With the various components affecting our modern business environment, such as geopolitics, economic cycles, globalization of the workforce and supply chains, and fast-changing technology... a higher volatility in our business environment IS the new NORM.
Building resilience skills will help you when the economy is on shaky ground AND will also serve you when the economy is back to something closer to "normal." In this blog post, I'm going to cover what resilience looks like for businesses, and I'll follow it up with a second post on building your own personal resilience.
Both studied how major economic downturns affected companies and what those companies did to get through recessions successfully, and in some cases, came out the other side of it in better standing than they were when the economic downturn began.
*Study 1: 1100 companies, range of industries and geographies, one recession time period
*Study 2: 4700 companies, range of industries and geographies, 3 global recessions reviewed
Study 1 findings:
Study 2 Findings:
The mindsets and behaviors of businesses in reaction to a recession basically fell into one of 4 categories, 2 of which didn't serve those companies well at all, 1 of which turned out okay, and 1 of which was clearly the most successful.
Prevention focused – minimizing costs... trying to survive by cutting costs, culling employees, and spending as little as possible. This is basically the austerity approach. Didn’t work.
Promotion focused – throw money at the problem. Spend whatever it takes to try to drive results, but with no changes or improvements to operations. Didn’t work.
Pragmatic – little of both. Combo of cutting costs by cutting employees or improving efficiencies and operations or both employees and efficiencies, and spending for growth by acquiring new assets or entering new markets. Worked... just not quite as well as the last type.
Progressive – cut costs by efficiencies not cutting staff, growth by investing in R&D and new assets that helped them respond faster / grow faster coming out of the recession. Also stayed closely connected to customer needs, which was a powerful filter for making those growth decisions.
When you analyze your own business, you can probably see where it aligns with a resilient business attitude and where it has the most room for growth. The place to start is with planning for the inevitable downturns. Do you have a tendency to be austere or progressive with your business, or somewhere in between? And what can you do to move your business toward a more progressive plan, since it's been shown to give your business the greatest chance of not just surviving a recession but thriving?
Businesses that survive and thrive during an economic downturn have some or all of these traits in common:
When it comes to business resilience, one other thing is clear... part of what makes a company resilient is having a leader that is resilient. In the next blog post, I'll dive into personal resilience - your ability to adapt and bounce back in times of stress.
written by Amiee Mueller
edited by Gloria Otto