Blog
Culture is the key to resilience. And resilience is the key to growth.
18 March 2024
The latest results from our Britain’s Most Admired Companies study reveal some important truths about corporate resilience. The first is more a confirmation than a revelation: resilience is absolutely critical to the long-term viability of a business. The surprises might come in our respondents’ views on how to build and ensure resilience in organisations.
The top three factors they identified are Culture, Leadership and Strategy. A couple of places below is Agility, which is an outcome of all three combined. While nobody is suggesting that the traditional requirements of operational and financial strength are not important, it is surely significant that these ‘softer’ factors are so prominent.
Ensuring the resilience of their organisations has quickly taken on a new urgency for business leaders. And with that, a realisation that it depends on their people. As Hiltrud Werner, former Head of Integrity and Legal Affairs at Volkswagen said, “Organisational resilience and personal resilience are cut from the same cloth.”
This was the dominant theme in an excellent panel discussion at the beginning of the Britain’s Most Admired Companies Awards Ceremony at the London Stock Exchange. Greg Jackson (CEO, Octopus Energy), Marc Ronchetti (CEO, Halma), Antoñio Simões (CEO, Legal & General) and Mark Irwin (Group CEO, Serco) shared how a more profound understanding of resilience had become both clear and necessary, and highlighted the need to ensure that resilience emerges as a deliberate, cultural outcome.
While Covid-19 undoubtedly exposed vulnerabilities in organisations’ strategies, structures and health, the post-pandemic challenges are at least as strong. The traditional idea of ‘business continuity’ is far too narrow and superficial, as it focuses purely on the operational and financial aspects. As these two polled at 59% and 47% in the study, we can see just how the resilience agenda has moved on. And it matters hugely, because any stakeholder with an interest in a business – internal is just as relevant as external – needs to have confidence in its ability to thrive through change and possible adversity. The fact that 45% of global CEOs believe their company will not be commercially viable in 10 years’ time (according to the 2024 PWC Global CEO Study) should focus everyone’s mind. As Harvard Business Review put it recently, “investors pay more for resilient companies”.
How, then, should we understand resilience now? How can it be incorporated into every corporate strategy, to create that deliberate outcome? And how, to turn a cliché around, can we ensure that what gets done gets measured?
Five types of resilience
We would begin by exploring the ‘compound substance’ that is resilience. Central to this is recognising the personal dimension; the human aspect behind that 78% score. In our own research at Echo, we have identified five types of resilience, each of which interacts with the other, all of which apply equally to the individual and to the organisation. They are:
Psychological, which enables people to cope with stressful situations, and remain calm and clear-headed
Emotional, which means people can reflect on how they’re feeling at any time, and to be aware of others’ feelings
Physical, which gives people the capacity to recover from injury or set-backs, and to ‘bounce back’ into shape
Community, found in the ability and willingness of groups to come together, support and collaborate in progress
Competence, showing that people have the ability and skills to do what is required in ‘the next normal’.
The Britain’s Most Admired CEO panel discussion raised all of these, not by name but by example. All four CEOs spoke of the need for clarity and strength of purpose, and of enduring principles that bind people together and therefore make the organisation stronger. They endorsed the importance of simplifying and sharing their business strategy, to build consensus and commitment. And they highlighted the value of bringing emotional intelligence into leadership, of knowing how colleagues are feeling and how they might anticipate and react to change.
Measurement framework and risk-radar
With that understanding in place, we see two further imperatives for leaders to build not only resilience within their organisations, but also the corporate reputation for being a good long-term performance bet.
The first is a framework for measurement that both quantifies these five types of resilience and animates the connection between the individual and the organisational level. The second builds off that, into a greater appreciation of resilience as an enabler – so that it can naturally be integrated into all aspects of corporate strategy.
For the first, Echo has developed and tested a new research methodology, called RQ2. Designed to give leaders the insights they need to know just how likely their business is to thrive through change, and where to focus greatest attention, it maps the relative strengths and weaknesses across the organisation, on each of the five types of resilience, to bring the necessary sensitivity in developing new strategies. Above all, it acts as an early warning system, to alert leaders to the possibility of cultural and operational misalignment.
For the second, the most important shift is in the mindset of leaders. The Britain’s Most Admired Companies Panel noted that the post-Covid challenges are at least as difficult as those experienced during the pandemic, so nobody can allow any sense of ‘going back to’ previous norms. Businesses made huge advances in many areas, and probably surprised themselves by those achievements. But the attitude that made those possible was in response to an existential threat and an absence of options. And while we might congratulate ourselves on getting through Covid and other crises, how do we ensure the same commitment to innovation, agility at speed, and profound change in a spirit of “What else might we be capable of?”
There are also, of course, negative experiences and outcomes from the past 3-4 years – many of which either persist today or are lining up ahead of us. Social inequalities, ‘the great resignation’ and (for some businesses) a painful dismantling of traditional and reassuring structures are not yet resolved and might stand in the way of further change. Against that we must also highlight the advantages of post-traumatic growth. How can leaders best embrace, and how should key stakeholders react to, the undoubted successes of ‘we got through it’?
It comes down to individual, and therefore organisational, willingness and capacity to change. Resilience within a business must be developed strategically, both to drive sustainable growth and to maximise commitment from all stakeholder groups, and that recognition of two further points. First, as confirmed in our Britain’s Most Admired Companies study, that culture is the single most important factor in building resilience. Second, that as with any other commercial asset, resilience must be measured, nurtured and refined continuously.
For more information please contact:
Tarquin.henderson@echoresearch.com
Dowload our Resilience report here
