We don’t have to think too hard to compile a list of companies that have failed in recent weeks and months.
Simon Perry, the partner in charge of business resilience at PwC, tells us: “It’s vital that organisations are equipped to identify and manage risk, and deal with sudden shocks, disruptions and crises, but that, as most leaders are aware, isn’t enough to make an organisation resilient. True enterprise resilience is about having the ability and agility to survive, proactively adapt and evolve over a sustained period of time, not just in response to a crisis.”
Business leaders are under constant pressure to cut costs while enhancing their long-term prospects of survival. The drivers for agility can sometimes be at odds with the requirement for robust protection mechanisms and, for many, this results in poorly considered investments in resilience. To meet these challenges, the processes that provide the bedrock of operational resilience need to be better integrated, intelligent and efficient, and combined with a focus on the strategic factors that contribute towards greater resilience.
Operational resilience functions, including risk management, business continuity, crisis management, IT resilience and strategies for managing cyber threats, are never likely to be less important than they are today. However, in our ever-changing world, winners and losers are drawn from those able to see and act upon changing contexts and opportunities, and those who continue doing the same old things. Winners see opportunity where losers only see unpalatable threats.
A mature business will generally mix operational resilience, which aims to address shorter-term risks and impacts, with more strategic resilience factors, which draw on the things that define the business and can guide its decision-making. Few, however, have the strategic elements nailed down cohesively and consistently in every department, and at every level of their organisation. Creating a code of values, for example, is useless if only half the workforce identifies with it.
I think the level of external threats has increased with every passing decade. And as the pace of change has increased, organisations like ours have to be a lot more flexible than we might have been in the past. Shikha Sharma, managing director and chief executive, Axis Bank Limited, India (PwC, 16th Annual Global CEO Survey)
Unsurprisingly, perhaps, leadership plays a crucial role in building resilience. Leaders committed to building more resilient organisations typically demonstrate authenticity, build trust that enhances social capital and maintain an awareness of an organisation’s current and future relevance, and innovate accordingly. These leaders have a deep understanding of their organisation and the networks and circumstances upon which they rely. They ensure that understanding is embedded within both everyday and strategic decision-making.
Think of the smartphone manufacturers that took the lead with touch-screen technology, apps and big, bold interfaces. They have reaped the benefits at the expense of those who stuck with tried-and-tested formulas until it was too late. Or the areas of the music industry that used changes in the market to grow their profit share while other well-known music retailers fell behind and went into administration.
What enabled these organisations to identify the way forward and adapt? What prevented those businesses from paying the ultimate price? And what does it take to avoid learning lessons about organisational resilience the hard way?
When great leaders talk about making their organisations more resilient, they are talking from a position of understanding their business and the context in which it sits. They’re talking about capability, sustainability and agility. They’re concerned about shared values, disciplined innovation, genuine social capital, the people who work with them and for them, their behaviours, and intelligently integrated risk management.
Many of the qualities that contribute to an organisation’s resilience are harder to visualise than functional processes, but they are not impossible to measure or manage. By gauging the level and impact of the factors that contribute directly to an organisation’s level of resilience, leaders are able to make more informed choices and amend their strategies to leverage advantage.
Enterprise resilience isn’t just about surviving in the present, it’s about having the foresight, capability and agility to adapt and evolve; to identify and take advantage of opportunities as well as address challenges; to thrive as well as survive.
For more information please contact Martin Caddick, director, PwC