Establishing the Resilience Strategy for Better Transformation

During the COVID-19 crisis, resilience rose to the top of every organisation’s strategic agenda. Many business leaders have indicated a desire to extract lessons to increase preparedness for future crises in today uncertainty world.

Research by Boston Consulting Group indicates that resilience, although less emphasised in stable periods, creates significant value and does so well beyond times of crisis. Nearly two-thirds of long-run outperformers do better than peers in response to shocks. Interestingly based from the same research, the evidence indicates that roughly half of organisations transformations fail to improve resilience in response to future crises.

Crises often trigger or accelerate the need to transform because of the immediate pressure on performance. Crisis-driven transformations often aim to reduce performance pressure by increasing cost and asset efficiency. But what is their impact on resilience and long-term performance? And how can organisations transform for not only targeting efficiency but also achieving resilience?

Figure 1: Organisational Resilience Drivers by Gartner

Gartner believes that resilience struggles with the complexity and unpredictability that digital business represents, allowing the organisation to return to stability without slowing down its operations. As shown in figure 1, resilience can be driven by internal or external factors.

Digital resilience is critical for new normal

The Covid19 outbreak has prompted many organisations to gradually shift their focus from business continuity to cost optimisation. As the economy faces a slowdown that was forced by a series of lockdowns and slow recovery due to uncertainty, organisations will have to be adaptive and digitally resilient to face more uncertainty before global recovery.

While every transformation has their own importance, establishing digital resilience strategy is considered critical and mandatory for the new normal. Organisations that are looking to establish resilience strategy should establish one with an opportunity and innovation mindset.

Defensive, cost-cutting strategies might provide short-term benefits, but they do not promote long-term resilience. Organisational transformation must boost the capacity for innovation and reinvention in order to establish resilience strategy especially in the recovery stage of a crisis.

Imagination comes before innovation. Transformations that prioritise growth are those that increase the organisational ability to think logically, break existing mental models, and create new ideas fit for new environments. Strategy that pushes organisations to compete on imagination will be best positioned to thrive in altered circumstances after the next crisis.

Digital transformations, when executed correctly with the right strategy guided through Digital EA, can improve resilience by increasing operational flexibility and positioning the organisation to capture new growth opportunities. Operational flexibility and adaptivity are both critical capabilities in improving an organisation’s future recovery speeds. Some asset-light organisations take this approach even further by organising in massive digital ecosystems, effectively reducing asset intensity, pooling resources, spreading risk, and accelerating the scaling of new models and offerings.

It is important to establish resilience strategy in good times as well. To capture the long-term competitive benefit of resilience in a very dynamic business environment, organisations must transform with resilience in mind in stable times too.

Future crises are inevitable. Organisations that recognise resilience as a long-term strategic imperative and make it a pillar of corporate change will be best positioned to overcome future crises.

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