Building Business Resilience

Introduction

Entrepreneurial life provides plenty of opportunities to test one’s resilience. Entrepreneurship, and the responsibility that comes with it, take us to situations and experiences that challenge our thinking and push us outside our comfort zone, providing a canvas for compelling stories that can be shared as insights and narratives among founders and business leaders alike.

In particular, during and after the pandemic that began in 2020, both new startups and established companies found themselves digging deeper for resources in an environment ever more hostile to businesses, new or existing.

What is business resilience?

Business resilience is a company’s ability to weather disruptions while protecting operations, people, assets and brand equity, even when the environment becomes adverse. Young companies, which are prone to feeling the effects of market shifts on their results, especially need to establish sources of resilience quickly, whether through a new business model, i.e. how they make money, an innovative product or service, or the talent of their employees.

However, the path to resilience differs depending on whether the company is a small startup or an established business.

Large organisations have procedures and processes to respond to crises and market shifts: consider a company in the retail space serving the construction industry, operating five stores initially. The mission of the newly appointed General Manager was to expand the business throughout Saudi Arabia and open 40 new outlets selling building materials to B2C & B2B customers. The GM had limited people resources and expertise in this area and doubted his ability to handle the task. He knew, however, that to grow the business he needed robust sales and fulfilment processes. He needed to generate more revenues, attract new clients into the retail stores and make sure his customers were statisfied.

To grow revenue and streamline operations, the GM made a new promise to his clients: products would be delivered within 24 hours from when the customer placed the order. Employees monitored the stores’ inventory; if product quantity was falling, they had to contact suppliers, place an order and make sure the product was delivered to the warehouse on time. These actions needed to be coordinated across 40 new stores, daily, before being automated later in the year. The GM explained the new process and trained his team on it, enabling the employees to manage the increased volume effectively.

A carefully designed, executed and monitored process allowed the company to scale up sales and operations seamlessly.

Entrepreneurs, on the other hand, cannot rely on processes for business resilience, because often they are still experimenting with their products and value proposition. Our experience shows that in times of upheaval, the human element provides the confidence and perspective the entrepreneur needs to continue going forward. This dynamic human element – which, paradoxically, can be a source of risk in established companies – is present in startups in customer interactions, in conversations with suppliers, and among the startup team members themselves. In other words, the behaviour and mindset of the people the entrepreneur interacts with can be the greatest source of competitive advantage, and also of resilience. Entrepreneurial networks can provide advice, perspective, resources to absorb increases in workload, and even healthy distance from the situation or empathetic support when needed.

How to plan for business resilience?

COVID-19 forced organisations to be agile and adapt quickly to be able to sustain the business and follow market trends, since they have responsibilities towards their customers. Shareholders expect a business to remain operational even when a disruptive event could hurt the firm. Hence risk function and risk management and mitigation are key in ensuring business longevity and prosperity. Established companies focus on what works: they built resilient processes and procedures that allow them to deliver value without interruption. They have established business contingencyplans and continuously adjust their strategic outlook.

Startups, on the other hand, benefit from their agility – the ability to twist and pivot, scale down or expand, and modify their value proposition. Ultimately, their greatest source of resilience is the customer need that they respond to: if the customer really wants the solution, the startup will find a way to build and deliver it. It is what we call a product market fit.

An important step in a business resilience plan is to define the end state of the organisation after an adverse event, when recovery plans have been deployed and processes resumed. It is easy to say a business has recovered from an incident once it has resumed operations. But does that mean it is resilient?

Ultimately, an organisation must determine what its end state and risk mitigation planning should be following an incident. To do this, it must determine what constitutes a state of resilience.

Conclusion

Established companies and startups do not practice resilience the same way. Big corporations rely on their processes, culture, and leadership team, but if these are not agile, their protection will be useless in the case of an adverse event.

Startups, on the other hand, rely on the human element and its ingenuity, creativity - and yes, unpredictability - to source the strength to survive tough times. Entrepreneurs should therefore spend a significant portion of their time on building and developing robust, diverse networks : over time, these networks will prove instrumental in helping the startup overcome challenges and build resilience.

Authors

Ihab Tabbara is a consultant and managing partner specialised in retail industry problem-solving and innovation and passionate about entrepreneurship. He is the author of Pathways to Business Success. Ihab has French and Lebanese citizenship and is based in Jeddah, Saudi Arabia.

Anna Dyngosz is a consultant and a lecturer. She is the founder of problem-solving.rocks. Her work focuses on transformation and entrepreneurship and she regularly publishes a blog. Anna has Polish and French nationality and is based in Paris, France.

Ihab and Anna are both MBA alumni of London Business School.