Organizational resilience – the basics

Operating environments for nearly all organizations are becoming more fluid and less predictable. Continuing upheaval and uncertainty in all global markets and economies, shifting expectations from both client bases and talent, and ongoing developments in financial regulations expose firms to more risk and uncertainty. And they make it significantly harder to create strategies that survive contact with reality and help you meet your goals and targets.

These changes are making organizational agility and resilience a key topic of C-suite conversation – and making plans and strategies for organizational resilience a key topic as we go into 2023. But building organizational resilience to meet these challenges of course must be addressed while still allowing your company to meet its financial and business objectives and maintain good fiscal discipline. Achieving this will require a skillful deployment of the right people, effectively leveraged data, and the correct operational processes and tech. In particular, the way that you use technology to foster better collaboration and create new sources of value and competitive advantage will be critical.

Click to read Leaving legacy behind to build business resilience (gated)

The basics of organizational resilience

As the term suggests, “organizational resilience” is the capacity of an organization to anticipate, prepare for, and respond to both small changes and sudden disruption. It’s the set of qualities that help you thrive by getting out in front of business risks and opportunities, allowing you to bypass or mitigate the risks while more readily embracing the opportunities.

Organizational resilience can be split into three essential components:

• Product or service excellence
• Process reliability
• Cultural behaviors

Resilient organizations have a full understanding of how they are run and the environment in which they operate. This makes them much more capable of identifying potential improvements across operations and their services, as well as a strong command of self-governance. They’re capable of continuous improvement and evolution because they aren’t complacent, and they have the visibility and flexibility necessary to be proactive.

The right technical investment is key to organizational resilience…

According to a Gartner® press release*, “To enhance their organization’s financial position during times of economic turbulence, CIOs and IT executives must look beyond cost savings to new forms of operational excellence while continuing to accelerate digital transformation”.

McKinsey have also noted that maintaining competitive advantage and retaining and attracting clients depends on a firm’s capability to operate at a faster speed than they did during or before the pandemic. Meeting this accelerated pace of operations will only be possible with the right kind of technologies underpinning operations and making it possible for leadership and talent to properly leverage the firm’s resources.

And as this Accounting Web article based on our own research in the Business Future Index 2022 points out, organizations that make the investment are much more likely to be ahead of their targets than those that don’t:

During the pandemic, a majority of survey respondents moved to cloud software and self-service online tools to support remote working. During the past year, 45% of respondents said they had followed up with internal tools to improve productivity and employee experience. These tools help ensure people working remotely are “just as productive and engaged as they would be in an office environment” and should be, the study explained.

Companies that invested in these areas were more likely to have seen improvements in business performance: 25% of organizations that did make workflow automation investments reported being ahead of their 2021 targets, compared to 13% among those that did not invest.

… even in times of economic downturn

When faced with turbulent economic times, the natural tendency is to batten down the hatches, rein in spending, and make cuts. But cost-cutting has a real impact both on morale and your firm’s ability to satisfy customers and clients.

Instead taking the opportunity to focus on your firm’s internal workings while the rest of the world is cutting back can actually work to build your resilience. As John F. Kennedy said, "When written in Chinese, the word crisis is composed of two characters -- one represents danger, and the other represents opportunity."

Although President Kennedy’s understanding of Chinese left something to be desired (the character in question doesn’t exactly mean opportunity, it really means something like “change point”), his quote endures because it contains a crucial truth.

At Unit4, we’ve found the organizations that use slowdowns to revisit processes, make tech investments, and upskill their people are often the ones that emerge strongest and thrive in the aftermath. Taking them as opportunities to improve operational resilience.

Firms can improve their organizational resilience by seeing our present economic crisis (or indeed any crisis) as an opportunity to step back from short-term growth and lay the foundations for long term prosperity.

Laying the foundations for organizational resilience

Here’s some general tips you can apply to ensure you’re building a strong foundation of resilience:

1. Start pre-planning during slow periods. Use downturns and “quiet time” to your advantage to think about how you can invest in the future. You can take advantage of the fact that your key people will be more able to focus on daily operations and transformation with time spare to focus on project delivery. If necessary, use these periods to “circle the wagons” and shore up your reserves to invest and set yourself up to accelerate your success when the economy bounces back.
2. Don’t give in to fear and don’t just hoard cash. Fear of the unknown and taking a risk will prevent you from taking the necessary steps or making the necessary investments. But not acting is itself an action – and if you allow fear of the unknown to convince you that taking action is a bad idea, you’re effectively choosing to put your firm in a worse position. Ensure you have the reserves you need to shore up your financial position – but be prepared to spend in order to take advantage quickly when the downturn ends.
3. Treat your customers, suppliers, and your employees with respect. This is easy to do when times are good, but organizational resilience is about culture as much as it is about processes, and the way you treat your people will play a big role in your ability to weather shocks. Pay particular attention to compensation and cultural factors and be prepared to look beyond the traditional hiring pathways and the way you recruit and incentivize talent – explore options like “stay interviews”.
4. Foster deeper relationships with clients and customers. Use this as the basis of revisiting cost structures by using analytics to personalize pricing more effectively, maximizing non-price levers, and communicating value more effectively.
5. Invest in process automation and other technological upgrades while you can. Organizational resilience in the future will depend on a paradoxical combination of flexibility and reliability. Automation is a vital component of this strategy – helping you to create repeatable processes that require a minimum of actual working time to execute, leaving your people free to do higher value work, handle exceptions, and innovate for the future.

Ready to know more?

With regards to technology projects, look at what is stopping you from moving forward. Are they valid reasons? Most orgs will benefit from making investments in their ERP systems. Discover how Unit4 can help you today.

*Gartner Press Release, Gartner Identifies the Top 10 Strategic Technology Trends for 2023, Oct 17 2022. GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.