Overcoming uncertainties

What is it that characterises a resilient organisation, after all? A resilient organisation is aware of its key stakeholders and the environment in which it operates. It has a deep understanding of its key vulnerabilities and the impact these vulnerabilities can have on its operations and financial results. Think of teams that are facing knowledge constraints in new projects or a high dependency on raw material shipments from overseas.

Another quality of resilience is the ability to adapt to changing situations with new and innovative solutions, and do so fast. An organisation with increased resilience is able to quickly identify and respond to any situation that has potentially negative consequences, finding ways to minimise detrimental consequences. They do not have to be perfect or overengineered, just an appropriate and fast response without delay. Fine-tuning and adjustments are of secondary priority. Resilience enables companies to see fruitful business opportunities in even the most challenging circumstances, enabling them to move forward even in times of adversity.

The importance of management structures to succeed

In times of uncertainty, management structures and processes must adapt to the challenges that arise and enable accelerated response cycles. Historically well-established management processes are not designed for this job. We are used to negotiating budgets and setting targets on an annual basis, and leaders work towards achieving them with more or less regular feedback rounds that usually do not impact the budgeting.

However, in times of uncertainty, iterative and fast-paced improvement processes are required. Instead of long processes, a quick diagnosis should be carried out in the respective business areas, taking current circumstances into account and adapting the operating model to address the issues. Understanding the need for urgency and necessary fast reactions trumps sophisticated and lengthy business planning, while we have to keep the drive for perfect solutions at bay.

The role of communication

Crises come in varying degrees of intensity, but, however great their magnitude, what they all have in common is that communication is crucial to maintaining employees' trust and confidence in the organisation. Communication plays a key role in ensuring that employees feel informed, supported and engaged. It helps manage expectations, dispel rumours, build trust and create a positive working environment that enables employees to adapt and thrive.

Focus on factors the organisation can control

While companies have very little leverage on volatile energy markets and disrupted supply chains, there are a number of areas that offer almost full control, and they are fundamental for creating a clear vision for a successful future. A good starting point is to create a flexible, lean organisation with a minimum of bureaucracy and decision-making driven by data rather than by mere assumptions.

Transparency throughout the production and SG&A processes, supported by digital tools providing real-time insights and analyses, leads to significant performance improvements and fosters agility. System automation helps increase shop-floor transparency with the information being made available on the levels where value is created, whether it is production, improving energy efficiency, supply chain or maintenance. Direct accountability for reactive decisions will follow, driven by empowered and engaged employees, and pave the way for forward-looking proactive measures and improved performance.

While we commonly experience double-digit performance gains in our projects with EBITDA impacts up to 12%, well-guided information system support is the “turbo mode” to achieving them. Rigour in quality control processes will help reduce reworking and material waste as a cost-reduction element but also as a pillar for environmental sustainability.

And, of course, practice makes perfect – a culture that is used to regularly evaluate performance against a set of iterative targets as better odds at defying the diverse uncertainties. By implementing a combination of these strategies, organisations can significantly improve performance, increase profitability and reduce their environmental footprint. At the same time, as a lever for reduced environmental footprint, raw-material consumption, energy, and efficiency, it helps organisations remain resilient through uncertain times.

If there’s one thing that’s certain in business, it's uncertainty.

– Stephen Covey