents pure cost with no return except in the eventuality of disruption. The authors contend that significantly more leverage, not to mention operational advantages, can be achieved by making supply chains flexible. Flexibility requires building in organic capabilities that can sense threats and respond to them quickly.

 

JetBlue didn't sense those threats, and didn't react to them quickly.

COMMENT:Bob TevisEMAIL: [email protected]: 206.106.168.10URL: "