- October 7, 2022
How Indian firms can build and sustain resilience in uncertain, turbulent times
In a world shaped by COVID-19 and geopolitical turmoil, building resilience is essential for growth of India’s economy.
For the last three years, we have lived in a surreal world that in normal times one would read about only in dystopian books or watch in horror movies. This is the period when humanity convulsed and the world went topsy-turvy thanks to the sudden dramatic onset of COVID-19. And just when we thought, we were close to the proverbial light at the end of the tunnel, the global economy was hit by the Russian invasion of Ukraine.
Arguably, the Indian economy and companies have shown tremendous resilience and both are back on the track of growth. The country, even with a consistent new normal of 6-6.5% GDP growth rate over the next few years, will remain one of the fastest growing economies of the world and is expected to catapult from being the fifth largest economy to the third by the end of the decade. But all is not well.
Corporate growth momentum is at the risk of getting lost due to varied factors – both external (uncertain supply chain and a challenging export market for goods and services) and internal (increasing input costs due and higher financing cost caused by an inflation-led spike in interest rates). And the early sign of such a reversal is already visible.
For Indian companies to defy gravity and actualize the trajectory of sustainable high growth, resilience holds the key. The most successful Indian companies in such an uncertain, turbulent era will be those who adapt, react, and pivot into whatever the new normal is and stay ahead of the learning curve.
How can Indian companies build and sustain resilience? Here are 9 key building blocks:
First, It’s Never Too Late to Start Building Resilience
When it comes to start building sustainable resilience in corporate entities, there is immense power in the Power of Now. Building organizational resilience is no child’s play — it requires deliberate intentionality and a tremendous amount of energy, time, effort, persistence, discipline and flexibility. There are low hanging fruits to be plucked, and often some gains of the effort arrive rather early.
Second, Leadership Holds the Key
In this uncertain, turbulent world, it is impossible to predict the future and despite corporations having developed specific resilience capabilities, when sudden disruptions occur, surprise gaps in those capabilities become visible and it is here that the leader plays the critical role.
Sustainable organizational resilience begins with some attributes so far not considered central to leadership capabilities. These are absolute calmness amid turbulence, ability to lead with empathy and awareness, inherent capacity to create an organizational culture where genuine mistakes are condoned and innovations rewarded. A resilient leader must be able to rapidly connect with stakeholders; positivity, creativity and ability to experiment have to be his/her first nature.
Three, Resilience is a Culture Thing
Leadership and culture are congenital twins; unless the leadership creates a culture where resilience thrives there is no sustainability.
Creating culture where resilience thrives is the primary responsibility of the leader. The leader also has to empower resilience champions because when the canvas is fast changing and unpredictable, organizations need multiple layers of shock absorbers, innovators and change makers.
Four, No Resilience without Transparent Proactive Communication with Stakeholders – Internal and External
Resilience takes centre-stage when disruptive changes happen increasingly abruptly and unpredictably. Such situations will require quick measures to stop loss and rapidly regain the competitive advantage. A culture of secrecy is antithesis to a resilient corporate entity. What is needed is a transparent, proactive, and credible and rapid communication with key stakeholders, both internal and external, including but not limited to employees, customers, and vendors.
Five, Resilient Organizations React Faster when Disruptions Occur
We are living in an era where disruptions can arrive from any direction, and relate to any part of the organization. Disruptions by definition often cannot be stopped in its occurrence. But resilient organizations are the one that react and act fast when the disruptions occur. A key distinctive feature of such companies is that they are agile and free of silos.
Six, Dynamic Business Resilience Forecasting and Rapid Adjustment is The Future
The strategic long-range planning I was taught at the Asian Institute of Management (AIM) in Manila using Harvard Business School (HBS) case studies are passé in the era of disruptive change and disruptive technologies. A resilient organization in today’s era of rapid-fire disruptive change, has to work with dynamic business forecasting with an ability to modulate, adjust, replan and act– this is critical whether the demand patterns change unpredictably or supply chains break down abruptly, as we have seen in the last three years.
Seven, It Is Innovation, Stupid, That Will Keep the Resilient Organization Going
Gone is the era of divisions, departments, compartments, and silos. A resilient company thrives on innovation and is perpetually in start-up and incubation mode. Valuing entrepreneurship is the most prized ornament of such company in normal times, but more so during crisis time.
Eight, Managing End-to-End Risk Is a Daily Task
A system of periodic preparation, comprehensive risk framework and monitoring was suitable to companies of yesteryears, Resilient companies use data mining, digital technology and artificial intelligence, and for them end-to-end risk management is a round-the-clock affair. It helps them avert disruption and to act swiftly if the disruption occurs.
Nine, Resilience Has to Be an All-Encompassing, Multidimensional Suite
A McKinsey framework provides for a six-dimensional resilience approach, namely:
Firstly, financial resilience to balance both short- and long-term financial aims
Secondly, Operational resilience to maintain robust production capacity that can be flexible to meet demand changes as well as remain stable when operational disruption happens
Thirdly, Technological resilience with investment in strong, secure and flexible infrastructure, including managing cyber threats, technology breakdown avoidance, disaster-recovery capability and a system that uses high-quality data, duly respecting privacy, without bias and compliant with regulatory requirements
Fourthly, Organizational resilience that creates a diverse, inclusive, equal opportunity workplace that recruits best talent, develop that talent equitably, upskill or rapidly reskill it flexibly, implements strong people bias-free processes, with a pan-organization, robust succession plans
Fifthly, Reputational resilience, one wherein institutions align their values with their actions and words. Resilience demands a strong sense of self—enshrined in mission, values, and purpose, which guides actions, along with flexibility and openness in listening to and communicating with stakeholders, anticipating and addressing societal expectations and responding to criticism of the firm’s behaviour.
Lastly Business-model resilience, one that can adapt swiftly to significant shifts in customer demand, the competitive landscape, technological changes and the regulatory terrain.
It is a no-brainer that the firms with capabilities to prepare for and respond to disruption dynamically are more resilient across all the above six dimensions.
Written by Akhileshwar Sahay
Sahay is a Multidisciplinary Thought Leader and Impact Consultant. He works as President, Advisory Services of Consulting Company BARSYL. Views are personal and do not represent the stand of this publication.
This article was first published on moneycontrol’s website