How to grow your return on resilience

In brief

• Accenture research confirms that resilience—core to reinvention—is not only measurable and predictive, but also a source of growth and profitability.
  
  
• Highly resilient companies grow revenues 6 percentage points faster than their peers and have profit margins that are 8 percentage points higher.
  
  
• Three actions today can help leaders build resilience in a way that generates significant returns and serves their organizations well for years to come.

Business leaders have long looked to unlock resilience, often focusing on a single intervention such as adopting a cloud-based infrastructure, fortifying operations, or building resilience into their supply chain. While all are important, the definition of resilience has changed. It’s less about managing risk and more about building capabilities that, together, serve as a critical source of revenue growth and profitability.

Resilience is measurable. And predictive.

Accenture’s Resilience Index (RI)—which assesses a company’s strengths across six performance dimensions—shows that only 15% of companies are highly resilient. They outperform their industry peers across all dimensions and use resilience as an engine of long-term profitable growth. Further, a company’s Index score is an early indicator of future financial performance; for highly resilient companies, the predictive accuracy of their RI scores hits 82% when looking three years ahead.

Investments in resilience deliver tangible (and significant) returns

A company’s Return on Resilience takes the form of enhanced revenue growth and profitability, particularly over the long haul. This is especially apparent among the most resilient companies. These leaders are set to achieve a compound annual revenue growth rate (CAGR) that is 6 percentage points higher than their industry peers, and profit margins that are 8 percentage points higher.

The key to high Returns on Resilience: Balanced and sustained investments

We found that investments that are broad-based and balanced across the six dimensions of resilience produce the greatest returns. By adopting a balanced approach, the most resilient companies today can multiply, by a factor of four, their chances of sustaining their high financial performance three years from now. Companies currently exhibiting low growth and low profitability can also benefit.

By investing in resilience more comprehensively and evenly than their peers, they can leapfrog to the top quartile of financial performance. Conversely, companies that are growing profitably today but underinvesting in resilience (28% of our sample) have a 4X lower chance of sustaining high financial performance in the future.

Balancing investments across resilience dimensions is critical. So is sustaining those investments over time. Investing in one or even a few dimensions of resilience may help companies achieve high performance. But sustaining that performance requires consistently investing in a balanced set of strengths across all RI dimensions.

Many happy returns

Leaders who want to optimize their Return on Resilience should consider the following:

1. Focus on early warning signals today to help weather the storms of tomorrow
   
   While the actions to build resilience will differ from one company to the next, investment across the three dimensions of finance, business and tech—and sustaining those investments over time—enable companies to thrive. In fact, our research shows that companies that are not high performers can double their chances to achieve top performance by balancing their investments in resilience and preserving their investments year after year.
   
   
2. Position tech, talent and TQ as an unbeatable triple threat
   
   Resilience depends on a strong digital core. But a focus on technology will only take a company so far. It’s the talent behind the tech—the human creativity, intuition and experience, as well as the technology quotient (TQ) of a company’s Board of Directors—that unlocks its full potential. The combination of a strong digital backbone, a robust talent strategy and Board TQ amplifies the value. Companies that invest in this combination of capabilities increase their probability of becoming a long-term profitable growth company by a factor of four. Under-performing companies with the best chance of rising to the top are 1.7X more likely to present this triple set of strengths.
   
   
3. Make resilience personal
   
   The CEO’s mindset around resilience can influence the mindset and actions of employees. Our research shows that CEOs have a direct role in building worker resilience and mobilizing actions that enable long-term profitable growth, with 58% of workers believing their company’s CEO directly impacts their personal resilience. That matters, since highly resilient workers are 1.7x more likely to drive a highly resilient enterprise.

Reimagine resilience

Returns on resilience are not only possible, but necessary in a world of heightened disruption and constant change. Optimizing returns requires leaders to reframe the conventional either/or tradeoff between resiliency and growth to a both/and mindset. It calls for leaders to embrace a holistic strategy that balances the right dimensions of resilience and invests accordingly over time. And it demands that leaders pursue personal resilience—and empower their workforces to do the same.