During a McKinsey Live event, senior partners Ida Kristensen and Maria del Mar Martinez discussed how business leaders can strengthen their companies’ resilience and go beyond surviving to thriving in the changing economic environment.
New McKinsey research shows the best CEOs don’t wait for trouble to arrive. Resilient companies make fast and bold moves on productivity, and create space for operational and financial optionality all while divesting during the downturn and acquiring in recovery.
Conversations often focus on financial resilience (balance sheet strength, cash positions, etc.) but there are multiple resilience dimensions that can support both defensive and offensive actions:
- Financial: pricing, cost control and agility, cash conversion, and hedging
- Operational: workforce management, supply chain, and maintenance
- Digital and technological: cybersecurity, data protection, and quality as well as availability, automation, analytics, and the digital experience
- Brand, reputation, and environmental, social, and governance (ESG) investment: stakeholder management and communication plus commitments to society
- Business model and innovation capabilities: Product and customer needs and ecosystems and alliances
- Organizational: leadership resilience, decision-making agility, and talent
To tackle institutional resilience, leaders can pose three key questions:
- How well is the company prepared to respond to disruptions and apply all available resilience levers?
- Has it defined the right scenarios and does it have an analytical tool kit in place to anticipate the next storm?
- Is it investing in an agile organization to build a resilience muscle that will serve in the long term?
* * *
For more on this topic, please read the article “Something’s coming: How US companies can build resilience, survive a downturn, and thrive in the next cycle.”