By Dr Alessandro Merendino
Originally posted on Business Insider.
Dr Alessandro Merendino is a researcher within Coventry University’s Centre for Business in Society (CBiS), specialising in how leaders’ actions can directly affect the performance of a business. Here, he looks at how they can survive crises like the COVID-19 pandemic and Brexit by ensuring they are resilient.
The COVID-19 pandemic coupled with the uncertainty of Brexit have brought challenges that for many businesses are unprecedented, and in a recent study the TUC concluded that because sectors and regions have been affected differently by each, when combined they have had a much broader impact than either would have had in isolation.
It’s important to remember that while it’s normal for a business to face crises, they will not always come along at the same time and have the global repercussions as seen over the past year: they could be the departure of a chief executive, an unfriendly takeover, industry decline or new competition.
But the reality is that many businesses will not see the seeds of a crisis because of a common focus on short-term objectives and performance such as immediate profit, quickly executed projects, return on investment (ROI) or return on equity (ROE), which is understandable because that’s what drives markets and pleases shareholders.
A wider view must be taken to ensure there is enough resilience in a business to weather whatever storm comes along, and to emerge from it in better shape for the future.
How do you make your business resilient?
There is no one-size-fits all guide to achieving this, but there are some key principles to follow:
Maximise the use of digital and big data.
Championing digital strategies and use of data at board level is critical. Many leaders know this, but they don’t know how to do it, and as a result are still not investing enough, while others invest too late. It’s more than just having a website and social media presence, it’s about engaging with customers online to keep them entertained and curious, and using data to understand human behaviour, whether that’s customers or competitors; this can revolutionise a business.
Diversify your business.
Diversity is not just about demographics, the way you think needs to be more diverse, and on a board of Directors you need a person who can problem-solve, a person who is analytical, another who is a networker. This diversity of thoughts among a team that is trusted by the person at the top can change the mindset of a company and ensure it constantly revisits and rethinks its strategies.
This can be an empty word, because anyone can say ‘yes, I’m adaptable’, but are you really? For business this means evolving through trial and error, reinventing processes to be sustainable. Processes and structure in resilient businesses are designed for flexibility and learning from mistakes, rather than stability and minimal change. Since the start of the pandemic, we have seen manufacturers adapt to produce PPE, which is a great example of thinking outside of the box to thrive in a new environment, and how manufacturing processes and organisational structure are sufficiently flexible to adapt to the new normality.
Form a crisis management committee.
Do not wait for a crisis before deciding how to navigate a way through it, because perceiving the seeds of a crisis is essential to surviving it, so it’s crucial to always be scanning the horizon. I’ve tested this hypothesis in a recent study and found companies that were successful in responding to a crisis had invested in recognition and resolution expertise, either consultants or non-executive directors, who constantly monitor the internal and external environment.
Invest in research and development (R&D).
R&D should be considered as an investment rather than as a cost because it’s been proven in many reports that it correlates with economic growth, resilience, productivity, and better business health. A good example of this is the partnership between Coventry University and HORIBA MIRA to establish a first-of-its-kind Autonomous Vehicle Development Centre.
COVID-19 and Brexit have provided an opportunity to think critically about mechanisms and processes to ensure good health throughout a business, and this is important because being resilient from the top down and the bottom up will help ready you for the next crisis — whatever it may be.