Future-proofing your business to unlock competitive advantage

The stakes for a sustainable future are at an all-time high, and every sector is likely to be completely reshaped as we enter a period of great uncertainty and volatility. Inflation has reset global economies. China’s zero-Covid policy has impacted manufacturing across multiple sectors. Russia’s invasion of Ukraine has driven oil and gas prices to soaring highs. In volatile times like these, resiliency has enormous value. Top leaders from across our biggest clients are rethinking their business models to deal with an unprecedented economic and socio-political climate – as well as turning that resiliency into a competitive advantage.

A holistic approach to resiliency

Resiliency has been the buzzword of the last two years. However, many organisations still view it as maintaining short-term operational continuity during a discrete event. But as we enter a new era of continued turbulence in the markets, true resiliency will enable businesses to absorb stress and thrive in changing circumstances – and it is essential across all organisational areas. Those companies that consider how resiliency fits into their operating model and use it to make better decisions are the ones that can most effectively turn resiliency into a competitive advantage.

So, how do leaders measure resiliency and report it internally? Rather than asking “what’s the ROI on our investment in resilience”, organisations should take a more holistic view – incorporating KPIs that measure responsiveness and flexibility. These metrics might include speed of mobilisation, portfolio fluidity and recovery rates relative to industry peers. They should be measured regularly and systematically, identifying strengths and weaknesses. By shifting the focus from short-term performance optimisation to more holistic metrics, companies can thrive in moments of unexpected volatility.

Cyber can’t be ignored

Escalating cyber-attacks need a strategic cross-organisational response that brings together procurement, HR, training, and operations to boost cyber resiliency. Cyber resilience includes preparation, detection, response, and recovery when cyber-attacks happen, and guarantees the continuity of operations during and after the attacks, avoiding service disruptions for customers and internal operations. It requires investment in strong, secure, and flexible infrastructure to manage cyber threats and avoid technology breakdowns.

However, beyond technology, the common denominator of many of the incidents we have supported for our client has been cultural – firms either failed to take risks seriously or acted as if cybersecurity was solely the responsibility of IT instead of fully integrating the topic within the business. An organisational best practice we have witnessed in building cyber resiliency is the appointment of a dedicated CISO (Chief Information Security Officer) who sits at board level. By giving security a seat at the table, CEOs ensure that cyber resiliency is integral to the company’s leadership, and not an afterthought.

Building a diverse ecosystem of partners

The pandemic exposed significant weaknesses in existing systems and showed the importance of developing a network of partners to help adapt to unforeseen circumstances. To reach this level of resiliency, leaders should review their operational and technology infrastructures on a regular basis to see if they should maintain in-house functions or look to external suppliers who are better positioned to provide required services. By building a portfolio of strategic partnerships and big bets, organisations can guarantee short-term performance and longer-term profitable growth.

We regularly speak to our clients about developing digital ecosystems to broaden their capabilities and help them enter and compete in new markets. With digitalisation becoming a critical strategic component of the business, rather than a source of cost efficiencies, we are seeing disruptive solutions developing at an unprecedented rate – offering organisations the chance to accelerate value realisation and compete in the new digital economy without development costs.

Look at data as a product – ethically

Our ability to collect, organise, analyse, and react to data will be the new differentiator when building resilient and competitive businesses. Accurate, timely and ethical data will form the backbone of all business units, from sales and performance forecasts to procurement and supply chain optimisation – allowing employees to optimise nearly every aspect of their work. To achieve this, organisations will have to develop an “data as a product” culture, embedding data-driven decision making from the ground up.

However, a key part of maintaining resiliency will be privacy assurance – and this should be at the top of the CEO’s agenda. Assurance is about providing clients and internal stakeholders with a clear message about your organisation’s privacy practices. As customers and employees continue to prioritise data privacy, they will pick companies and employers that offer full transparency about their data collection and processing activities. Resilient companies maintain and make use of high-quality data that is compliant with all regulatory requirements and process it in a way that avoids biases and demonstrates accountability.

Align stakeholder and shareholder interests

Company value is still primarily dictated by quarterly results and related short-term economic measures. However, with the release of the United Nations’ and WEF’s “Measuring Stakeholder Capitalism” report in 2020, common metrics on nonfinancial factors and environmental, social, and governance (ESG) indicators are now central to the CEO’s agenda and for building resiliency in the future. Stakeholder capitalism requires business leaders to create long-term value for not only their shareholders, but also for all internal and external stakeholders including employees, customers, partners, suppliers, and communities.

To align these interests, businesses should first understand who their stakeholders are and engage in dialogue with customers, peers, employees, activists, and investors about what’s happening and how it relates to their business - this is the first step in defining and executing a stakeholder capitalism strategy and building a resilient operating model that can sustain long-term value creation. Ultimately, stakeholder capitalism can’t succeed if shareholders don’t see the value; measurement must be a team effort.

For business leaders, so much of reality is in the now: figuring out how to operate stronger today to achieve quarterly targets and thrive in the present state. Much of the thinking we try to drive with our clients is that resiliency isn’t a destination, it is a journey; a journey that requires the input and buy-in of all internal and external stakeholders to successfully navigate the evolving and volatile climate.