a new era of business is emerging - resilience

a new era of business is emerging – resilience

by Mark Lockton Goddard | Jun 12, 2020 | digital finance, digital transformation, embracent news, programme excellence

In our previous articles we discussed how a new ERA of business is emerging, as we need to be more Efficient, Resilient and Agile in the future.

In this article, we discuss the second of those topics – Resilience.

What is Resilience

Firstly, let’s look at what we mean by personal resilience, which we can later apply to business resilience. In this Business Insider article from 2017, Áine Cain argues that resilient people:

Take responsibility

and hold themselves to account

Don’t complain

or blame others for the current situation

Are self-aware

and understand their strength and weaknesses

Accept limits

and adapt well to changing circumstances

Ask for help

and support when needed and where it is useful

Don’t compare

themselves to others

Are good humoured

and keep a sense of fun

Don’t overplan

recognising that the future is uncertain

Practice self-care

and manage their health and energy levels well

In her excellent TED talk, Angela Duckworth discussed the importance of Grit, and how this relates to resilience and success. Her research indicates that people who score highly on her Grit Scale do two things:

Have clear goals

for the long-term, that they stick to

Practice self-control

and don’t lose focus along the way

Whilst these points give a great insight into personal resilience, they do not fully relate to business resilience – even though they might give some food for thought. So, how do we apply this to a business?

The Resilient Business

In this recent report, McKinsey explain how they surveyed more than 1000 publicly traded companies in the last downturn and found that 10 percent fared materially better than the rest – they called them the “Resilients”.

They concluded that these Resilients did 3 things well:

Created financial flexibility

by aggressively reviewing and divesting areas of under-performance, these businesses created financial flexibility in the balance sheet to focus on high performing areas. They created financial headroom and agility to be able to invest wisely.

For example:

Divesting underperforming business or removing low-margin products and services
Reducing fixed overhead costs in favour of variable cost structures e.g. moving to Software As A Service (SAAS) models
Re-financing the business to manage gearing ratios
Changing financial write-down policies to reduce legacy technology investments that remain on the balance sheet

Reduced costs early

they tended to cut unnecessary costs and complexity early, and constantly ensure that the business was “lean and mean”. This created a culture of continuous improvement and also removed any complexity in the business that might slow or restrict agility.

For example:

Creating high efficiency / low cost support functions and shared service centres for Finance, HR, IT
Developing digital platforms that offer a fundamentally lower cost of delivery for core products and services
Removing system and process complexity using automation
Reducing the cost and complexity of legacy systems
Reducing support and maintenance costs where not needed

Invested for growth

by having the financial flexibility and headroom created above, they were able to invest into growth areas early. Even when the overall market was still challenging, they were able to make strategic and opportunistic investments for the future.

For example:

Investing in new products and services
Purchasing or investing in businesses that are in growth areas
Developing Digital platforms and Data Assets that can reshape markets

This is excellent advice, as you would expect from McKinsey, but it tends to be more relevant for very large businesses and, in this case, ignores the people component.

It is necessary to encourage resilience in both structures and people.

It also does not consider how we can use technology to improve business and structural resilience and remove single points of failure in organisation.

Technology Resilience

“Every company is now a technology company” – and this statement, made famous by this 2018 Wall Street journal article, has never been more true.

As we increasingly use technology to automate business processes, interact with customers and suppliers, and market our products and services, we have never been more reliant on technology.

However, this technology that we rely on day-to-day is not always as resilient as we would like it to be. It can often be reliant on a number of single points of failure – either in key technology components, or with manual processes interventions that someone needs to remember to action.

There are a number of ways in which our technology resilience can be improved, without costing a small fortune and taking many years to deploy:

Cloud first approach

hosting or deploying core applications on industry leading cloud environments from Microsoft, Google or Amazon Web Services (AWS)

Resilient Architecture

making sure that the overall architecture of systems, applications and infrastructure is fault-tolerant to sudden changes and designed with resilience and security in mind

Secure by design

making sure that security of information and data assets is considered at every stage of design, build and implementation. Retrospectively reviewing core architecture for any security weaknesses and concerns.

Automated Processes

making sure that when manual interventions are required in critical processes, they are well documented and understood, and automated if possible.

Managing Partner Performance

ensuring that third party products and services are understood and that the Service Level Agreements (SLAs) are clearly described and appropriate

Continuous Learning

creating feedback loops on actual versus predicted technology performance to identify any improvements. Conducting root cause analysis on incidents to continuously improve resilience.

Bringing these three aspects of resilience together, we have created a short practical list of things that we can do to become more resilient.

Our 7 key tips for improving resilience

By looking at both the business and personal components above, there are a number of ways in which we can materially affect resilience:

Set clear business resilience goals

making sure that the goals align with the overall values of the business and stand the test of time

Communicate them well

so that people buy into the journey – including a recognition that there will be challenges along the way

Create headroom

by restructuring the balance sheet, reducing costs and investing wisely for the future with resilient technologies

Agree Priorities and Plans

so that everyone understands how their day-to-day actions align with the overall direction of travel

Build for flexibility and mistakes

at a business, personal and technology level. Reassure people that there will be bumps along the way, and that’s OK.

Manage personal energy and enthusiasm

by allowing time for rest, recovery and fun

Create a support network

of people and partnerships that can help if needed

If you would like to know more about how to improve resilience in your organisation, please contact us for an initial discussion.

At embracent we provide world class technology advice in simple and pragmatic ways to mid-sized businesses across the world. We can help you embrace the opportunities that technology brings in the most cost-effective and sensible ways.

Find out more

Mark Lockton Goddard

Prior to founding embracent, Mark held senior leadership positions in a range of FTSE listed businesses – building a solid reputation for leading complex global transformation with the aid of technology.

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