Is your business resilient? The answer has nothing to do with your size, revenue, or whether this quarter or year is going well for you. Think of a memory foam mattress: rest a weight on the mattress, and the foam will rebound once you remove the weight – no matter how heavy. Resilience doesn’t mean resistance to change or downturn, but rather your ability to recover.
The importance of planning for resilience
We live in a time where the conditions of conducting business are unpredictable. Speaking generally, your business is far more likely to suffer a temporary hit to revenue right now than in more stable times.
Changing economic and political circumstances are distracting businesses from taking a more sustainable and healthy view of the future, and keeping them tactically focused on short term cash and operational challenges. Even if we get in the headspace to think ahead, few of us know what will happen post-COVID.
That begs the question: what is the role of strategy making when it cannot handle such exceptions in history?
We must place more importance on resilience through any time of turmoil. The answer is to move our strategy to one that gives us options and allows a quicker response to any negative, rather than building a strategy which can be completely derailed by one disaster.
Are your goals and measures right for this business climate?
Your existing management principles and business planning assumptions may be preventing you from building resilience. Let’s take a few examples:
Outdated Measures of Shareholder Value
Organisations are designed to drive higher stock appraisals and maximise shareholder value. It is occasional to see which avenues of the business are measured for resilience, it is only visible in audits, and those are only financial loopholes.
Inflexible Organisational Goals
As discussed before, instabilities over the brief history of time have bound organisational goals to be short term, quick and concise. In contrast, flexible business plans do have the definition of waiving short term gains in favours of a better future.
Narrowly Defined Market
Businesses get comfortable operating in a familiar niche, which can quickly become irrelevant in times of turmoil. Ships are safest at the harbour, but they are of no use when the harbour is blown up! Go-to-market strategies have to allow for adjacency moves or even a fresh, blue ocean play if your existing GTM is under threat.
To conclude, today’s business world needs a systemic change in vision, and it cannot be achieved by one-off conferences to rethink business. As uncertainty, complexity, parallel operational difficulties increase the need for new approaches, the opposite of contemporary management principles rises.
Furthermore, turning to resilient processes is not only working on identified risks but also devising plans for relieving them. On the contrary, uncertainties and factors of failure need to be side-lined, as these methods of business evaluation are archaic and need to be re-engineered.
Three points for a resilient leader to consider
If you are responsible for leading your organisation through a crisis, consider the following:
- Compartmentalise to avoid sinking: enable individual departments and teams to make decisions and function independently where possible, thus making it easier for these smaller chunks to be rectified in the face of a problem.
- Take more risks: Bear markets are ruled by conservative moves and thinking: do the opposite. As your competitors run on preconceived notions of caution, throw that caution to the wind. The fewer risks you have the confidence to take, the more prone you will be to failure in a time like this.
- Embrace change – just be prepared for what comes after: Whatever is supposed to happen, will happen. As other leaders fight for some breathing room in this chaos, set your mind to what comes after. Understanding the fact that things will go wrong, and we need to be prepared for the worst is one of the critical steps to build resilience.
Benefits of a resilient business
A resilient business has the ability to absorb shockwaves and hold steady in the face of difficulty. By predicting and absorbing difficulties, it becomes easier for businesses to recover faster – which puts them on a faster growth curve than competitors who are less resilient.
Resilient businesses bounce back quickly, in the short term; they win market share, in the medium-term – and they are worth more, in the long term.
COVID-19 may not be the last significant pandemic we see in our lives. We will almost certainly see multiple recessions and downturns in the coming years and decades. Resilient companies will find themselves in anticipation of such further difficulties.
Path to Resilience
COVID-19 is more of a warning sign than a pandemic for global businesses; it has created the urgent need for strategists to take out their drawing boards and understand how they can prevent such systemic changes in the future.
As we dive headfirst into the issues of the future, here are three quick tips on how to make your business more resilient:
- Know where to seek improvements rather than striving for everything back to normal, businesses should understand that this a brilliant chance to embrace the diversity of ideas and functional streams.
- In continuation of the previous point, companies should know that this pandemic presents itself with a brilliant opportunity to transform the way mission criticality of the goals is looked at.
- It is a brilliant time to eliminate age-old benchmarks of performance and to factor in essential building blocks which make businesses more sustainable, diverse, and sufficiently more resilient.
RK is the Founder & CEO of Resonate.