Surviving the uncertainty rollercoaster. Organisational Resilience in business strategy.
Threats to Business Survival
“Life is a Rollercoaster” sang Ronan Keating. Multiple twisting loops, vertical drops, high speeds, and massive G-forces are characteristics of the theme park attraction. Rides that promise to challenge your mind and body. The same effects are being experienced in businesses today. Since Brexit became official in January 2020, companies are continually cycling through unforeseen challenges impacting their supply chains, people, and performance.
The global pandemic and three national lockdowns disrupted supply chains and changed working practices. Russia invaded Ukraine and then restricted the flow of gas to Europe resulting in a surge in energy markets. This summer, extreme weather events ranging from floods in Pakistan to heatwaves and drought in Europe lead to loss of life and food shortages. As winter approaches higher supply costs and lower customer demand are threatening business viability. A cost-of-living crisis, rising interest rates and recession are all forecast. What can businesses do to ensure their survival now and into the future?
Resilience Trumps Adversity
According to the Australian Home Office, how an organisation responds to adversity depends on its resilience objective. Organisations can Decline, Survive, Bounce Back or Bounce Forward.
BSI who developed the Organisational Resilience Standard, BS 65000, defines resilience as, “the ability of an organisation to anticipate, prepare for, respond, and adapt to incremental change and sudden disruptions in order to survive and prosper. A resilient organisation is one that not merely survives over the long term but also thrives – ready for the future”. The business benefits of implementing organisational resilience go beyond surviving disasters and disruptive events to include enhanced reputation, competitiveness, and profitability.
Long-term Thinking and Planning
Organisational Resilience requires long-term horizon scanning and planning. In 2015, BSI commissioned the Economist Intelligence Unit (EIU) to conduct a worldwide survey on how to build an enduring enterprise. Over four hundred business executives were interviewed and 88% said that organisational resilience was a priority.
The survey identified the biggest sources of risk as macroeconomic uncertainty and events, disruptive competitors in the market, reputational risks, and threats to information security. In contrast, the risks of disease and epidemics, environmental changes and natural disasters, and political instability and civil unrest were lower priorities.
Coincidentally, 2015 was the year that Bill Gates gave a TED Talk on our readiness for the next pandemic and the year that the Paris Agreement was signed to limit the rise in mean global temperature. Many free sources of horizon scanning insights are available to help with long-term strategy and planning such as management consultancy global mega-trends and corporate company scenario modelling reports. As William Blake said, “Hindsight is a wonderful thing, but foresight is better.”
Surviving the Pandemic
In 2020, I was working as the Chief Marketing Officer at a professional services firm that provided critical infrastructure and global supply chain businesses with a license to operate. Our proposition spanned certification, assurance services, and performance optimisation across seventy-eight countries, including China. As the pandemic broke, we prioritised three things: keeping our people safe, supporting our customers, and protecting the company.
Across the globe, office-based colleagues started working from home, field workers used digital technology and tools to conduct remote inspections, and cashflow was secured with one click from inspection to invoice. Perhaps nothing too remarkable, apart from the fact that none of this would have been possible four years earlier.
In 2016, a new strategy was created to modernise the business. Founded in 1760, at the start of the first industrial revolution, the company needed to adapt to the challenges of Industry 4.0. The process focused on identifying and solving our core challenges and derived three objectives: strengthening our current business, shaping our culture, and investing for our future. Our core challenges were to become market-led and customer-focused, technology-enabled, and agile, have empowered, collaborative and innovative people who lived our values and to take a proactive approach to market access and influence.
Over the next four years, the business implemented its “digital transformation” through:
- Transitioning to a behavioural-led safety culture
- Refreshing the brand proposition and deepening relationships and partnerships
- Digitising processes and services with AI, sensors, and predictive modelling
- Acquiring businesses and digital start-ups for product and service innovation
- Improving sales effectiveness
- Establishing customer insight and customer experience capability
- Deploying SAP ByDesign for all enterprise resource planning (ERP) and billing
- Creating culture change and enhancing employee engagement
- Developing leadership capabilities
- Embedding the sustainability (ESG) strategy
Organisational resilience was never mentioned, yet in hindsight, that is what we achieved. The scope of the change embraced people, processes, and systems and the core challenges provided the foresight to our future risks. The strategy and business transformation delivered the four Rs of organisational resilience: controls to increase Readiness, flexibility to increase Responsiveness, optimisation to improve Recovery and innovation to increase Regeneration.
Managing Tensions
The change was not easy. Tough decisions had to be made from prioritising resource allocation to the company’s future size and shape. Today the business is smaller, focused on a single sector and delivering high performance.
Opinions differed at every level. Some long-serving colleagues believed that too much was being changed and that we should maintain the status quo, whilst new hires believed that we were not changing fast enough and needed to bring in fresh thinking. This dynamic is reflected in the Strategic Tensions Model developed by BSI and Cranfield School of Management. Their research found that organisational resilience differs on two core dimensions, mindset (defensive vs progressive) and design (consistency vs flexibility), leading to four distinct strategies: Preventative Control, Mindful Action, Performance Optimisation and Adaptive Innovation.
Resilience Reimagined: A practical guide for organisations explains that an organisation doesn’t have to select just one of the four specific strategies and that organisations can benefit from adapting to each: both/and rather than either/or.
Leadership is Key
Designing a business strategy that embraces organisational resilience is imperative for businesses to survive and thrive. Resilience Reimagined describes the maturity journey progressing through five phases: Ad Hoc, Reactive, Prescriptive, Adaptive and Generative.
Although the majority of the EIU survey respondents said that organisational resilience was important, only 29% had embedded it within their organisation, with 44% planning to do so in the next three years. Lack of leadership commitment and a lack of skills and relevant knowledge were cited as among the biggest obstacles to making companies more resilient.
Embedding organisational resilience into strategy requires the commitment of the executive leadership team and the support of the Board, who may be more familiar with the risk register. Resilience First, a London-based global business network, launched its Non-Executive Director’s Guide to Organisational Resilience earlier this year. Their advice is that “whilst the Board should maintain a risk register, it is more important to question the ability of the organisation to respond to interconnected and dynamic threats which do not fit the traditional model”. The Guide lists twelve practical steps that can be applied across five principles: People, Place, Process, Performance and Preparation.
The principles form the framework of the Resilience First Self-Assessment Tool developed in partnership with Arup and EY, which provides a helpful first step to inform leaders of their current maturity. “Self-assessment tools provide a baseline for organisations to understand their current organisational resilience status, the ability to identify areas of strength and for improvements, the ability to track organisational resilience on an annual basis and benchmark position against industry peers”, say Resilience First.
Businesses wishing to further evidence best practice can be certified for BS 65000:2022, now a code of practice rather than a guide and contributing to several of the UN Sustainable Development Goals.
Surviving and thriving on the rollercoaster? Integrating organisational resilience into business strategy is the first step. Start now or you might wish that you had.
