Ramping Resilience Into a Strategic Pillar

The economics and business annals of the first half of the 2020s will feature plenty of buzzwords. Remember the unprecedented rise in our use of “unprecedented?” Of course, “AI” and “hyperscalers” will be well represented. As will “uncertainty,” “tariffs” and “transitory”—the last of those an adjective many pros and commentators are now quite wary of applying to anything that is, in fact, quite impermanent.

Also prominent on that list: Resilience. The economy as a whole has been resilient in the face of a pandemic and supply-chain shocks. Consumers have been resilient despite higher prices and a job market that this year started to wobble.

And businesses? They, too, have shown resilience in digesting COVID, the wave of inflation that followed and the more recent upheaval of the United States’ trade policies, among other things. Management teams have tweaked their strategies, trimmed or redirected spending and vetted their processes and partners.

But is all that actually building resilience or simply cutting costs?

The professionals at Grant Thornton this summer set out to answer that question as well as more clearly define what resilience means to Corporate America. After surveying 550 business leaders to get that answer, they also established a clear link between an organization’s resilience and its profitability—even if that means spending a little more in some places.

First, here’s how the executives polled by Grant Thornton broadly defined resilience: The ability to maintain core operations under stress or disruption with minimal impact to customers while continuously learning to improve future responses. Breaking that statement into its components leads to the following priorities leaders should keep in mind when framing their organizations’ work on resilience.

Crosstrain your people

A pandemic, a regional internet outage or a similar disruption will sideline a potentially significant portion of your workforce. Have you properly cross-trained your teams to pick up the baton from those who temporarily can’t do their jobs? Grant Thornton experts say that can take the form of shadowing peers, having junior employees rotate through several departments and setting up more formal education programs with clear goals and skill milestones. The last of those is becoming especially important when it comes to effectively using artificial intelligence and other newer technological tools.

Doing these things, which along the way also build a bench of future leaders, also pays off in times without major disruption: Two-thirds of Grant Thornton respondents who rate their companies as more efficient than their peers have formal workforce resilience programs. Among executives who say their organizations’ efficiency lags peers’, just 30% have such talent initiatives.

Another benefit to having formal training is that it helps eliminate what John Carrier and other professors in the MIT Sloan Executive Education program call “the hidden factory,” the operational tweaks and changes people develop that deviate from how things are supposed to work. Cross-training builds consistency and flushes out “the flaws and annoyances” of such a hidden factory, improving a team’s capacity for redundancy.

Spend smartly

Building resilience calls for greater investment in certain areas but Jen Morelli, a partner in the business consulting group of Grant Thornton, said on a December webcast that improving workforce resilience should aim to over time have teams be better with less rather than do more with less. And while cutting costs remains a corporate must with several GDP models putting growth today and in the first quarter around 2%, the broader aim in controlling spending and targeted investments should be to embed greater optionality.