Organizational resilience is defined as the ability of an organization to thrive, adapt, and expand during times of uncertainty.
The past few years have indeed consisted of several “shock events” globally, in rapid succession. Businesses with organizational resilience have survived epidemics, wars, and financial crises across the world.
The researchers at the Harvard Business Review found that the successful businesses that they analyzed following each recession fell into four main camps:
Overall, prevention-focused businesses seem to place too much emphasis on loss minimization and cost-cutting. Unfortunately, this includes a reduction in advancing R&D, developing new business, or capitalizing on other investments. This mindset of providing the same quality of goods and services simply by cost cutting, instead of operating more efficiently, often results in a loss in customer satisfaction.
Promotion-focused businesses, on the other hand, concentrate on investments that increase value, in an offensive move. However, garnering upside benefits can also be too ambitious, due to the aggressive nature of promoting change. Initiatives are optimistically yet blindly followed, and organizations should aim to avoid this sort of tunnel vision—promotion-focused organizations may be blindsided by unfavorable financial results.
Pragmatic businesses combine defense and offense, by trying to cut costs while increasing value. This is typically done by combining three defensive approaches (employee reduction, operational efficiency improvement, or both) with three offensive approaches (new market development, investment in new assets, or both). The nine possible combinations yielded from these approaches ranges from worst to best in terms of organizational resilience following a global crisis or shock event.
Progressive businesses outperform their pragmatic counterparts by almost four percent. Why? They select the best defensive moves. Instead of only reducing employee numbers, they focus more on operational efficiency improvement. On the offensive side, they are far more generous. They make greater investments and create more new business prospects.
Below, we’ll unpack some of the best defensive and offensive approaches that your organization can take, to ensure resilience during times of uncertainty.
Successful organizations worldwide implemented the digital transformation of important processes—operational, management, and supporting processes—long before the latest global shock event. Implementing sound technology solutions to improvement efficiency in daily tasks not only reduces time and effort, but also reduces redundancy and the risk of loss, enables agility, and provides visibility over processes. This gives any business an edge over competitors and improves organizational resiliency.
With recent global crises, many businesses have had to temporarily close their doors—some fortunately only physically, and not in the metaphorical sense. With manual and face-to-face interaction being impossible for some time during the various shock events of 2020-2022, or due to downscaling of office space for budgetary reasons, businesses have had to rapidly adapt to enabling remote work, with several technology adjustments and a shift to cloud storage. Organizations that are unable to do so are not nearly as resilient as their counterparts.
With the need for processes to be visible and knowledge to be distributed to relevant stakeholders highlighted in these times of uncertainty, organizations that have comprehensive knowledge distribution and exceptional approval strategies for processes are far more resilient. When there is visibility over activities, organizations can identify successful approaches and detect issues earlier, and then follow various defensive and offensive processes to survive crises.
As mentioned previously, focusing solely on cost reduction does not guarantee success. However, with inflation being at a record high across the globe, your business should certainly examine its expenditure more closely, and identify which processes are too time-consuming and costly.
With the closer examination of expenditure, your business will certainly need to analyze and manage direct and indirect spend more thoroughly. If your organization still utilizes manual spend management processes, you can greatly improve resilience during difficult economic periods by digitally transforming these and investing in a cloud-based spend management system.
A spend management software solution such as Fraxion supports organizational resilience by combining improvements from both approaches: offense and defense. With the workforce at an all-time low, its streamlined capabilities provide your organization with the opportunity to have less employees spend less time and cost your company less money while carrying out functions that are important for the survival of your business.
Spend management software is stored on the cloud, making it accessible from any device, in any location. Whether your company is carrying out flexible remote work policies, or whether its business as usual, cloud-based systems allow you to be agile and more responsive to crises in real-time.
With cloud-based spend management systems, any software worth its salt will also be available for mobile devices. The Fraxion Mobile app, for example, is available for Android and iOS devices, and enables your employees to create and submit requisitions for approval, as well as allow for mobile approvals by the relevant stakeholders. This gives your organization the modernization it needs to keep up and be resilient during periods of difficulty and unpredictability.
Organizational resilience has been shown to be greatly improved when businesses are able to improve operational efficiency and reduce costs. With a spend management system in place, you can save time and money by cutting out labor-intensive manual spend processes. In addition, a good spend management system also ensures purchasing authorization and allows for complete visibility over budget versus actual spend for the relevant stakeholders, as well as early risk detection with real-time view of budget impact at decision points.
With budget visibility greatly improved, a spend management system can also enable you to fine-tune your approval workflows and provide transparent audit trails of all user activity on the system. Spend management software provides different levels of approval groups and thresholds, with internal policy controls, configurable to your business rules and delegation of authority—eliminating rogue spending and advancing resilience. The accountability that these systems ensure, promotes a cost conscious and responsible spending culture company-wide.
The ability to analyze and report on current and historical spending empowers business leaders to make informed decisions. From identifying saving opportunities, understanding where risk exists and where tighter control is required, to gaining more spend predictability for budgeting and forecasting, having these capabilities in your arsenal during times of uncertainty can give you the edge to prosper. Spend analytics and reporting tools embedded in spend management systems underpin organizational resilience by empowering business leaders with the data to make astute decisions to reduce the right costs and protect reserves.
Do you need assistance with making your organization as resilient as possible, to survive these times of uncertainty?
Contact our team for a demonstration of how our capabilities can be tailored to seamlessly integrate with your organization’s processes to drive efficiencies, visibility and spend management.