Developing resilience to navigate the headwind

The energy crisis is already dire and could get worse threatening to derail the net-zero transition. The war in Ukraine. The prices have gone through the roof. China, a key supplier and customer, is wrestling with its own economic problems. The effects of climate change are pronounced across the world. Semiconductor shortages, technological shortfalls, labour shortages.

How are companies responding to these crises and disruptions? Executives have reacted to each disruption by fighting fires, but this approach is not sustainable in the context of continuous disruptions. Nowadays resilience is an essential condition.

Some think of resilience as the ability to recover quickly, but it is more than that. Resilience is the ability to deal with adversities and to continuously adapt and accelerate growth. Truly resilient organizations bounce back better than before and go on to thrive despite a hostile environment.

Faced with overlapping disruptions and complex situations, executives must decide where to concentrate their forces. To tackle this context there are three key aspects to consider: capabilities, outlook and adjustment.

Capabilities – Do companies have the right capabilities and are they acting on all levers to respond adequately to the challenges? With severe challenges pressing, companies may have to address immediate gaps in their profiles. Before jumping into action mode, companies should take a step back and consider an initial capabilities assessment. How prepared is the company to resist repeated shocks and disruptions? What short-term growth opportunities are within reach, and what will it take to capture them? What changes will enable the company to make that crucial turn to accelerate into new opportunities? The assessment will discover where investment in capabilities is needed and allow defining the actions that will close the gaps.

Outlook – Can senior leaders anticipate what is going to happen next? As companies get through the storms of today, they must also anticipate and prepare for events to come. To anticipate and respond to crises and opportunities, scenario analysis should be developed and stress-tested in analytics-based simulations and connected to key indicators. This process should be revisited regularly, and assumptions and scenarios adjusted to the changing environment. This will ensure that appropriate mitigation actions will be taken on a regular basis.

Adjustment – Are companies able to adapt fast to a new situation? The outlook may help a company anticipate potential future outcomes through simulation and early-warning indicators, however, the resilient organization is flexible, able not only to react but capable also of adapting to new situations and able to capture growth opportunities under adverse conditions.

To confront the toughest times, leaders must possess a strong, resilient mindset, act as role models, communicate an entrepreneurial spirit, encourage free thinking across an agile organization and have an impact on the following aspects:

• Business operating model. The operating model is set up in an agile and flexible way, to facilitate collaboration across teams. Decision-making and escalation processes are fast, roles are clear, and decisions are effectively executed once made.
• Mindset. A strong sense of ownership pervades the organization. Curiosity and humility prevail; learning and adaptation are constant. Empowerment and decentralization are encouraged, with only the most strategic decisions going to the senior leadership team.
• Workforce & skill set planning. To execute new, adaptive strategies, companies have to ensure resources with the right skill set. Find the best people with the right skill sets and give them the support they need to cope with present and future challenges.
• Investment decisions. Resilient organizations can make investment decisions and reallocate capital quickly, based on changing scenarios.

The resilient companies, beyond operating under “business as usual” scenarios, show their confidence in crises and disruptions, using foresight to shift gears fast and accelerate into new opportunities through adaptation. The enabling mechanisms are their agile organization design and decision-making structure with clearly defined roles and responsibilities. Everyone knows what to do when storms come, and companies can make the kind of turn that strengthens their growth trajectory for the coming years.