Resilient companies are more profitable companies, especially in the long run, according to a new report from Accenture.
The report, How to Grow Your Return on Resilience, said that highly resilient companies experience growth faster than their industry peers and have profit margins that are 8 percentage points higher. Moreover, by investing in resilience, companies are four times more likely to sustain their financial performance three years from now.
“Turning resilience into a competitive advantage is less about managing risk and more about sustaining high performance through continuous reinvention and balanced investments,” according to the report.
Accenture measured the resilience of more than 1,600 companies globally over the past seven years to understand how they performed before, during, and after a disruptive event.
The report introduced two notable metrics:
The Resilience Index assesses a company’s strengths across six performance dimensions: financial, sales, technology, global operations, talent, and sustainability. Only 15% of organisations are highly resilient, outperforming their peers in all six categories.
The index is designed to be an early indicator of future financial performance, with 67% accuracy when looking one year ahead and 82% accuracy when looking three years ahead.
The report’s return-on-resilience measure is a company’s expected revenue growth and profit margin three years into the future relative to revenue growth and profit margins of the average low-performing company in its industry.
Companies that are profitable today but underinvesting in resilience have a far lower chance of sustaining high financial performance in the future, the report said.
For organisations that want to optimise their resilience, the report recommends three actions:
Focus on early warning signals. Identify gaps in the resilience dimensions that will deliver long-term profitable growth.
Invest in technology and talent. Technologies such as cloud computing and artificial intelligence are critical to creating the flexibility and new ways of working that resilience requires.
Make resilience personal. Highly resilient workers are 1.7 times more likely to drive a highly resilient enterprise, the report said.
— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.
