Resilience Is More than Being Able to Rebound: It Should Be Used As a Competitive Advantage

By Jacques Bughin

While they may not be able to prevent pending economic crises such as those resulting from the COVID-19 pandemic, businesses can use them as launch pads to growth by becoming resilient and doubling down on growth instead of cutting costs.

Worried about a crisis? You might think it’s coming if you add in the Ukrainian war, inflation, a remnant COVID-19 pandemic, and burgeoning private debt. But in reality, there is also a bright picture to contrast with this bleak outlook in that the war may soon be over, China has reopened its economy, and inflation is levelling off slightly in some parts of the world.

Rather than spending too much time guessing at the next crisis, its size, nature, and timing, business leaders should instead teach their organisations to become resilient. In analysing the numbers from numerous crises, including research conducted in cooperation with Accenture Research at the time of the COVID-19 pandemic, we have discovered three important elements for leaders to take notice of.

The first is that resilience, or the ability to bounce back, is both a rare and long process. Brands like Hertz, JCPenney, and J.Crew went out of business in the first few months of the COVID-19 pandemic. In previous crises, 17% of publicly traded companies have gone public, either because they went bankrupt, went private again, or were bought out. And while most firms survived, it took between 1.5 and 3 years for firms and economies as a whole to recover the losses incurred during a major shock.

The second insight is that crises often redefine the status quo, with new winners emerging, and old winners becoming new losers. The falling angels are numerous, about 25% of total companies, but new rising stars are also visible. In fact, the idea is that resilience is a strategic complement to do better than before the crisis: what academics call bouncing “forward”. Resilient companies are those that use the crisis as an opportunity. Remember Andy Grove, then CEO of Intel, when he said that “crises make great companies better? At the time, Intel nearly collapsed because of a bug in the Intel Pentium processor. In fixing the bug, Intel also radically reinvented its partner ecosystem, while developing its Intel Inside Program that allowed the company to rebound and dominate the semiconductor market for years.

A final point concerns the ingredients for resilience and performance. Many studies, including consulting firms, will preach the virtue of agility, the ability to innovate or, the need to digitise. But the reality is more subtle than that. If a leader wants resilience to drive the new trajectory of his or her company, that same company will need to invest in the entire portfolio of capabilities (agility, innovation, digitisation, sustainability, and flexible work practices). And the best time to do so is during a crisis –precisely when rivals are scared, retreating, and overly focused on survival, instead of preparing for the next competitive battle. As Winston Churchill once said, “a good crisis should not be wasted.”

In practice, however, the typical company has a narrow set of capabilities and tends to retrench during a crisis. Winners are already preparing for the next crisis, and are eager to invest in difficult times when rivals have morphed into victims of turbulence. Best companies are not necessarily good at predicting crises, rather they focus on excelling in rising, and not falling, when the crises hit. Are you that breed?

This article is originally published on May 16, 2023.

About the Author

Jacques Bughin is CEO of machaonadvisory, and a former professor of Management while retired from McKinsey as senior partner and director of the McKinsey Global Institute. He advises Antler and Fortino Capital, two major VC/PE firms, and serves on the board of multiple companies.

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