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12 September 2018
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The world's first Organizational Resilience Index raises questions for smaller businesses
Only resilient organizations will survive and prosper over the long term. To help them, BSI has developed the world's first Organizational Resilience Index report and benchmark tool that can show them just how resilient they are.
The Index comes at a time of intense and unrelenting business disruption. Organizational Resilience is about the ability to adapt to such change. It is about being innovative, constantly learning and improving to overcome adversity and spring forward to seize new opportunities.
BSI has produced the Index with the aim of improving and embedding a culture of continual improvement. Achieving mastery of Organizational Resilience requires leaders to reflect upon and challenge assumptions. Past prosperity is no guarantee of future success, even for the greatest enterprises; time and again, inflexibility and being too inward looking have been shown to be their undoing.
Overall research findings
To create the Index, BSI conducted a major international study in which 1,260 senior business leaders participated, representing organizations in 10 sectors across three regions of the world: UK and Ireland, USA and Asia Pacific. The study asked leaders to consider their organization's fitness across 16 core elements, categorized into four areas: Leadership, People, Process and Product.
BSI's study found that, overall, leaders regard all 16 core elements as important, but not equally so. Reputation is seen as the most critical element for the long-term success of a business, even more important than Financial Aspects, Leadership, and Vision and Purpose. Despite this, 43% of the leaders interviewed believe their organization is strongly susceptible to reputational risk.
When asked to rate their own resilience, different sectors have widely differing perceptions of themselves.
Focusing on smaller businesses
Small and medium-sized enterprises are the driving force of the UK economy, but life can be far from rosy for them, with more than half of new UK businesses failing to survive beyond five years. In a survey by the FSB – the UK's largest organization representing small firms – over half of its 200,000 members identified the burden of regulations as their chief concern. A further government study of more than 5,000 managers and owners of UK SMEs identified a tough economy and strong competition as key barriers to their success.
In such circumstances, SMEs will benefit enormously from greater insight into just how resilient they are. BSI's Organizational Resilience Index can help by highlighting the indicators their leaders rank highest in terms of importance and performance:
On the positive side, most small business leaders feel their firms perform at their best in managing the Financial Aspects of the business. And, not surprisingly, they rank Financial Aspects highly in terms of importance. No doubt they are aware of the high risk of failure for small firms, and therefore the need for financial rigour.
Another ‘plus' is the perceived strong performance by small businesses in the ‘People' areas of Alignment – that is, staff pulling together in the same strategic direction – and Community Engagement. It makes sense that small firms find it easier than larger organizations to win the ‘hearts and minds' of their employees, and that they benefit from strong local connections.
So far, so reassuring. More worrying is that the two elements leaders consider of most importance – Reputational Risk and Leadership – achieve only mediocre ‘mid-table' rankings in terms of performance. Put simply, they are not as good at them as they would like to be.
But perhaps of most concern is the business element that small business leaders consider of least importance, and also regard as their weakest area of performance –Horizon Scanning. Their relative neglect of Horizon Scanning raises key issues, such as whether it is born of ignorance or complacency, and whether it invites unexpected setbacks in the future. Much the same questions should also be asked of small firms' Adaptive Capacity – their ability to implement change quickly – or apparent lack of it.
It will be of little comfort to know that the Index shows Horizon Scanning, Supply Chain and Innovation to be consistently among the weakest performance elements across most industry sectors. In general, it seems, organizations are leaving themselves vulnerable to unforeseen risks. In particular, they appear relatively ill-prepared to cope with today's extended, global supply chains, and the furious pace of technological innovation. Should leaders prioritize both to stay ahead of the competition?
Debra Charles, founder and CEO of Novacroft, a software development business that produces smartcards and smart technology, recently made use of the Index's benchmark tool. “We were going through some organizational change, so it was the ideal time to map our position in order to maximize future opportunities,” she says. “We could see that we were incredibly good at preventative control, performance optimization and mindful action – but we also recognized that we needed to balance that by being agile, enterprising and innovative.”
She adds, “The Index enabled us to evaluate where we were as a business, in order to keep balance in the organization. It also helped team members understand and get on board with the change that was happening.”
Where are your strengths and weaknesses?
To find out your organization's relative strengths and weaknesses – and how you compare with the 1,260 organizations behind the BSI Organizational Resilience Index – complete the simple BSI Organizational Resilience benchmark tool.
This online tool will present your results in a spider diagram. It will allow you to compare how you perceive your performance in Leadership, People, Processes and Product, based on the 16 elements, against the overall benchmark results. If, in light of your results, you wish to investigate further through a more comprehensive comparison against others in the survey, email [email protected]
BSI's Index can inspire your organization to boost its resilience, embrace change and seize every opportunity.
BSI is the business improvement company that enables organizations to turn standards of best practice into habits of excellence. For over a century BSI has championed what good looks like and driven best practice in organizations around the world. Working with over 86,000 clients across 193 countries, it is a truly international business with skills and experience across a number of sectors including automotive, aerospace, built environment, food, and healthcare. Through its expertise in Standards Development and Knowledge Solutions, Assurance and Professional Services, BSI improves business performance to help clients grow sustainably, manage risk and ultimately be more resilient. To learn more, please visit: www.bsigroup.com