Leading Off: From planning to practice: A leader’s guide to building resilience

Strength training ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

Click to get this newsletter weekly

Brought to you by Liz Hilton Segel, chief client officer and managing partner, global industry practices, & Homayoun Hatami, managing partner, global client capabilities

We last published an issue on the topic of resilience in January 2022, and we have to say: what a difference a year makes. Back then, organizations were still struggling to respond to the fallout of COVID-19, and resilience, though hotly debated, hadn’t yet become core to organizational strategy. Today, there is a remarkable shift from discussion to action—increasingly, companies are implementing formal and systematic techniques to shore up resilience in all aspects of their operations. Here are some strategies for leaders to consider.

AN IDEA

Tackle geopolitical risk

“In the next two decades, competition for global influence is likely to reach its highest level since the Cold War,” according to McKinsey’s Andrew Grant , Ziad Haider, and Jean-Christophe Mieszala . As organizations strive to remain global players in a world rocked by crises, most executives are “seeking a more rigorous and analytical approach to fostering geopolitical resilience and to creating an enterprise-wide ‘resilience premium,’” the authors report. This involves focusing on six key dimensions of resilience —such as business model resilience and reputational resilience—and addressing strategic issues related to each. For example, when considering business model resilience, leaders may need to ask practical questions such as: How should we structure relationships with joint-venture partners in the short and long term? How should we manage extraterritorial legal, tax, or regulatory requirements? The answers could help shape proactive risk mitigation measures.

A BIG NUMBER

49%

That’s the percentage of respondents to a McKinsey survey who see technological innovation as the global force most likely to affect their organizations over the next 20 years. Energy and natural resource considerations come in at a close second. Most enterprises are taking major steps to prepare for the impact of those two forces, with a few regional differences: in some countries, respondents are taking steps to prepare for a new world order , whereas in others, they are gearing up for financial changes resulting from debt, currency fluctuations, or growth.

A QUOTE

“If we stop at planning, nothing’s going to happen. I think 2023 is the year of getting stuff done.”

That’s McKinsey global managing partner Bob Sternfels during a panel discussion on global resilience at the World Economic Forum’s annual meeting in Davos , Switzerland, earlier this month. Urging companies to begin “stress testing a much wider array of scenarios” than previously, Sternfels called for tangible action: “[If we] start making some decisions and move even under uncertainty against a wider range of scenarios, we may end up having some positive outcomes.” Panelists concurred that resilience needs to be viewed not as a cost but as an investment in future growth. “If you don’t invest in resilience, you move into loss and damage,” cautioned Rania Al-Mashat, Egypt’s minister of international cooperation. “Being resilient is a commercial endeavor,” said Robin Vince, president and CEO of financial institution BNY Mellon. “Economies around the world rely on the financial sector to be resilient, to be able to weather downturns.”

A SPOTLIGHT INTERVIEW

‘As recently as January 2020, we took a lot for granted and didn’t consider resilience to be very important,’ says Alain Bejjani, former CEO of Dubai-based conglomerate Majid Al Futtaim, in this interview with McKinsey senior partner Gemma D’Auria . “What mattered at the time, first and foremost, was efficiency and how to improve it to support growth and margins. Then, in the span of ten days, we discovered resilience matters above all else.” Though Bejjani’s company is used to operating in volatile regions—the Middle East, Africa, and Central Asia—the COVID-19 outbreak was of a scope and scale that no organization could have been prepared for, with disruptions that are still ongoing, in his view. “As leaders, we must be mindful of the consequences of an action not only in the next week, month, or year, but over the horizon,” he says. “We must plan for long-term recovery by taking into account the changes to normal business operations that are apt to become permanent; this is yet another dimension of resilience.”

MOVING ON

Image of a person hopping onto a rock in water

The writer and philosopher Ralph Waldo Emerson is lauded for his resilience and optimism in the face of personal tragedy. His remedy for it was “not to stay still” but to go on with his life and work by harnessing a “recuperative force,” as this Wall Street Journal article describes. In a business context, that recuperative force is all about moving forward and adapting to change in practical ways, whether it is through agility and self-sufficiency , as McKinsey senior partner Dana Maor and colleagues suggest, or bolstering resilience through foresight, response, and adaptation , as McKinsey senior partners Celia Huber and Ida Kristensen , along with North America managing partner and senior partner Asutosh Padhi , recommend in this podcast.

Lead with resilience.

— Edited by Rama Ramaswami, senior editor, New York

Click to get this newsletter weekly

Follow our thinking

Share these insights

Did you enjoy this newsletter? Forward it to colleagues and friends so they can subscribe too. Was this issue forwarded to you? Sign up for it and sample our 40+ other free email subscriptions here.