Entrepreneurship, Technology

What Does Strategic Resilience Look Like for Startups in 2022


Resilience is a critical requirement for organizations in crises, but what does being strategically resilient mean for startups? How does strategic resilience give startups the ability to overcome the short-term and long-term challenges of, say, the pandemic and thrive long beyond?

Download the full whitepaper – Building a Resilient Company in the New Normal

Defining Strategic Resilience

“The greatest danger in times of turbulence is not the turbulence itself, but to act with yesterday’s logic”- Peter Drucker.

McKinsey defines strategic resilience as the “extent to which an organization’s business model and competitive position prove resistant to disruption”. During COVID-19, a major global crisis, McKinsey surveyed 300 senior European executives to understand their organization’s resilience.

McKinsey found that the pandemic exposed weaknesses in companies’ strategic resilience. It also discovered that the most pivotal factor in strategic strength was business model innovation. And finally, the survey revealed that 60% of executives expect these innovations to continue beyond the pandemic, with projects lined up.

When responding to uncertainty, Deloitte reads, most executives and board members incline toward one of the following responses:

  • They either portray a lack of confidence- understanding the depth, presence and complexity of a challenge but being paralyzed- which results in slow, timid and erratic decision-making.
  • Or, they portray overconfidence, dismissing genuine threats in front of them, only to make hasty, superficial and simplistic solutions that fall short.

Strategic resilience involves realistically taking in the status quo, devising strategies to cope and thrive in the environment and then consistently beyond it.

Business Model Innovation as Part of Strategic Resilience

The pandemic compelled businesses to reevaluate their business architecture as obvious avenues closed down. Business architecture or business model refers to all the systems and connections between people, processes, activities and resources that are ultimately essential to deliver value to customers and stakeholders.

Business and technology models have been constructed to support a stable environment. However, with several disruptions looking us in the eye, there is a dire need to introduce flexibility in these models to respond to threats in newer, more empowering ways.

The pandemic didn’t introduce anything new. It only accelerated the need for change that was very much present before. The difference between the best and worst-performing businesses lied in their preparedness to bring on those changes. Companies that lost their competitive edge will need to move faster to cover the lost ground.

As stated earlier, business model innovation was the top cause of resilience in winning companies. Those who adopted newer business architectures focused on the following areas:

New offerings to Respond to Changing Customer Needs

Leaders of retail companies will tell you how different things are now from March 2020. In the U.S. alone, e-commerce constituted 15% of sales in 2020, up from 11% a year before. Today, consumers are accustomed to shopping online. Those who didn’t have an e-commerce store account before learned to surf their way through online stores during the pandemic.

According to EY’s Future Consumer Index, 80% of U.S. consumers are still changing their shopping habits, 60% are visiting brick-and-mortar stores less frequently than before the pandemic and 43% shop online for products they previously purchased in stores.

This is just about the retail and e-commerce businesses. Catering to changing customer needs has been no longer an option for a couple of years. Rolling out new services or new ways of delivering the same services will help companies build strategic resilience.

Fresh Partnerships

Continuing the same example and report around retail businesses and how they strengthened their position during the pandemic, retailers made approximately $10 billion in acquisitions, partnerships and e-commerce investments between May to July 2020.

These investments went into logistics capability-building to enable last-mile, asset-light service approaches, including ghost kitchens (restaurants with kitchen equipment and facilities that don’t cater to dine-in customers) and dark stores (distribution centers that only cater to online orders), and investments in up and coming digital capabilities in AI and blockchain.

New partnerships within and outside the industry can create new opportunities for businesses to deliver value.

Related Reading: What’s Up With Blockchain? Current Trends in the Industry

Risk Management

As companies bumped against challenges, they planned strategic changes to their operation and configuration of their supply chains to mitigate risk. McKinsey surveyed senior supply chain executives across geographies and industries. They found that 93% of respondents intended to make their supply chains more resilient, flexible and agile.

Companies tried to balance just-in-time delivery with protection against shutdowns and delays by securing alternative supply sources and ensuring that the labor force continued to operate. For instance, contact centers split their teams and moved remotely to isolate teams from spreading infection.

Agile supply chain management can mean the difference between a resilient and a frail organization.

Changes in Sales and Marketing

As businesses changed the way they delivered services, products and experiences, they had to switch up their sales and marketing for the same. For instance, restaurants shifted to at-home delivery and pick-up orders- which transformed what they were selling- not a dine-in experience, but a safe and secure at-home delivery experience.

In another wave of changes, marketing and sales got hyper-personalized rapidly. Marketing messages became more relevant with the world’s happenings, and customers started expecting businesses to offer precisely what they needed in terms of content, commerce, community and convenience.

Resilient and strategic businesses realized the switch and held back from scheduled marketing, which was tone-deaf in light of the recent global events.

Related Reading: Personalization Vs. Privacy- Where’s the Fine Line?

Rapid Iteration & Development

A rapidly changing outside world warranted rapid product development for quick response. For instance, telecom companies working with insurers and healthcare institutions quickly responded to the pandemic by creating telemedicine applications to test and diagnose COVID-19 remotely.

Meanwhile, events management companies started offering virtual event experiences to stay in business.

Rapidly iterating and developing new products and business models allowed companies to respond to the pandemic effectively- not losing a lot of money, time and sanity.

Download the full whitepaper – Building a Resilient Company in the New Normal

For startups in 2022, building strategic resilience might look like setting bold aspirations, visualizing scenarios of uncertainties you might face, setting up a portfolio of big moves (resource reallocation, mergers and acquisitions, investing in technologies) and dynamically adapting strategy to reflect the needs of customers and partners.

The level of innovation achieved by businesses in building a resilient strategy has been impressive. If you’re plunging into it now, having a trusted vendor by your side can be immensely helpful. KiwiTech helps startups in several ways. Reach out to us today.

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