We think of resilient companies as being good at responding to risks. But what about taking risks?

Turns out they’re pretty good at that, too.

The most resilient companies in a survey by SAP Insights are more likely to see intelligent technologies such as AI and blockchain–considered risky by pretty much everybody–supplying their biggest opportunities for growth.

These companies are also experimenting much more with process change–another risky proposition, considering that resistance to change is woven into our DNA.

Why do they do it? Because risks are less risky for these companies.

If you were a toddler about to jump into a pool for the first time and someone who had never dropped you awaited you there with arms outstretched, you would be a lot more likely to take that jump than you would with swim fins alone. Resilient companies are the same way. They have a foundation of strength and reliability that makes taking risks (including innovation) easier and (usually) more rewarding.

The top 25% of companies in the survey (let’s call them “the Resilients”) are better at responding to problems–such as market dips, labor shortages, and disrupted operations–that can occur at any time. They are also better prepared for what might happen in the future. Furthermore, they are more likely to have access to the data they need to be confident in their decisions. (See “Our resilience formula.”)

These strengths don’t just reduce risks and improve the prospects for innovation: the Resilients also tend to expect more revenue growth than other respondents.

Our resilience formula

We told you that the Resilients are the top 25% most resilient companies from our survey. But if you really must see our work, here’s the formula:

We calculated a resiliency score for each respondent based on their answers to our questions about current resilience, future resilience, and data accessibility capabilities. For each question, we graded the responses on a scale of 0–5 (with 0 equal to “no capability”) and calculated an average.

We added the scores for current resilience and future resilience, then multiplied the sum by the data accessibility score to get an overall resiliency score. We chose to multiply the data accessibility score because when people have access to the right data it amplifies their decision-making ability.

The Resilients have a foundation of strength–and it pays

First, let’s understand the three characteristics that give the Resilients their strength.

• Resilience now. They are more than twice as likely as other respondents to say they are “very effective” in nine capabilities needed to respond to problems such as disruptions to operations that can occur at any time (see Figure 1a).
• Resilience later. The Resilients are nearly twice as likely to say they “strongly agree” that they’re ready to respond to challenges that could affect them in the future, such as staying current with technology and responding to changes in customer demand or preferences (see Figure 1b).
• A talent for data. Finally, the Resilients are twice as likely to “strongly agree” that they have access to the data needed to make decisions: for example, to find and analyze potential risks, plan for the future, and make operational improvements. Their talent for using data suggests they know resiliency isn’t just about knowing how to suffer and survive. It’s about knowing when disruptions will occur, and responding in ways that will make them less vulnerable next time (see Figure 1c).

Resilience pays. Now we can see how their strength pays off. The Resilients are more likely than the rest of the respondents to say their companies increased revenues in 2022. Though we can’t draw a causal connection, it’s probably no accident that being more resilient today and tomorrow, and having better access to data for decision-making, correlates with more success.

Resilience makes risk-taking easier

From their position of strength, the Resilients can afford to take more risks than the rest of the respondents. For example, their attitude toward technology and their pursuit of process change shows a greater potential for innovation.

Resilients are better at leaving the past behind. Think coming up with new products and services is the hardest part of innovation? Perhaps even tougher is leaving successful products or business models behind in pursuit of new ones. Although all respondents named this as one of their top innovation barriers, the Resilients have an easier time saying goodbye than other respondents.

They connect technology with growth. The Resilients are placing their bets on intelligent technology that improves data analysis and decision-making. They’re more likely than other respondents to say that such technologies are a pathway to future growth.

They’re more ambitious about process change. Process innovation can be every bit as important to growth as new products and services. And the Resilients tend to be doing more than everyone else. Most often, they said they were working on five improvements, while everyone else most often said they were working on three (See Figure 5a). As a result, they are also significantly more likely to be targeting a wide range of outcomes from process improvement: everything from increased automation to sourcing more ideas from customers and partners (See Figure 5b).

How to join the Resilients

Perfection is not required. A big first step you can take to joining the Resilient club is to excel at one thing. Respondents who say their companies are highly skilled at any single capability in the categories of current resilience, future resilience, or data access tend to rate themselves better across all the other capabilities compared to those who say they aren’t excellent at any. One possible reason: scenario planning processes followed in one area can be adapted across functions with incremental adjustments.

The Resilients are far ahead of the rest of the respondents in their ability to deal with problems in the moment and anticipate those in the future. But they are far from perfect. The Resilients gave themselves the highest ratings on at least four out of nine current preparedness capabilities and six out of 11 future preparedness capabilities. Beyond that minimum, having more highly rated capabilities didn’t significantly improve respondents’ resiliency scores. The entry fee to the Resilient club may not be as high as you imagine.

But investing in data is essential. Remember that one of the characteristics of the Resilients is their high degree of access to data. You can win as many black belts in Six Sigma (or its derivatives) as you want. But all that expertise and effort will be muted at best and wasted at worst if you lack the data to know how your current processes are working. Without that insight, it’s more difficult to know which processes most need fixing to make your company more resilient.

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