Technology and Communications

The global economy is characterized by accelerated business cycles that swing from boom to bust at an increasingly challenging pace. During downturns like the recent global recession, companies in all sectors tend to respond by slashing expenditure and investment to survive in a depressed market. But what kind of shape does this leave them in to turn the corner of the economic downturn and start preparing for renewed growth?

In our experience, companies that put business resilience at the core of their operating philosophy, and consequently make it an integral part of their talent management process, are best-placed to weather rapid changes in the economic climate. Such resilience allows them to react swiftly to downturns and emerge from them without sustaining fundamental damage to their core activities. Business resilience is therefore a relevant and timely concept for all leaders of global organizations.

We recently invited technology executives from several major IT companies to participate in a forum discussion of developments in the industry over the past 24 months. Based on their experience of the recent recession, leaders shared their insights and identified ways of making their business more resilient.

Early warning signs and reactions

A key finding to emerge from the discussion was that most companies failed to pick up the early warning signs of a recession and formulate a timely response. Even those firms that were able to detect the downturn often lacked the tools or processes to assess its impact or to react accordingly. Although some field sales teams quickly reported deteriorating market conditions, they often struggled to get corporate headquarters to trim projected revenues in line with the on-ground reality.

Once the extent of the recent crisis did come to light, each company adopted a slightly different approach to the situation, reflecting their key markets, customers and products. The notion of ‘one approach fits all’ to recession consequently turned out to be a fallacy. However, a number of common corporate strategies to the crisis did emerge. Of course, the first step universally taken was to slash budgets. However, several companies across the board worked to get closer to customers, both to see how their priorities were changing and to ensure that they stayed on top of emerging requirements.

Some companies also focused on innovation with a view to boosting efficiency and cutting costs, while improving the market relevance of their products and services. In growth-focused markets like India, tight prediction and control of sales numbers was not a priority prior to the recession. However, with greater visibility and pressure on the topline, the downturn forced some companies to radically improve revenue prediction processes or implement them for the first time.

The backbone of business resilience: change leadership and team skills

Implementing the initiatives required to enable companies to weather economic storms calls for top leaders with outstanding change management skills. However, to drive change, it is essential for leaders to be able to gain group commitment for rapid corrections to strategy and operations. Introducing high-impact actions to boost business resilience will be increasingly required of business leaders in an uncertain and rapidly evolving corporate world.

Each crisis over the last 50 years has been unique, requiring a different set of corporate responses – which makes the task of predicting outcomes close to impossible. In other words, while it is relatively easy to standardize processes for business-as-usual scenarios and growth situations, it is almost impossible to standardize the right strategy in times of crisis. Instead a new, specially adapted response needs to be formulated for each and every crisis. How can leaders prepare for this?

In our experience, the answer involves constant evaluation of top talent, and especially top team dynamics with respect to strategically important points such as business resilience. Are senior leaders really heeding advice from their executive teams and are individual team members listening to each other? Is there a culture of dissent at a senior level and does this produce constructive results?

These questions can be evaluated and used as a basis for recommendations on developing or recruiting talent. Of course, change management skills have to be in place to enable a fast reaction once a crisis emerges. So institutionalizing early warning systems and listening better to teams – that are closely in touch with customers – is absolutely critical to building business resilience.

Nature is a great example of resilience, where redundancy is engineered into most organisms and eco-systems to allow for resilience and survival. In their drive for efficiency, corporations are probably becoming less resilient, meaning that there is less to fall back on. To improve their performance in the future, companies will need to focus on treading the fine line between achieving optimal efficiency and developing their business resilience. To allow a highly efficient yet resilient organisation to thrive, the leaders of such organisations will not only require a deep understanding of the capabilities within the team, but will also need to be able to swiftly and effectively manage change within their business environments.