Why senior leaders should focus on organizational, technological and operational resilience.
In today’s world, organizations cannot afford to miss the mark on building business resilience—the proactive capacity to absorb stress, recover critical functionality and thrive in altered circumstances. Companies that are resilient can not only withstand major disruptions (i.e. COVID-19 pandemic, economic fluctuations, etc) but create value for their organization during such times. In fact, high-resilience firms have nearly double the survival rate of low-resilience organizations.
But what types of business resilience are most important? What strategies are organizations using to build and strengthen their resilience? How does that resilience affect their ability to create value and future-proof themselves against the next crisis or disruption?
In early 2023, Dataminr commissioned Economist Impact to examine these questions via a survey of 600 global senior business leaders from six key industries: energy and utilities, financial services, manufacturing, pharmaceuticals, retail and technology.
In the culminating report, Building business value: Resilience in a rapidly evolving global environment, Economist Impact outlines the three pillars that were found to be foundational to building business resilience: organizational, technological and operational. Here, we take a look at what each means and why organizations have prioritized them.
No. 1: Organizational resilience
Just under half of the respondents ranked organizational resilience—maintaining a company culture that focuses on inclusive governance structures, open communication and internal initiatives to make employees feel connected and engaged—as the type of resilience their business most highly prioritized.
This was true across all industries, especially within financial services and energy and utilities.
Prioritizing organizational resilience aligns with businesses’ increased focus on employee communication and maintaining company culture during, and in the wake of, COVID-19. As companies pivoted to remote work—which for many was done in the span of 24 to 72 hours—leaders quickly recognized that keeping employees as calm and informed as possible required clear, frequent and easily accessible communication.
The result: Employees openly shared what mattered to them in the workplace. Their voice gave rise to new and more flexible policies that helped keep employees engaged and productive during and beyond the pandemic.
The importance of organizational resilience should not be underestimated as company culture is critical to determining whether or not employees at all levels can help their organization successfully navigate a crisis or disruption.
No. 2: Technological resilience
Organizations ranked technological resilience—the safeguarding of a company’s data, complying with data localization requirements and protecting the firm’s information technology/operational technology [IT/OT] systems and digital assets—nearly as important as organizational resilience.
This is not an unexpected finding. In today’s hyperconnected world, digital assets are everything. The data that a business owns—and by extension its ability to protect and monetize that data—is what enables organizations to grow and create value. As such, protecting that data is paramount, as evidenced by the survey findings. Respondents said that data protection policies and procedures were among their most business-critical strategies.
Technological resilience was found to be particularly valued in the retail and energy industries. In fact, 56% of energy and utilities industry respondents said their organizations’ first priority is building technological resilience, higher than any other industry. That’s no surprise given that the energy industry is one of the most targeted by cyber criminals.
Technological resilience is also a key requirement for digitalization—an important strategy for many organizations—and for ensuring business continuity and operations. The survey found that respondents are strengthening their technological resilience with risk assessment and threat modeling, business continuity and disaster recovery plans, and identification of physical security risks that impact digital assets.
No. 3: Operational resilience
Across industries, operational resilience—ensuring production capacity, supply chains and distribution networks are protected and adaptable to changing circumstances—ranked as the third highest priority for respondent leaders.
Pandemic lockdowns and border closures had unprecedented impacts on supply chains, highlighting operational weaknesses for organizations across the world. Suddenly, established supply chains found themselves without the resources to operate: workers couldn’t physically get to factories, mandates closed borders, and transportation was slowed or halted. It was clear that most supply chains had become very brittle.
Leaders in the Asia-Pacific region remain particularly concerned with supply chain shocks, as well as respondents in retail and manufacturing. Even as the pandemic subsided, these regions and industries have continued to experience the negative impacts of volatile supply chains.
Survey findings show that, in response to supply chain failures, organizations have diversified suppliers, adopted near-shoring so production is physically closer to the customer base and implemented technology to increase automation efficiency and real-time management of logistics.
Other types of business resilience
Although the respondents prioritized three key types of business resilience, it’s important to note that four other types of business resilience remain critical: financial, reputational, business model and physical. Depending on industry and geography, these types of resilience will be of varying importance to an organization:
- Financial resilience: Ensuring a strong balance sheet, liquidity and the ability to balance short- and longer-term financial goals
- Reputational resilience: Strong alignment between an organization’s values and its words and actions
- Business model resilience: Adapting the organization’s business model to material changes in demand, competitors, technology and regulations
- Physical resilience/security: Safeguarding an organization’s people and protecting its facilities, locations and other physical assets
And, as we learned from those who both survived and thrived during the COVID-19 pandemic—and other recent unpredictable shocks like geopolitical conflicts and economic uncertainty—highly resilient organizations aren’t just prepared for major disruptions and crises, they seek them out and plan for them via:
- Anticipation: Looking for emerging risks and preparing for disruption
- Re-imagination: The ability to experiment, be agile, develop operational flexibility and shift their portfolio mix and innovate against new opportunities
What’s most important is that organizations prioritize building and strengthening their overall business resilience, while simultaneously creating business value. Those that do will emerge as the winners of any future disruption.
To learn more about how and why organizations are prioritizing business resilience—and the strategies they’re using to build and strengthen it—download the Economist Impact report, Building business value: Resilience in a rapidly evolving global environment.