Reinventing Resilience And Achieving Long-Term Profitable Growth

The Ebers Papyrus, an Egyptian medical text from 3,500 years ago, claimed that patients who recovered from certain infections were less susceptible to future occurrences of the same illness. Fast forward 1,000 years and Athenian historian, Thucydides, made a similar observation. He noted in History of the Peloponnesian War that people who survived the plague in Athens seemed to be safe from future outbreaks. These ancient authors were the first to recognize the concept of immunity to disease. But they didn’t understand the mechanisms at play. For thousands of years, human resilience to disease was largely attributed to divine intervention or luck, not a systemic biological process.

Business leaders over the past decade have a lot in common with the ancient influencers. They’ve watched other companies (or even themselves) successfully navigate adverse conditions, bounce back from disruption faster, and thrive when others struggle. But it has been hard to pinpoint why. Now we know.

Elusive, yes. Unattainable, no.  

A recent Accenture analysis of more than 1,600 global companies from late 2017 to late 2022 found that only 15% of companies demonstrated true resilience—defined as long-term profitable growth before, during and after disruptive events. Compared to their peers, this group widened their performance margins by more than five percentage points in that period.

The number of long-term profitable growth companies is relatively small, to be sure. But it’s somewhat surprising that this group of top performers is as large as it is. That’s because the overall level of disruption that companies face has increased by 200% from 2017 to 2022, according to Accenture research. That compares with just a 4% increase in disruption over the five years prior. The new pace of disruption shows no pace of slowing. In fact, 93% of CEOs admit they’re dealing with 10 or more global challenges today. In this environment, it’s easy to understand why business resilience can seem unobtainable.

Stroke of luck? Or stroke of genius?

Starting in the 18th century, physicians and researchers like Edward Jenner, Louis Pasteur and Elie Metchnikoff, who coined the term “immune system,” began proving that human resilience doesn’t just happen by chance. It depends on a complex network of cells, tissues and organs that, together, defend us from health threats.

Similarly, business resilience is a complex defense system, underpinned by three main components. As revealed by Accenture’s analysis, financial discipline, technological maturity, and strong business capabilities make all the difference. Nearly half of long-term profitable growth companies analyzed achieve higher-than average scores across financial, technology and business dimensions within Accenture’s Resilience Index. The opposite is true of companies with low growth and low profitability: almost half of them are weaker across the three dimensions.

Further, the analysis found that long-term profitable growth companies balance their performance across the functional business areas of talent, customer-centricity, sustainability, and supply chain and operations. Each of these functional capabilities is crucial. It is the combinatorial effect of cross-capability performance that produces the greatest long-term value.

A renewable energy company in Europe is one example of a company building multi-dimensional resilience. It has consistently demonstrated financial discipline by hedging its raw material exposure and diversifying its income streams. At the same time, it has ramped up investments in cloud and digital technologies to reduce carbon emissions, enhance energy interconnectivity to customers, and accelerate the deployment of electric mobility. The company’s financial health is intertwined with its digital and operational maturity.

A multinational fast food holding company also exhibits resilience by balancing performance across dimensions. Its sustainability and supply chain focus is reflected in its commitment to sourcing 100% cage-free eggs by 2030. It is upgrading its equipment and EV fleets for its people across its portfolio of stores. And it is investing significantly in innovation to drive seamless customer experiences across its online platforms. Strengthening its business capabilities to better serve its people, supply chain partners and customers is giving the fast-food giant a competitive advantage.

Boosting the immune system

We’ve learned a lot since our Greek and Egyptian forebears stumbled upon the concept of immunity. We now know, for example, that our immune systems can be made stronger when we focus on three things: a balanced diet, regular exercise and sufficient sleep. Strengthening an organization’s resilience also comes down to three things:

• Investing in building a digital core, while also strengthening the talent strategy. Leaders are using cloud, data, security and even emerging technologies like generative AI to build a digital core. That is enabling them to drive agility, innovation and transformative change at scale. In addition, Accenture’s analysis found that achieving resilience through technology is more likely when companies adopt a human-centric approach to their digital investments. This means integrating their digital and talent strategies and building diverse teams that can use technology to address challenges and pursue new opportunities.

A banking and financial services company, for example, is bolstering resilience by digitizing its banking offerings and simultaneously investing in talent. Grants to at least 12 social start-ups are creating an ecosystem for highly skilled and specialized talent in the technology space.

• Focus on financial discipline by making smarter capital allocation decisions. Of the three actions that boost immunity, a nutritious diet is arguably the most important. It fuels the body to fend off whatever nature may throw its way. In an organizational setting, financial prudence serves the same purpose. Sound financial management of costs and productivity ensures business leaders have the capital necessary to build their digital core and strengthen the business capabilities necessary for resilience.

A leading online travel company is doing just that. It is keenly focused on balance sheet optimization activities, such as restructuring of existing overheads by selling and leasing back its future headquarters, resulting in gains of $240 million. At the same time, it is pursuing a long-term investment strategy aimed at strengthening three key areas: marketing, technology and talent.

• Balancing the environmental, social and governance (ESG) agenda with customer-centricity and operational excellence. Savvy business leaders don’t pursue ESG actions to only reflect their organizations’ ethical principles, but also to achieve a strategic advantage by aligning values with value, not separating the two. These leaders know that socially responsible and sustainable actions can foster deeper relationships with customers, investors and communities. And they understand that setting strong ESG goals and then turning these commitments into tangible outcomes can even help boost operational efficiencies, innovation, talent retention and more.

A multinational consumer goods corporation is successfully balancing its ESG efforts with its strategic imperatives for growth. How? By focusing on building more diverse business operations, serving and advocating for women, and recognizing suppliers that demonstrate high standards of environmental sustainability. This multi-dimensional commitment to social responsibility is capturing the interest, and loyalty, of customers. Equally important, it unlocks new opportunities to strengthen and revitalize operations for the company.

Strength in one of these areas may enable companies to overcome a particular challenge or disruption. But leaders would be wrong to think they are truly resilient. When Thucydides said 3,500 years ago “…those who had recovered from the disease… in the elation of the moment, half entertained the vain hope that they were for the future safe from any disease whatsoever,” he knew that overcoming a single illness did not convey immunity to all maladies. The same is true for business disruptions.

Achieving resilience to multiple, ongoing challenges and disruptions requires a holistic and balanced system of defense. Financial discipline, digital maturity and operational fortitude are all necessary for long-term profitable growth. Each is critical. And it is their interplay that makes all the difference.