The tools and technologies that turn challenges into opportunities
Even the most successful businesses are occasionally faced with unforeseen challenges. Rather than crumbling under the weight of adversity, resilient companies adapt to their circumstances and learn from their mistakes. A resilient business model is not developed by chance, and it isn’t established overnight. Companies that remain resilient in uncertain times take proactive steps to reinforce every aspect of their operation.
In this blog post, we take a closer look at business resilience, and why it is so important. We also examine five key strategies that help to build a resilient business model, and the ways many world-renowned companies have implemented them.
What is business resilience?
Business resilience is the ability of an organization to anticipate, respond, and adapt to disruptions and crises while preserving their operational continuity and business culture. These disrupting factors include external shocks from global events and financial downturns, as well as internal conflicts and shifting company priorities. Some of the key traits shared by resilient businesses include:
- Flexible processes that are continually challenged
- Prudent financial habits to preserve solvency
- Honesty, integrity, and trust between employees
- Diverse revenue streams and supplier relationships
- Steadfast focus on the customer experience
A resilient organization can also become an enduring organization by remaining relevant and successful over an extended period and continually reinventing itself while establishing an iconic brand name. Enduring, resilient organizations invest in their talent and leadership to establish a positive company culture.
Why is business resilience important?
There is no shortage of unforeseen events and circumstances that force companies to adapt and regroup to remain profitable, or simply to survive. Business resilience can turn potential negatives into positives by utilizing challenges as learning opportunities to strengthen rather than weaken the company and its employees. Some of the additional benefits of business resilience include:
- Employee engagement: Difficult circumstances provide opportunities for employees to work together and demonstrate their strengths and talents. This heightened level of engagement improves job satisfaction and worker retention, contributing to improved organizational continuity.
- Risk management: Reviewing, prioritizing, and mitigating threats from internal and external sources is the best way to prevent risks from escalating into more serious issues. A resilient business model incorporates risk management as an ongoing practice.
- Innovation: Resilient businesses rely on the creativity, problem-solving skills, and resourcefulness of employees and leaders to overcome challenges. Cultivating these traits also leads to more innovative products, processes, and business strategies.
Keys to Building a Resilient Business Model
Some organizations are naturally resilient, with established products and services that never lose their value, even in uncertain times. Apart from these rare exceptions, most businesses must make a conscious effort to build their resilience through a few core principles.
- Diversification: Businesses and conglomerates that operate in multiple industries or regions minimize their potential risk. For example, the Walt Disney Company offset decreased theme park attendance through movie and TV revenue streams.
- Brand identity: Companies with an established brand identity tend to maintain their value in lean economic times, since customers are more likely to stay loyal to familiar products rather than seeking out new and unproven alternatives.
- Scalability: Large companies often create multi-tiered structures, with multiple sites, contract employees, and outsourcing strategies providing layers of redundancy that can be shed during slowdowns and ramped back up when the economy recovers.
- Financial reserves: Cash and other liquid assets in reserve are perhaps the best hedge against economic downturns, since they allow companies to absorb temporary setbacks without layoffs, service interruptions, and other outcomes with long-term financial and reputational consequences.
1. Collaboration
Problem solving, innovation, and engagement can only be leveraged to their full extent when accompanied by ongoing collaboration. Employees that feel safe and valued within their organization are more willing to participate in continuous improvement activities and share ideas that improve business resilience. Collaborative practices and effective communication should also extend outside the organization, as businesses share ideas with customers, investors, and suppliers to develop new roadmaps and stay ahead of the competition.
2. Diversification
The idea of not putting “all your eggs in one basket” might sound more like common sense than strategic business advice, but it rings true when building organizational resilience in uncertain times. Diverse revenue streams are essential, since financial downturns and market shifts can impact product and service offerings disproportionately.
Developing new offerings allows companies to expand organically into new markets or pair an online and brick-and-mortar presence as part of an omni-channel commerce strategy. Diversification is also one of the pillars of success for conglomerates, which strategically combine individual entities to form a more resilient organization.
3. Customer focus
It is easy for businesses to lose focus during uncertain times, especially when personnel changes, new projects, and company initiatives are competing for time and attention. This is remedied by maintaining an unwavering focus on the customer experience. Feedback from customers should be sought out continually, and incorporated into both new and existing products and services. At the same time, outstanding customer service should be provided at every touchpoint. Customer loyalty and brand value are key attributes that ultimately allow resilient companies to thrive when others struggle.
4. Technology and analytics
In an era when smart technologies are being used to modernize manufacturing practices for small, mid-sized, and large organizations, it is important to embrace these opportunities as part of a robust resiliency strategy. Analytical tools incorporating machine learning algorithms simplify risk management and contingency planning processes, making it easier to stay one step ahead of industry trends. Modern automation and monitoring technologies including the internet of things (IoT) also make it possible to detect problems and disruptions earlier.
5. From suppliers to partners
No company that manufactures or distributes physical products can remain competitive in an uncertain economic climate without establishing supply chain resilience. This requires a commitment to stringent supplier selection, accurate forecasting, and ongoing communication to turn suppliers and contractors into partners rather than interchangeable parts. Supply chain diversification is also an essential practice to prevent an unforeseen disruption at one supplier from having long-term repercussions.
Resilient business model examples
Most successful businesses periodically retool and recalibrate their operations to remain competitive. Some of the more exceptional companies have also taught us how change and adversity can become opportunities.
Walmart
One well-known retail business that appears stable and consistent on the outside has quietly been implementing key resilience principles throughout their history. Walmart has increased their product diversity through ever-changing in-store options and a successful online storefront, with technology and advanced analytics contributing to the consistently low prices their customers expect. They have also built a resilient international supply chain to ensure unwavering product availability.
Microsoft
Large technology companies like Apple and Microsoft have experienced their share of good fortune over the years, but they have also rebounded from adversity on many occasions to emerge even stronger. The original Microsoft business model of selling physical software disks to consumers or businesses sustained them for decades, but Microsoft saw a major transition (and opportunity) coming with the advent of the internet. Their early pivot to cloud computing kept them on top of the industry.
IBM
One of Microsoft’s earliest successes involved licensing their operating system to IBM, rather than selling it outright. While this decision temporarily left IBM as just one of many players in the personal computer market, a dedication to crisis leadership through innovation allowed IBM to weather this and other storms. As many large companies moved from traditional mainframes to the cloud, IBM adapted their core business offerings to incorporate cloud connectivity, artificial intelligence, and advanced cybersecurity features that once again set them apart.
Conclusion
We certainly live in uncertain times, but to some extent, this has always been the case. Enduring companies that demonstrate humility and resilience over the years manage to grow their customer base and bottom line consistently, as thousands of promising new competitors come and go. Thankfully, these resilient businesses have left behind clues for others to follow. While risk-taking and re-invention are not absent from their strategies, a foundation built on collaboration, diversification, and customer satisfaction allows them to build a positive culture that resonates with both customers and employees.