The shocks to our society and economy from the coronavirus pandemic highlight the value of companies that can withstand and recover from unfortunate events,and rapid change.
Resilience canhard times, but it’s more than the ability to respond to a crisis or setback. It’s about continuously surfacing, anticipating and adjusting to developments that can either impair your business forever or present opportunities for innovation and growth.
As individuals, we learn resilience from parents, from role models, from social networks and from overcoming hardship. Madeleine Albrighthow she developed it by witnessing the calm and courage of her parents as a girl in London during the Second World War.
For companies, resilience comes from developing practices that can help your business thrive over the long term, come what may. From the #MeToo movement to the onset of a global pandemic, things. Events move too quickly for even the most socially responsible companies to anticipate every issue.
Instead of trying to anticipate the next secular trend or macroeconomic event, focus on building resilience into your company’s practices. Here are five suggestions for how to begin.
1. Act on signals when they materialize
Resilient companies learn to read and interpret signals. But this advantage only translates into better outcomes when coupled with an intent to act. Take responsibility for what is emerging and eschew denial. Act early to mitigate risks or seize opportunities.
Cities and countries that ordered residents to shelter in place at the first evidence of the coronavirus pandemic have experienced lower rates of local infection than those that, armed with similar data, either disregarded it or declined to act.
The same is true of business. At various junctures, Boeing, Facebook, Purdue Pharma and Wells Fargo all had information they needed to avert the crises that engulfed them. What they lacked was the will to act in a way that would produce better outcomes for their employees, customers and shareholders.
If you search the latest annual reports from America’s five largest banks, you will see that four of them list the possibility of a global pandemic among factors that could threaten their business. But disclosure of risk factors in boilerplate does not count as action.
Though your company rarely has perfect information, it often has the data it needs to avert, or at least to attenuate, a crisis before it reaches a breaking point. Provided you are willing to confront the challenge head on.
2. Use your strengths to have a positive impact
Over the past decade, companies have learned that sustainability efforts that are disconnected from their business models and core competencies are neither effective nor, well, sustainable.
Philanthropy often produces little more than anecdotes for the next corporate social responsibility report — or worse,. Impact comes from aligning a big vision with the resources to deliver it. In times of crisis, resilient companies are able to shift their core capabilities to focus on the impact that matters. To cite just a few examples from the coronavirus crisis:
Apple and Google are building coronavirus tracking. Microsoft is from its Bing browser to track cases of COVID-19. Alibaba has used its expertise in artificial intelligence to create a system that can read CT-scans to detect coronavirus . IBM, Amazon and others are to national labs with projects underway in epidemiology, bioinformatics and molecular modeling.
Tesla, GM, 3M, GE and Fordto make ventilators and masks. True Value that produces paint to produce hand sanitizer. The uniform maker Fanatics switched from making uniforms for Major League Baseball to making masks.
Meditation apps like Calm and Headspace are. Airbnb is helping hosts on its platform to COVID-19 first responders.
The advantage that resilient companies gain from aligning impact with the resources available to them does not translate directly into gaining market share or profiting from scarcity. Instead, these companies are building trust and goodwill with stakeholders who want them to succeed. Over time, this will translate into dedicated staff, loyal customers, and the support of policymakers and the public.
It’s stakeholder capitalism at its finest: resilient companies harnessing their resources for the benefit of society in the near term, while playing the long game when it comes to creating value for investors.
3. Put people first
Resilient companies put people first always, but especially during a crisis. Companies that have protected employees and acted to secure their supply chains throughout the COVID-19 market collapse have experienced higher institutional money flows and less negative returns,.
Aligning your priorities with stakeholders is easy when times are good. But resilient companies do their best to do right by all their stakeholders in good times and bad. “The way you treat your employees today while all this is going on will define you as a brand for years if not decades,” Mark Cuban tells Eric Ries, LTSE’s founder and CEO, in.
4. Invest in the future
As Audrey Hepburn, to plant a garden is to believe in tomorrow. It’s no accident that Roche, which in recent years was one of just a handful of pharmaceutical companies that spent more on research and development than it did on marketing, won regulatory approval to ship a diagnostic test for COVID-19 than any other. Or that Molekule, the maker of air purifiers, for a medical-grade purifier that can remove up to 99.99% of viruses with similarities to both COVID-19 and influenza.
Unless you’re a grocer, no one is buying right now so there’s no need to sell harder. (And even grocers that are forward-thinking are doing things like setting aside hours for older shoppers, and trying new ordering, pickup, and delivery models.) Instead, shift spending to research and development from outlays such as marketing and sales. The world will reopen for business again, and you will be ready with new ideas and products in the pipeline. This isn’t just true during times of crisis — somerecommend investing 30% of annual capital expenditures to test new strategies and radically innovate aspects of your business model.
5. Do the right thing
Moving fast is essential in a rapidly changing landscape, especially in times of crisis or instability. You may make mistakes. That’s OK. The important thing is to set them right, and to do so transparently.
The sustainable footwear company Rothy’s led by example after its purchase-to-donate mask initiative backfired with customers. The company. It teamed with like-minded brands to support relief efforts collectively. Rothy’s is building resilience.
By now you’ve probably inferred that resilience is the opposite of. As the disruption from COVID-19 demonstrates, threats from substitution or new entrants are immaterial by comparison with the existential threats raised by a pandemic.
Resilience is the building block of sustainable businesses. It offers a way of thinking that confers long-term competitive advantages on companies that practice it. There’s no time like the present to begin.