In the world of business, evolution and change are happening fast, and resilience is needed if your business is to not only survive any shocks that occur but also thrive despite those challenges. We look at business resilience in some depth and suggest how you can design your business model for resilience.
What is business resilience, and why is it important?
In simple terms, business resilience is the ability of a business to not only absorb but also weather any challenges that it may face, regardless of whether those challenges are small or big, or whether they last a short while or a long time.
The challenges businesses face can be internal or external in nature. Some qualify as both internal and external challenges. For instance, the coronavirus outbreak was an external challenge, but it also triggered internal challenges, such as straining company cash flows and forcing firms to work with a smaller workforce in order to adhere to social distancing rules.
Designing a business model for resilience comes with many benefits, which is why every business needs to have resilience at the core of its systems. One major benefit is a better capacity to recognize emerging threats a lot faster than other players in the industry. When you are slow to recognize a threat, the fallout from that threat is all the more pronounced and can sink your business.
Another benefit of business resilience is that agility and speed in responding to challenges is optimized. Consequently, shocks can be addressed sooner and their adverse impact minimized due to the timely response.
Recovery is also swift when a company is resilient. For example, companies which had designed contingency plans for major disruptions were better able to access government aid quickly and reopen their doors while those without financial stress modeling took longer to put their act together and access the available aid for small businesses.
Resilient businesses are also better positioned to take advantage of the changed circumstances. For example, while many businesses struggled or even collapsed during the worst of the Covid-19 pandemic, there are some that actually thrived because of the pandemic. That is how huge a difference building a business with resilience in mind can be.
How to improve the resilience of your business model
In the current profit-focused, highly competitive business environment, most of the attention of business owners is on short term results. This manifests in the form of obsession over ultra-efficiency in resource allocation and use. However, resilience sometimes calls for sacrificing short term gains in order to be more robust and healthy in the long term.
For example, your company may need just three drivers, but when an emergency occurs and one driver is unable to work for a long spell, operations can suffer a great deal. Redundancy in the form of maintaining four drivers on the payroll can save the day when something unforeseen happens and stresses a tight employee roster. Similarly, having a website designed to handle the current peak of order numbers without any redundancy built in can trigger a system crash when a promotion delivers better than expected results and customer numbers surge suddenly. Redundancy is therefore a great way to ensure business resilience.
Diversify revenue streams
Another way to build resilience into your business model is by thinking of ways to diversity the revenue streams of that business so that it isn’t overly dependent on one source. For example, if you own a restaurant, don’t be content that tables are always fully booked. Diversify and start a food delivery service so that should the numbers of people who dine in decline for whatever reason (the pandemic, for example), some revenue inflows can still come in from clients who order for food delivery.
There is always a way to diversify income pipelines for any business regardless of the industry. Think hard and consult widely so that you can exploit those income diversification opportunities. The resilience of your business will be boosted by that effort.
Stay abreast of industry changes
Technology is driving change at a dizzying pace, and other factors like climate change and globalization are further accelerating the pace of change. It is therefore prudent to stay abreast of the changes happening within your industry so that you aren’t left behind.
For cautionary tales about how ignoring industry changes can be, read up on what happened to Nokia when smartphones were emerging onto the tech scene. Always sniff out any changes that are emerging and find ways to take advantage of those emerging trends so that your business remains relevant and retains its competitive edge. Let the less resilient fall by the wayside!
Reimagine the customer experience
It is important for you to keep reimagining how you can better serve your clients. Don’t be content to maintain things as-is just because your product launch received rave reviews from those that bought from you. “If it ain’t broke, don’t fix it” is no longer applicable. Continuous improvement is the way to go if your business is to stay resilient.
Seek for feedback from your clients and learn what their current experience with your product or service is, and also inquire into what more they would wish for in the products or services they buy from you and your competitors. Act upon that feedback and keep more feedback coming in so that today’s insights inform the decisions you make tomorrow. Stay in startup mode (the agility and lack of fixed notions regarding how things should be) so that you can quickly adapt to the evolving customer needs.
Hire with innovation as a key driver
All your best laid plans for business resilience may mean little if your employees aren’t innovation-minded or the company culture doesn’t foster a spirit of innovativeness. It is therefore important for you to select job candidates with a demonstrated knack for innovativeness. These will be the change drivers in your firm and their contributions will support the resilience of your business.
You also need to assess the company culture and ensure that it is supportive of employee innovativeness. For example, do you have rigid systems that don’t allow employees to make use of their creativity while solving company problems? Are employees singled out and punished for every mistake they make? Does your company budget allocate resources to trying out new approaches? Does management micromanage every aspect of the workday? Tweak company culture so that employees are free to think of innovative solutions to the emerging challenges.
Have consultants on hand
It is hard to see the picture if you are standing in the frame. For meaningful resilience, it is vital that you work with a team of consultants to help you see where gaps that need fixing are. For example, you can ask your diverse team of consultants to identify any opportunities to serve your clients better that you may be missing. Is another customer service channel needed? Are there changes in social media use that you are missing? Are customer preferences shifting and you need to change in tandem with the needs of your target market?
Depending on the size of your business, the stage in its growth, and other such factors, the consultants you talk to or get input from can range from a group of friends to business consultancies. Whatever you do, don’t rely on your head alone because once it is consumed by the tiny details of daily operations, it is hard to think about and design the big-picture strategies needed for business resilience.
Don’t let disruption to keep you in reactive mode. Build resilience and agility into your business by using the suggestions above so that you can take advantage of any crisis that occurs to drive your business onward and upwards while others in the industry scramble to know what hit them. With resilience as the cornerstone of your business, you will always stay focused on what matters most and any changes that occur will be taken comfortably in stride. What’s not to like?
To Your Success,