Resilient Business: proactive strategies and corporate flexibility

While there is nothing new about it, in fact it has been a key pillar of innovative companies’ strategies for some years now, the concept of corporate resilience has gained even more importance in the last few months characterised by the Coronavirus. Resilience is a fundamental characteristic of those companies that are able to prosper in difficult times, setting them apart from those that can’t make the cut. It has shown its importance in previous months, when the Covid-19 pandemic took over the world, and its importance will certainly not diminish in the short term. Companies will have to regroup and relaunch their businesses and this will often take place in a very different context to that of the “old normal”.

Corporate resilience or a resilient business model is primarily a matter of vision: although we tend to view it as a purely reactive capacity dependent on a company’s flexibility (i.e., how and how quickly a company can respond to a scenario of intense stress, especially external, but also internal: for instance, the very delicate generational hand-over), corporate resilience is closely linked to how the company is structured. They are two sides of the same coin, which work together to safeguard corporate value in both easy and difficult times.

The topic is vast and it is impossible to do it justice in a short article. While there are different schools of thought on what a resilient business model looks like, the common thread is that there are various factors that influence the ability to adapt before, during and after a stress-inducing change.

First and foremost is the ability to anticipate an event: what are the possible dangers? How can I prepare for them? This is followed by the ability to monitor a situation: how is my system working? Is it working smoothly? Then, when the crisis arrives, the key factor is the ability to respond: am I able to respond immediately to change? Can I adjust the company’s modus operandi and limit the damage or even benefit from the crisis? Finally, we need to learn from what has happened: have the lessons learnt been absorbed into the company’s memory bank thereby improving its ability to respond?

Whether a company is resilient or not does not depend on luck but hinges on a medium to long-term vision, based on a four-phase process: anticipate – respond – adapt – relaunch.

While each company has to find its own form of resilience, studies carried out over the years of companies with a strong propensity for active change in the face of adverse events often have common characteristics.

First, past experience of change: these companies have already overcome crisis situations, which may not have been easy but which have given them experience they can then exploit. Second, financial strength. Healthy finances mean that a company can respond to unexpected and unforeseeable bumps in the road without having temporary liquidity crises. Third, an inclination for innovation: innovation implies change, the ability to think outside the box, to be inventive and to reinvent yourself. Fourth, a horizontal structure that engages the various departments in innovation in a coherent and ongoing manner, encouraging them not to be shy about voicing their contribution and actively engaging in finding original solutions to unexpected situations.

Alongside the concept of corporate resilience among companies of all sizes and types, the even more compelling concept of an antifragile company, as one capable of turning seemingly adverse situations into advantages, has also gained ground in recent  years.

An antifragile company does not limit itself to survival but takes steps to do something different, or to reinvent itself in the face of a major event that could cripple or even end it.

There are myriad examples of resilient companies from all sectors and of all sizes over the years: for example, Marvel, which was nearly bankrupt in 1996, was acquired by Disney in a multi-billion dollar deal. How did it achieve this? By identifying a formula that channels its strengths and reapplying it consistently. The result is that its previously largely unknown characters are now firm favourites of adults and children alike and its films are blockbusters.

Another famous example is Lego: according to its CEO Jørgen Vig Kundstorp, the company’s senior management “believed they knew best and had stopped listening to their customers”. Once again, acknowledging the problem and adopting a “rigorous and creative approach” saw Lego reinvent itself and win back its followers.

The events triggered by the outbreak of the Covid-19 pandemic have tested companies’ resilience and will continue to do so: there are examples of companies that have been able to respond to the crisis, such as those that have converted their production in little to no time, not only providing a valuable contribution to society but also rightly reaping a return. Other examples are companies that have made their expertise available to hospitals, the Red Cross, the National Civil Protection Service and their communities: some companies have invented proper medical devices using easily available materials, others have built hospitals and still others have redesigned how we interact. There are many examples of companies that have demonstrated flexibility and responsiveness.

We will see many other examples in the coming months, when companies will have to really show what they are made of and how they respond to this unprecedented global crisis.