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From planning to practice: A leader’s guide to building resilience

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“In the next two decades, competition for global influence is likely to reach its highest level since the Cold War,” according to McKinsey’s Andrew Grant, Ziad Haider, and Jean-Christophe Mieszala. As organizations strive to remain global players in a world rocked by crises, most executives are “seeking a more rigorous and analytical approach to fostering geopolitical resilience and to creating an enterprise-wide ‘resilience premium,’” the authors report. This involves focusing on six key dimensions of resilience—such as business model resilience and reputational resilience—and addressing strategic issues related to each. For example, when considering business model resilience, leaders may need to ask practical questions such as: How should we structure relationships with joint-venture partners in the short and long term? How should we manage extraterritorial legal, tax, or regulatory requirements? The answers could help shape proactive risk mitigation measures.

49%

That’s McKinsey global managing partner Bob Sternfels during a panel discussion on global resilience at the World Economic Forum’s annual meeting in Davos, Switzerland, earlier this month. Urging companies to begin “stress testing a much wider array of scenarios” than previously, Sternfels called for tangible action: “[If we] start making some decisions and move even under uncertainty against a wider range of scenarios, we may end up having some positive outcomes.” Panelists concurred that resilience needs to be viewed not as a cost but as an investment in future growth. “If you don’t invest in resilience, you move into loss and damage,” cautioned Rania Al-Mashat, Egypt’s minister of international cooperation. “Being resilient is a commercial endeavor,” said Robin Vince, president and CEO of financial institution BNY Mellon. “Economies around the world rely on the financial sector to be resilient, to be able to weather downturns.”

‘As recently as January 2020, we took a lot for granted and didn’t consider resilience to be very important,’ says Alain Bejjani, CEO of Dubai-based conglomerate Majid Al Futtaim, in this interview with McKinsey senior partner Gemma D’Auria. “What mattered at the time, first and foremost, was efficiency and how to improve it to support growth and margins. Then, in the span of ten days, we discovered resilience matters above all else.” Though Bejjani’s company is used to operating in volatile regions—the Middle East, Africa, and central Asia—the COVID-19 outbreak was of a scope and scale that no organization could have been prepared for, with disruptions that are still ongoing, in his view. “As leaders, we must be mindful of the consequences of an action not only in the next week, month, or year, but over the horizon,” he says. “We must plan for long-term recovery by taking into account the changes to normal business operations that are apt to become permanent; this is yet another dimension of resilience.”

Lead with resilience.

— Edited by Rama Ramaswami, senior editor, New York

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by "McKinsey Leading Off" <publishing@email.mckinsey.com> - 02:13 - 30 Jan 2023