The links between markets, regulatory, economic, social, geo-political and technological forces are increasingly becoming fast and interconnected, making them stronger than before. Each dimension is becoming more dependent on another, and supply chains are now more global than national and regional. Furthermore, the relationships between markets, geography and industry are no longer as linear as they used to be. This means that there are no more safe business models. Products and services that were innovative a decade ago are no longer relevant. New organisations are coming to life overnight and transform the way things have been run before. The disruption is unstoppable. What can organisations do to remain in existence and prosper?
Resilience is a term that every organisation should embrace and ignore no more. A little ignorance may result in the disappearance of the business overnight. A couple of organisations lost their relevance and existence in the past decade as they failed to build resilience in their business models and processes. Expressed in simple terms, business resilience is an organisation’s capacity to anticipate and react to change, not only to survive, but to evolve. It is therefore a resilient business that normally survives and flourish, passing the test of time – even to hundreds of years. In such a context, business resilience is no longer about disaster recovery only but about existence in the future – and it is a team effort.
Business resilience encompasses several factors such as agility, adaptability, robustness and continuity – making it a must that the way business was conducted a few years ago must change. History do show that companies that fail to adapt to changing circumstances and environment can lose profits, relevance and can even disappear. Change does not necessarily mean that you must do different things, but you can do the same things differently. Even though change brings its new risks, it also brings new opportunities that change the way business is done. These opportunities might not have been so visible before.
Likewise, it has become a necessity for businesses to build a culture of resilience that allows them to identify risks and opportunities of venturing into the unknown that promises growth and profitability. To build such a culture, it demands that right strategies be in place – strategies that embrace change. The strategies must address both the downside and upside possibilities brought about by the change. With such strategies in place, resilient businesses adapt successfully to turbulence, and instead of struggling they do far much better as their ‘non-resilient’ competitors will be struggling to find their standing.
With the unpredictable and increasing pace of change that has become the ‘new normal’, resilient businesses have moved from a reactive mode of dealing with change to building proactive resilient strategies. To remain relevant in the ever-changing business environment, the resilient strategies should address embracing change and embedding resilience in the business processes and models. A good approach to organisational resilience enables leaders to take measured risks with confidence, making the most of the opportunities presented to them by the environment. Any leader who has a full understanding of their organisation, its capabilities and the market they serve, can easily anticipate change and move swiftly when the opportunity arises.
Valuable lessons can be learned from the closed companies in Zimbabwe. Company closures have been on the rise ever since dollarization, bringing into question the resilience of the current existing companies. It is therefore an excellent opportunity for risk managers to put the importance of business continuity as the top priority in the current environment. Business is no longer as usual, and it is never going to be as usual – the seasons have changed and are changing at a fast pace.
A reactive approach to business environment changes will result in lost business reputation, stakeholder sentiments and wiped out bottom line. In the face of disruption, hindsight is not an option, especially in the interconnected world that we now live in. The 21st century is the era of proactive business – meaning there is higher need for business leaders to be searching for new ways of delivering their products and services to the customers cheaply and faster. The era of developing one strategy for the next five years is gone, the need for a contingency plan should no longer be underestimated.
Not being prepared for change is unacceptable, as both business and risk settings are increasingly becoming complex. Natural disasters are on the rise and technological changes are moving at a faster rate than the last decade, therefore, unprepared businesses will be severely exposed. Insurance is no longer enough to protect the business from changes in the environment. The greatest threat to business now cannot be insured, which is the rise of a new and stronger business – driven by technology. For example, the taxi business is feeling tremendous heat from Uber and other similar transport business models. Such threats cannot be insured – even though the taxi business can insure the cars!
How then do you build resilience into your business?
Enterprise risk management – every business must understand its risks and opportunities and develop an adaption plan based on experience and changing circumstances. If a threat is to occur, a structured adaption plan should be immediately deployed, reassuring customers of efficient continued products and service delivery, safeguarding the reputation of the business and shareholders value. Also, if an opportunity arises, the business must be agile enough to take advantage of the opportunity before competitors. In that regard, the business needs to have the right personnel – that quickly make decisions and move the business forward.
Managers who over-consult before making decisions are no longer for this era, but the era that is long gone. Someone once described the older generation running organisations as ‘ancestors’ – in the sense that they still want to do things the way they were done twenty something years ago! In the VUCA world, ancestors are no longer needed to be stirring the ships. This is not to say their wisdom is no longer relevant, let their wisdom come as advice to the young and agile generation. If ancestors stir the ship, the old will always be insisted upon – and the organisations will die with such ancestors. There are organisations that are being run by a very young generation that are billion-dollar organisations – and there are organisations that are being run by ancestors that are struggling to make a million!
It is therefore important for organisations to work proactively to minimize exposure and leverage opportunities. It is minimizing risk and taking advantage of opportunities that are leading to the emergence of new businesses that never existed 10 years ago.
Functional collaboration networks – building functional collaboration networks is key to the survival and flourishing of business. The future is in the hands of the businesses that collaborate rather than those that compete. If institutions become divided, they are easily penetrated by the enemy – competition, especially from across borders. There is power in groups, trade associations, as they can speak with one voice that protect industries and markets. Weak institutions will never compete with strong institutions. therefore, the power of associations should never be ignored – and such associations should be run by people of honesty, integrity and values – people who represent the interests of the industries not personal interests.
It is pointless to be a member of an association that does not have direction, as that weakens the resilience of your business. Be a member of a strong network and associations – networks and associations that protect your markets and your existence –both local and international. From international network and associations, your organisation learns how business is run in other settings different from yours. With good networks and associations, your businesses will be part of a strong value chain. Value chains that adds and cements your resilience – improving your growth and profitability. Weak value chains result in lost business and markets.
Loss Prevention – establishing where your organisation is susceptible to loss before it occurs puts the business in a far more resilient position and will greatly improve the organisation’s ability to avoid such losses. The business strategy should have a plan that is committed to proactive loss prevention. It is not always the case that everything goes according to plan – but that should not be an excuse not to have a plan. If the loss can be insured, it is better to be insured than not to be, hoping that disaster will not fall upon you – for when it does, it wipes out everything the business might have achieved over the years.
Your business resilience approach should contain elements that protect your business, enhance your response capabilities to change and crisis, and support your growth and profitability through identifying risks and opportunities that may face your business.
Batanai Kamunyaru is a business writer, speaker and coach. He can be contacted on firstname.lastname@example.org or +263 718 852 489.