Beyond Covid: Why business leaders fear future crises

Global business leaders believe the disruption seen in 2020 is not a once-off and advise CEOs to better prepare for future disruption.

Most global leaders (60pc) believe the disruption seen in 2020 isn’t a one-off, and disruptions of similar scale – including those related to the climate crisis – could come with more regularity.

However, less than a third of leaders feel completely confident that their organisations could quickly adapt and respond to future threats.

“Organisations that plan and invest in anticipation of future disruptions will be better positioned to thrive”

Deloitte’s 2021 Resilience Report explores how organisations have coped with the tumultuous events of 2020 and identifies the traits that characterise a resilient organisation—traits business leaders can cultivate in order to build greater resilience into their own companies.

Deloitte’s survey of 2,260 C-Suite executives in 21 countries confirms that organisations that plan and invest in anticipation of disruptions—whether on the scale of an isolated cyber-attack or a full-blown health pandemic—are better positioned to respond, recover, and thrive.

The consensus is that acting early and advanced preparation matter.

Cultivate an appetite for disruption

Man in suit beside wall that says Deloitte.

Harry Goddard, CEO of Deloitte Ireland

“We all know that the one thing that is certain in life is change, but what we have all faced in 2020 has been uniquely challenging,” said Harry Goddard, CEO of Deloitte Ireland.

“Business leaders have had to explore new ways of operating including switching from physical to digital channels to meet customer demands, reconfiguring supply chains and shifting to remote working.

“As resilient Irish businesses look to recover and rebuild, the road ahead is likely to be even more unpredictable. Organisations that plan and invest in anticipation of future disruptions will be better positioned to thrive,” Goddard recommended.

Can you lead in a crisis?

Sometimes leaders don’t know their capabilities until they are put to the test. Case in point, before 2020, only 24pc of C-suite executives felt completely ready to lead through potential disruptions, and only 21pc felt completely confident their organisations could quickly adapt and pivot, if needed.

In the midst of the pandemic, however, these numbers jumped to 34pc and 30pc, respectively, indicating that the events of 2020 have given some a confidence boost about their organisations’—and their own—resilience. Yet, that still leaves 66pc of C-suite executives who don’t feel completely ready to lead and 70pc who don’t have complete confidence in their organisations’ ability to pivot and adapt to disruptive events.

That is concerning considering that global business leaders made it clear that disruption is not going away: Three quarters say they believe the climate crisis is of similar or greater magnitude compared to the COVID-19 pandemic. They ranked climate change as the top societal issue for business to tackle over the next decade (47pc), followed by health care issues and disease prevention (42pc), and gaps in education and training (39pc).

“January is always a time to take a moment to reflect,” said Goddard. “It is also a time to plan ahead to meet future challenges and likely disruptions. One real and meaningful approach would be for businesses to adopt a truly purpose-led strategy that embraces all stakeholders and puts the advancement of society at the heart of business strategy for the benefit of all.”

The 5 characteristics of resilient leaders

Deloitte’s research identifies five attributes of resilient organisations that serve as a strategic, operational, and cultural guidepost. Resilient organisations did not necessarily predict the events of 2020, but they withstood the immense pressures by enabling and promoting nimble strategies, nurturing adaptive cultures, and implementing and effectively using advanced technologies.

The survey suggests that organisations that deliberately build the following attributes into their operations and cultures are better positioned to overcome disruptions and help usher in a “better normal.” They are:

Prepared. Successful business leaders plan for all outcomes, both short- and long-term. More than 85pc of those surveyed whose organisations successfully balanced addressing short- and long-term priorities felt they had pivoted very effectively to adapt to the events of 2020; fewer than half of organisations without that balance felt the same.

Adaptable. Leaders recognise the importance of having versatile employees, especially after a year like 2020. To that end, flexibility/adaptability was, by far, the workforce trait business leaders said was most critical to their organisations’ futures. Nearly three out of four respondents from organisations that had implemented actions to make their workforce more adaptable—such as by training or reskilling workers, implementing worker redeployment programs, or offering flexible working options—said their organisations are doing a good job at cultivating resilient cultures compared to just about half of organisations who didn’t have such programmes in place.

Collaborative. Business leaders indicated the importance of collaboration within their organisations, noting that it sped decision-making, mitigated risk, and led to more innovation. Two-thirds of respondents who said their companies removed silos in their organisations before the pandemic reported managing the events of 2020 better than their peers. Technology was a critical enabler of collaboration throughout the pandemic. Just 22pc of those surveyed said their organisations had the technologies needed to facilitate remote working before the pandemic. Forty-two percent developed and adopted these technologies out of necessity during the year.

Trustworthy. Business leaders understand the challenge of building trust with key stakeholders, yet many did not feel they had lived up to the task. More than a third of respondents were not confident their organisations had maintained trust between leaders and employees. In the context of the pandemic, physical, emotional, and digital trust were particularly important. Organisations that prioritised the physical safety of their employees and customers, the mental health and morale of their employees, and the security of their data weathered 2020 better than those who did not.

Responsible. Most business leaders acknowledge that the business world has a responsibility beyond the bottom line. Eighty-seven percent of C-suite executives who said they have done very well at balancing all of their stakeholders’ needs felt that their organisations could quickly adapt and pivot in response to disruptive events. That is nearly 50 percentage points more than the proportion of C-suite executives who said the same at organisations that haven’t done well at balancing their stakeholders’ needs.

By John Kennedy (john.kennedy3@boi.com)

Published: 25 January 2021