What exactly does it mean to be resilient? In physics, it is the ability of an elastic material that will take its original shape after being forcefully deformed. This principle was adapted to psychology and is the mental skill to meet setbacks and change with an inner strength and therefore recover quickly from difficult situations. You as a company leader can actively make an impact with resilient business design in order to be prepared for such crises.
Never let a good crisis go to waste.
Resilient business design: Seize the Crisis as a Momentum for Change
Crises are not usually situations to appreciate but you can learn to deal with them effectively with a resilient business design. Winston Churchill already understood about the opportunities that a crisis brings with. It operates in the extremes, casting a magnifying glass on the inefficient elements of all operations that need improvement. Hence, such a situation always offers the opportunity for self-awareness, to get to know one’s weaknesses just as well as one’s strengths. Turning the data gained from this into action and monitoring regularly is what resilient businesses do right.
It is crucial to conduct a precise assessment, analysis, and root cause analysis and then to create a proactive plan for recovery and optimization. The fact that many companies have understood this can also be seen when looking at the figures from a survey conducted last year regarding the lessons learned from the pandemic: At 59%, almost two-thirds of companies put the expansion of crisis response teams, task forces and scenario analyses for exceptional situations on their agenda as a high priority (source: Future Readiness Index 2020)
This increased focus on risk management aspects are essential and exactly the right step in this situation. However, it would be much more efficient and less risky if these scenarios and task forces were given sufficient attention in advance and a resilient corporate design was considered right from the start.
What does resilient business design do correctly?
We’re going to outline what the main steps of building a resilient business design entail. There is the question however, of how to combine the pursuit of efficiency with increased resilience? The magic word for this is flexibility and a creative approach in order to be able to adapt to every situation anew. To do this, of course, these situations and scenarios must be thoroughly examined beforehand, which then supports efficiency in the event of an actual crisis: The options for action that have been devised are clearly outlined and there is no need to make difficult decisions under high pressure. This sweet spot of flexibly planned options for action is where resilience and efficiency meet.
Four steps for a resilient business design
The following four-step method, created by Dr. Tobias Naujoks, shows you the different tasks that are to be completed by resilient businesses.
- Understanding the dimensions of risk: evaluating expected change on a local, national and global scale → recognizing interdependencies
- Developing scenarios for your industry: assessing key aspects of one’s own industry in risk scenarios and evaluate the results
- Creation of medium-term resilience: developing a plan of action based on the gained insights
- Changing perspectives: considering the opportunities as well as the risks → opening up markets, acting with an eye to the future (source: KPMG)
Another key point is the integration of digital transformation into your operating model and its future-oriented optimization. This means that there are areas of action, particularly in the areas of production, supply chain, marketing and IT. Digitalizing these helps your business to achieve flexibility, for example through cloud-based services, agile supply chains and web presences on suitable channels. In addition, the personnel area must not be ignored when it comes to digitalization – employees should have the option of working in a home office without creating security gaps or communication shortfalls. Cyber security and strong as well as trustworthy leadership are therefore also key topics. Read more about that specific subject in our article How to Master the Digital Transformation Successfully.
Food for thought: How can your company be resilient if the management does not transmit this inner strength? It is worthwhile for leaders to exemplify resilience. Essentially, this involves acting self-responsibly; taking ownership of your own character development, and gaining an awareness of your power over your personal attitude.
Establish an agile supply chain
An important part of creating a resilient business design is supply chain optimization. Global trends have a major influence in this regard. These include demographic change, increased sustainability awareness, or the general shortage of resources. A mere risk assessment based on statistical calculations and empirical values is often not sufficient to absorb supply chain interruptions. For this reason, we present you the 5 factors for resilience in the supply chain, created by KPMG Director Dr. Sylvia Trage:
- Making organizational structures more agile: Agility through alternative plans and early warning systems, regular review of customer expectations
- Decentralizing the setup of supply chains: making individual locations more independent and more capable of innovation, creating (global) options for evasion
- Utilizing structural duplications: Standardize processes, create norms (in infrastructure, technology, production, etc.), bridging gaps by switching to other locations, minimize variants.
- Designing a New Work environment: outside of qualification & motivation, also pay attention to personal qualities of employees: Interdisciplinary, diverse, intercultural teams bring benefits of different perspectives, innovative solution strategies, using group efforts
- Stimulating continuous learning processes: Seize opportunities of constant change, steadily monitor and adapt scenarios, train employees, establish emergency processes for crises → avoiding negative impacts to the market
The 7 Factors of Inner Strength for Leadership in Times of Crisis
How can your company show a resilient business design if the management does not transmit this inner strength? Especially now, but also with a view to the future, it is worthwhile for leaders to exemplify resilience.
Essentially, this involves acting self-responsibly; taking ownership of your own character development; and gaining an awareness of your power over your personal attitude. All of this helps you to master smaller and larger, short- and long-term crises – in brief, to react resiliently to failures, defeats and crises. This is not something that can be learned in the blink of an eye or in passing, but requires an in-depth, continuous engagement with the subject. After all, today, there is no such thing as the one job for life – every day we are asked to be aware of the new requirements that are imposed on us and to ask ourselves whether we have the necessary skills to meet them.
This lifelong learning has become the norm, and it goes without saying that we need to look inward. The future-oriented, self-confident, but critically-thinking mindset is the key to success in resilient business design. For that purpose, we have listed seven different factors, adapted from Micheline Rampe’s work The R-Factor (orig. Der R-Faktor), that help you to build and strengthen this mindset and thus resilience.
- Optimism: Difficulties exist now and will pass. It won’t stay this critical forever, and there are certainly things you can do to bring about positive change.
- Acceptance: It is what it is. Getting bogged down in the supposed hopelessness of a situation doesn’t help. It is better to accept it and try a change of perspective: There is always an upside to the downside.
- Focus on solutions: With acceptance comes openness to new ways of thinking, because there is a solution for everything. Sometimes you just have to look for it a little longer.
- Take initiative: We ought to discover courage and self-efficacy. Only when we take active steps, we can make a difference. Every freedom also costs the courage to grow a little beyond oneself.
- Take responsibility: In the case of crises caused by others as well as those of our own doing, it is not a matter of dwelling on casting blame for a long time, but of taking responsibility. After analyzing the error, we must move quickly in the direction of finding a solution.
- Community orientation: Solidarity makes us strong. Trust in your fellow human beings is an excellent source for sharing experience, strength and gaining new energy and ideas.
- Plan for the future: True to the motto After planning is before planning, we have to think with an eye to the future. Play out visions of upcoming difficult situations and develop strategies, because the next cold winter is sure to come.
It is becoming clear: Not only in your company should constant growth be a priority, but also in your personal development. The one cannot be separated from the other in the long run – professional coaching with an eye to optimization can be a catalyst for this process. Opt for resilient business design today!