CEOs around the world are losing confidence in the their organisation’s ability to survive long term and losing sight of the importance of resiliance, according to a new report from The Economist Intelligence Unit (EIU) on behalf of BSI.
The global study of business leaders reveals that just one third (29%) trust their firms have fully embedded resilience practices, and less than half (44%) expect it to be the case in three years’ time.
This is despite 88% believing that resilience is a priority for their organisations, and indispensable for long-term growth (80%).
The study, Organisational Resilience: Building an Enduring Enterprise, finds that achieving the resilience to survive and prosper in the long-term is held back by a lack of skills and knowledge, insufficient leadership commitment, and short-term financial considerations.
It also highlights that cultural resistance and skills silos create weak-points and bottlenecks within an organisation.
Two fifths (39%) of business leaders struggle to secure business support for essential resilience measures such as information security, supply chain efficiency and corporate governance.
In Asia Pacific, 34% of organisations have succeeded in fully embedding resilient processes, the report shows.
Worldwide, a third (33%) of larger organisations have resilient processes embedded across their business, compared to a quarter (26%) of those with revenues of less than $500 million.
Smaller businesses are held back by a lack of knowledge, whereas larger firms say the main issue holding them back is financial problems, according to the report. Furthermore, older organisations are found to be more likely to see the connection between resilience and long-term growth.
In the report, resilience is defined as the ability to avoid operational failures and simultaneously engage strategic enablers, ultimately leading to business success.
Three fifths (61%) of CEOs see resiliance as a source of competitive advantage, with more than half seeing a very strong link between investment in this area and long-term financial performance.
Firms interviewed for the report explained that achieving organisational resilience is vital for long-term financial success. True resilience is found to come from strategic adaptability across all aspects of operations.
Howard Kerr, BSI chief executive, says, “Navigating today’s fast moving and ever-changing world requires companies to be agile, robust and adaptive in order to defy corporate mortality and pass the test of time.
"That two out of three business leaders believe their organisations may fail this test, shows just how fragile and vulnerable company structures are. This is further reinforced by high-profile examples regularly appearing around the world.”
The report identifies six key features of resilient organisations:
- Proactive approach: A willingness to adapt before being forced to
- Dynamic leadership: Support from the top of organisation to embed process, CEO down
- Responsiveness to change: A willingness to listen to market needs
- Strong corporate culture: Holistic inclusion and recognition of everyone’s responsibility and contribution to the business
- Keeping focused: Possessing a clear vision, purpose and identity
- Long-term view: Avoiding responding solely to short-term financial goals
Victoria Tuomisto, editor of the report from the Economist Intelligence Unit, says, "The apparent gap between the intention and action in companies' approach towards resilience suggests that businesses are facing a host of challenges in embedding resilience in a changing and volatile marketplace.
"These, in turn, will be different for every company. But a resilient organisation by definition is one that is constantly shifting and adapting; there is no ‘finish line’ when it comes to implementing a culture of resilience."