How to build company resilience

How to build company resilience

How to build company resilience

The pandemic and the war in Ukraine are destructive and groundbreaking events for many industries, but also for entire economies. Management specialists watch with great curiosity companies that are doing well in this surprising and extremely complex situation.

The most important feature that allows enterprises to survive is defined by the English term “resilience”. It is one of the most popular words used by organizational strategy specialists lately. However, neither the term is new nor is it new that companies need to learn how to react to sudden changes in their environment. Before the pandemic and the war in Ukraine, the role of groundbreaking events was most often played by technological revolutions in individual industries or the increase in the intensity of competition on the global market. The ability to react quickly to changes in the environment has always been particularly important in the dynamic technological market.

It can be very difficult to react appropriately to changes. Firstly, management boards of enterprises must understand exactly what is happening in the environment, and secondly, they must imagine the far-reaching consequences of these phenomena, which is often impossible in practice. The problem is that we do not know what changes we need to prepare the organization for. Perhaps it will be a sudden increase in raw material prices, or perhaps disruptions in distribution channels or the emergence of a new competitive product. In addition, the crisis may affect the entire economy, a selected industry or just a specific company. Only the ability to quickly adapt to changes can provide a company with relative stability.

Where does organizational resilience come from?

An organization that wants to be resilient to devastating and disruptive events must have several characteristics. Firstly, he must be aware that the environment is constantly evolving, secondly, he must thoroughly understand the changes that occur in the internal and external environment, and thirdly, he must be able to respond to these changes in a logical and orderly way. Certainly, in a crisis situation, the ability to make quick decisions, striving to reduce and diffuse risk, openness to innovation, as well as extensive knowledge, broad qualifications and appropriate personality traits of employees will be useful.

Many specialists often point out that crises can be an opportunity for authoritarian-managed enterprises, mainly because their leaders make decisions very quickly, and in addition they have no problem with their efficient implementation. However, the disadvantage of “chief” organizations is often a low level of creativity. When faced with a major crisis, the best response is to combine efficiency with creativity. After all, democratically managed organizations can also react efficiently to market changes, and taking care of this efficiency is one of the most important skills of their leaders, who can therefore include employees in the management process.

The company’s ability to survive depends to a large extent on its organizational culture. The problem, however, is that crises or the uncertain situation of the company are conducive to tensions and conflicts. This leads to reduced productivity and discouragement, reducing the adaptability of the organization. In fact, there are always emotions and tensions in a crisis situation. Procedures for dealing with them should therefore be a standard element of plans prepared in the event of a crisis situation.

Cooperation will answer the crisis

Building a strategy responding to the crisis should start with an analysis of the impact of the changed conditions on the competitive position. The changing environment forces modifications of the strategy. It may even happen that the crisis will strengthen the position of the company, for example, when it has a cost advantage. Consumers and contractors reacting to the crisis will almost always look for cheaper solutions. On the other hand, if the company does not have a cost advantage, the crisis may be a great opportunity to start looking for it. Otherwise, buyers may leave for competitors. Of course, you have to be careful that the changes don’t come at the expense of quality.

Reaction to unexpected and sudden changes should take into account several elements. Firstly, it should ensure that the company can operate safely in the new conditions. This means that the organization should understand the risks it faces. Secondly, the response to the crisis may require structural restructuring and cost reduction. Thirdly, crises pose completely new tasks for leaders who must properly indicate the directions of change, adapt the management style to the market situation, organizational culture and the competences and skills of employees. Effective leadership must be based on supporting the development of the organization, its employees and the implementation of strategic goals. The activities of the leaders should promote ethical values, cooperation and creativity in a transparent and understandable way, and involve the staff in the process of change. Leaders work best when they accept that they are not infallible. The process of change should be a learning opportunity for them as well.

In a period of rapid change, the ability to use resources flexibly can also be a key factor for survival. This is especially true of staff.
The organization must find a balance between specialization and the versatility of employees. Specialization leads to efficiency and effectiveness, versatility allows for easier adaptation and use of knowledge. It is also important to remember that organizational resilience increases when projects are led by teams rather than individuals. This supports creativity and the tendency to absorb innovation. Team members, by learning from each other, solve complex problems that the organization has not dealt with before, faster and easier. Delegating more powers to teams can be a very effective way to build a more resilient organization, provided, of course, that responsibility for individual projects is clearly defined.