Adopt better leadership practices to improve business resilience and agility
Find out how improving leadership practices contributes to better business.
Hyland's team
As many executives have discovered, nurturing business resilience and agility needs to be a top priority. Thought leaders across industries have placed particular importance on this metric; Bob Sternfels of McKinsey & Company said that companies focusing on resilience “outperform their peers by up to 50% in terms of total shareholder returns.” Now, C-suites the world over are shifting focus to ensure their businesses are resilient and agile.
What is business resilience and agility? How can organizations develop these crucial attributes to remain agile and competitive? And where do companies stand today? We analyzed the insights and opinions of both leaders and employees and published our findings in our 2023 report, Unlocking business resilience and agility. Our analysis offers a clearer picture of where businesses in various industries stand regarding business resilience and agility.
Five factors that define business resilience and agility
Our analysis identified five dimensions that contribute to resilience and agility for businesses across industries:
- Vision and alignment
- Leadership and innovation
- Technology
- Market intelligence
- People and culture
Of these, leadership and innovation as well as market intelligence were the most influential factors for driving business resilience and agility. While people and culture was the least influential, all factors play a part, and none should be neglected.
Businesses need to improve their resilience and agility
Thirty-one percent of companies evaluated themselves as "weak" or "very weak" in terms of business resilience and agility, while 51% self-assessed as fully resilient and agile. The results were similar across industries: Financial services companies were a standout on one end, rating themselves very highly, while insurance, education and government rated themselves on the lower end.
There is a substantial misalignment between employees and executives. Forty-two percent of employees rated their company low in resilience and agility, while only 24% of executives did the same, indicating a divide between leadership and those on the ground. This misalignment is itself symptomatic of the challenges companies face in developing resilience and agility.
Four obstacles companies need to overcome
Based on our analysis, we identified four specific obstacles companies need to overcome:
1. Neglecting to see people as both a challenge and a solution
People are the key to business resilience and agility. No initiative can succeed if the individual members of an organization aren’t ready to put it into practice on a daily basis, and reaching that point has proved a challenge for many companies.
In 71% of companies, it appeared that people — rather than systems — were the cause of problems like low adoption of new technologies or compliance rules. Fifty-nine percent of companies reported a lack of alignment between overarching vision and employee behavior. By not fostering a culture of innovation, companies found their employees resistant to new ways of doing work.
But if people are the cause of the problem, they can also be the solution. People should always be the first consideration when it comes to strengthening business resilience and agility, before technology or systems. A “fire-and-forget” approach will not be effective in promoting long-term change or development. Rather, companies should continually seek to engage their employees in initiatives to promote change and keep in mind how needs and expectations will evolve over time.
In short, the analysis encourages companies to ensure employees understand the company’s broader vision and make decisions aligned with it. Once they understand the importance of resilience and agility, they’ll begin to think about ways they can incorporate these goals into their daily work.
2. Treating technology as the solution rather than the enabler
Tech is fundamental to business success, but when it comes to building resilience and agility, it doesn’t currently provide a solution by itself — although it can enable progress. When companies struggle to make the most out of their investments in new technologies, often the problem is that they haven’t done enough to put their people in a position to leverage the technology for efficiency and innovation.
Per our analysis, three essential traits make technology an effective investment: It should be innovative, impactful and, above all, helpful. To put it another way, tech should promote a genuine improvement in business processes and do so in a way that reduces friction rather than increasing it.
As important as it is for companies to focus on innovation in their technology investments, software that isn't efficient and effective won't offer the returns on those investments that companies expect. While we found 60% of companies are confident in the effectiveness of their technology, it's worth raising the question: Is 60% good enough?
Companies must invest in training for employees to ensure that they can use and leverage technology products and solutions. It’s an additional cost on top of investing in the technology itself, but it’s necessary to put the tech to work in the best and most effective way possible.
3. Failing to balance compliance and autonomy
It’s a challenge for executives at companies at any stage of development to find the right balance between controlling risk with good governance and enabling employees to be agile and move fast on their own initiative. Employees need to be able to act independently and make decisions without needing to consult leadership, but this presents risks, particularly in industries with strict compliance requirements.
Then there is the simple fact that executives and employees operate with different priorities and perspectives. This naturally presents roadblocks to achieving a unified vision of what constitutes a resilient, agile business.
Developing core values and procedures to handle major transitions, documenting risk tolerance, and listening to customers and employees can help companies increase their agility without exposing themselves to greater compliance risk. Documentation in particular is key: It helps companies navigate situations where their exposure to risk is at odds with their desire for agility.
Our analysis identified the dilemma between autonomy and compliance. Sixty percent say that they have increased risk because of too much autonomy, while 40% say they are limited by too many compliance rules. The best companies find the right balance to be agile while still being resilient.
4. Bouncing back, but not forward
When faced with major disruption, many business leaders focus on trying to get back to where the company was before the crisis — but the companies that will lead the pack set their sights higher and aim to be stronger as they emerge from crises. To do this, the analysis points to three focus areas: Market intelligence, innovation and leadership.
- Intelligence, in this case, means data: Getting hard facts about a company’s products and performance (and those of its competitors) and leveraging analytics to identify areas of strength and weakness. For this to be effective, a company will also need strong internal methods for communicating feedback among and between teams. This provides the foundation for better decision-making.
- Innovation plays a critical role in being able to move forward rather than simply trying to recapture lost ground. The best companies are constantly trying to improve their processes and take steps to build resilience and agility — both on a day-to-day basis and with regard to larger strategic decisions.
- Leadership requires a balance between the micro and macro levels of business. Executives may focus too closely on the macro strategic level and ignore the details — 54% of executives and 61% of employees felt this was the case. Consider whether executives in your company have a grasp of both large- and small-scale factors influencing your business.
Success depends on investing in market intelligence and innovation to be able to bounce forward from a crisis. Failing to do so effectively means standing still, allowing competitors to potentially leapfrog and gain a competitive advantage.
Leadership and intelligence lead the way to resilience and agility
Building business resilience and agility starts and ends with people. While they can be a challenge, they are the solution and the core element to success.
To build resilience and agility, companies should empower their employees to deliver on the company's vision and strategy with autonomy and access to the right technology solutions.
There are four specific actions to take:
- Ensure employees understand the company vision and goals, and help them align their actions with them.
- Invest in technology training to ensure employees are able to use systems and solutions to their full potential.
- Organize and structure in a way that gives employees the autonomy to make decisions within their area, and invest in systems to enable quality control and compliance.
- Focus on improving from a crisis by investing in market intelligence and innovation to bounce forward and not just back.
