Harvard Business Review has defined business resilience as a company’s capacity to absorb stress, recover critical functionality, and thrive in altered circumstances. It’s a multifaceted definition that includes the mental resilience of management and the financial resilience to bounce back after a loss of revenue and profitability.
How can leaders continue to absorb stress and recover critical functionality after prolonged periods of uncertainty? And, regardless of what causes a disruption, how will your business continue to “thrive in altered circumstances” in the future?
Continue to evaluate, reduce, or eliminate
your financial risks.
In periods of disruption, many businesses must take a deeper look at their balance sheets, contracts, loans, insurance policies, billing practices, and employee handbooks and make immediate adjustments to reduce risk. At the same time, leaders should review data security policies and practices, identify additional suppliers and distributors as potential back-up plans, and reach out to customers to identify new needs and expectations. These swift actions made it possible for businesses to manage through difficult times and establish a new path forward to address future challenges. Effective leaders will continue this practice as a standard operating procedure.
Continue to manage revenue, expenses,
and cash flow.
As revenue improves during periods of uncertainty, determining in advance how it should be allocated is very important. Should you pay down debt? Invest in people and technology to grow the business? Or set it aside in case a new need arises? Through this process, it often pays to consult with your financial and tax advisors. They can give you a wider perspective on the implications of your decisions, and help you create a thoughtful, well-balanced plan based on facts rather than fear or self-confidence.
Cultivate a culture of resilience with and for your employees.
Periods of change – big or small – can leave people feeling overwhelmed, insecure, and isolated. Parents still struggle to help their children get the education they need, assist family and friends who need their care, celebrate special events at a distance, and stay productive and valuable in their home “workplace.” In this environment, leaders must be even more conscious of their employees’ morale and sense of security, regularly and intentionally offering them more encouragement, support, and genuine appreciation for their contributions.
This may require an intentional shift to a more human-centered leadership style focused on helping employees develop and perform to the highest standard. Leaders who also cultivate a culture of resilience and model resilient behavior help employees learn to embrace change, share new ideas, and collaborate more often. In such a dynamic marketplace, these behaviors are critical to sustaining the financial health and well-being of a business.
Review the attributes that make your business competitive in the marketplace and valuable to your customers.
Whether freeing businesses from the burden of historical norms, attitudes, and behaviors, disruption can enable leaders to think more broadly about the purpose of their business, the promises they make to customers, and the performance they should deliver to earn trust and revenue in the future.
Effective leaders recognize how deeply their businesses are connected to and dependent on their customers, suppliers, and communities. This heightened awareness offers them an unprecedented opportunity to:
- Expand their brand purpose beyond providing products and services to truly impacting peoples’ lives
- Deliver greater value and support to their customers, knowing their needs and challenges have changed
- Discover new ways to identify and attract prospects, building their trust as well as gaining their business
- Create positive new employee and customer experiences that build their confidence and loyalty
Does strategic planning still make sense?
Yes, especially when you need to improve your financial resilience. Setting goals keeps everyone on the same page, especially if tactics need to change based on new circumstances.