Weekly Brief: Biological Mindset + Digital Levers = Resilience
To BCG’s network around the world,
When times are stable, leaders are absorbed with driving performance. But during a crisis, what matters most is how well a company can manage stress, recover operations, and advance in the face of adversity. This requires leaders to focus also on resilience.
For many, this isn’t easy. In their recent Harvard Business Review article, Martin Reeves and Kevin Whitaker, from the BCG Henderson Institute, explain how typical management approaches—with their focus on near-term performance and reliance on plans that assume stability and predictability—make it hard for leaders to organize and manage for resilience.
Digital will invariably be part of the solution. Its outsize role in building resilience was made plain as the COVID-19 crisis intensified, with companies using digital technologies to enable virtual collaboration and help manage operational disruptions. As companies continue to shift from responding to recovering—and as they look further ahead, reimagining their businesses in the new post-crisis reality—they’ll lean heavily on data, analytics, and digital tools.
Many technology companies, like Microsoft, Google, and IBM, have embraced digital’s role in creating resilience. Take Microsoft, for example. Digital has been core to its own resilience, enabling teams to shift to remote work and maintain critical services in the face of massive spikes in demand. Recognizing the power of resilience to create value for customers, Microsoft is demonstrating how its offerings provide companies with the digital tools, solutions, and services that will help make them more agile and adaptive.
Digital is pivotal, but it’s far from the only factor when it comes to building resilience. My colleagues Martin and Kevin make the case that leaders need to think about business as a biological system tuned for sustainability and evolution, not just as a machine optimized for efficiency. Resilience, whether in biology or business, is characterized by:
- Redundancy, such as having factories in different locations that can produce the same product or incorporating functional redundancy within the organization
- Diversity, which, along with an inclusive environment, delivers the most innovative ideas
- Modularity, so that one part of the organization can fail without bringing down the rest
- Adaptability, with processes designed to be flexible and conducive to learning
- Prudence, including contingency plans and stress tests, in case what could go wrong does go wrong
- Embeddedness, or the understanding that we’re all part of something bigger—from supply chains and business ecosystems to economies, societies, and the natural world—and we have to stay aligned with a broader purpose
Resilience that’s built on such a broad foundation gives companies something even more important than short-term gains—it gives them a shot at sustained performance and competitive advantage.
Chief Executive Officer
Managing for resilience requires more than just grafting new ideas or tools onto today’s approaches. It requires a fundamentally different mental model of business—one that embraces complexity, uncertainty, interdependence, systems thinking, and a multi-timescale perspective. In an article for hbr.org, Martin Reeves and Kevin Whitaker detail six actions for building greater systemic resilience.