It’s a jungle out there, so build resilience and adapt
Research analysis firm Nomura gave a bleak forecast for SA in April after the abrupt removal of Pravin Gordhan as finance minister, cutting the 2017 GDP forecast from 1.1% to just 0.2%.
The country is in a recession, has been downgraded to junk status, per capita wealth has declined steadily and unemployment rates remain high. Focus Economics has warned of a “potential retreat from fiscal prudence, a rise in spending and increased opportunities for patronage”, which are unlikely to impress investors.
Businesses big and small are facing the same challenge: survival in an unforgiving climate. But, as in a literally dangerous climate, executives must do what nature does: rely on adaptability.
Resilience is explained by more than one dictionary as being synonymous with elasticity. It follows then that flexibility is a core part of any resilience strategy.
And yet, despite the signs, many South African businesses invest precious little in their resilience. The recent ITWeb/ContinuitySA 2017 Business Resilience survey, released in February, found that the majority of organisations are well aware of the importance of sound strategy in determining resilience. A third of them cited the cost as a reason for not investing in a resilience strategy that could minimise the effects of disruption. Only 8% said they specifically had a business continuity plan.
Specific resilience strategies are just one piece of the puzzle. An overall sound business strategy will contribute enormously to resilience. Organisations that have moved beyond growth for growth’s sake and have considered sustainable growth above short-term shareholder satisfaction have taken the first step to building a more resilient business. A sustainable growth strategy is not negotiable.
The core features of a resilient organisation lie in two main areas: the capacity to withstand uncertainty and the ability to achieve optimal connectedness. The former means building fat into existing structures so that the organisation has the resources and potential to survive when things don’t go as planned.
Being connected enough means avoiding the kind of isolation that can be damaging to a business.
But it also means not being over-connected to existing systems, structures, relationships and methods.
Under-connectedness increases vulnerability. But overconnectedness risks atrophy. It is essential to see the value of different perspectives and styles of strategy, depending on the environment.
There is no shortage of wellknown theoretical perspectives on the crafting of strategy. But the best strategy is worth nothing if it is not implemented.
In simple, applied terms, this means thinking about strategy, planning for strategy, executing the strategy, engaging people in the strategy and putting the strategy into action.
An end-to-end approach includes thinking, formulating and visioning (including threeand five-year plans); moves into examining options, understanding gaps and initiatives associated with those gaps; understanding the uncertainty; and then developing objectives and action plans.
In tough economic times, an essential part of the implementation is engaging the people involved. In this sense, it is helpful to think of sound strategy — whether it is a more general business plan or specifically geared towards resilience — not only as end to end but also as rounded or spherical. The top-down aspect ensures that there is leadership and direction but engagement comes up from the bottom. It’s a matter of culture and buy-in.
Strategy and implementation should also be approached from the outside in so as to take in the context; that is, it should be propped up by relevance. And lastly, it must be viewed from the inside out, for leverage. This involves examining what distinctive competencies are available in order to differentiate.
SA’s social, political and economic climate is at best unpredictable. Organisations are facing a more challenging business environment with greater risks and, thanks to fewer borrowing and lending options, less access to capital.
Infrastructural hurdles take their toll.
In the same poll by ITWeb and ContinuitySA, the majority of organisations said their downtime over the previous year had been caused by power outages. The rest had faced technological or network issues.
Then there are the human resources challenges. Even in 2015, when growth was declining more slowly, SA faced a dismal level of employee engagement, according to one report. At the time, British multinational Aon noted that just a 5% increase in employee engagement could add up to a 3% increase in annual revenue, so when belts are tight, it’s an investment worth making.
SA’s top companies recognise this. According to data from the Top Employers Institute, which certifies excellence in human resources among South African employers, 98% say they execute a formal engagement study at least once every two years on issues like reputation and company culture.
Smart employers know that when the economic forecast is looking increasingly uncertain, it’s essential to realise that sustainability relies on tapping into the passion and desire of the people involved in the dayto-day, here-and-now operation of the business and to retain that relationship.
A strong strategy recognises that a lot of what forms it is subjective. The critical question becomes: how to connect people to the vision? How to maintain morale and commitment? And, perhaps most importantly, how to inspire faith in the organisation (from the inside out)?
Like fictional character Arthur Dent in the book The Hitchhiker’s Guide to the Galaxy, we are heading into unknown territory. Any organisation’s survival after the downgrade will depend on marrying flexibility and sustainability, with a side serving of effective engagement.
It’s unlikely that business won’t continue taking a knock. But the gap between uncertainty and sustainable growth is bridged by resilience.