by HPA Partner Justin Moser
Every business that lasts for decades faces seasons of turbulence, including macroeconomic, geopolitical, and industry situations, or firm-specific difficulties. Even industry icons struggle. Take Alphabet, which holds one of the strongest market leadership positions and cash generation business models of any firm in history. Yet it faces real existential threats from regulatory forces pushing for a breakup, and the widespread use of GenAI alternatives for a variety of search content. Then there’s Southwest Airlines; one could hardly get through business school in the ‘90s or ‘00s without studying the airline’s industry-leading performance, employee productivity, and culture. Today, however, the airline finds itself grappling with underperformance, aging teams, shifts in the air travel business model, low-fare competition, and residual Boeing risks. All this to say: Even the top performers wrestle with difficult changes.
Let’s talk about the power of resilience
HighPoint Associates has previously written about resilience from a variety of vantage points: leadership resilience, supply chain resilience, and resilient strategy. While each of these are crucial components to a company’s long-term success, it’s also important to take a deeper look at the broader concept of firm resilience.
Firm resilience is distinct from business continuity planning. The latter addresses specific disruptions like cyberattacks or natural disasters. Instead, firm resilience focuses on a company’s ability to withstand and adapt to more existential threats like the ones I mentioned above. Both research and our experience working with clients who’ve navigated significant challenges support a few key themes.
Firm resilience can mitigate the impact of these risks, support faster change and recovery, and help the company emerge as a stronger, more competitive player. Instilling resilience manifests in several ways: reduced vulnerability to shocks, accelerated recovery times, and the ability to capitalize on opportunities that arise from adversity.
Here are a few hallmarks of resilient firms:
1. They maintain a proactive mindset. Resilient firms possess the ability to anticipate and prepare for existential crises. They are adept at sensing future changes and challenges earlier than their competitors and peers, allowing them to proactively allocate resources and take decisive action when it’s called for. This foresight is rooted in a combination of market perspective, data-driven insights, and a healthy dose of paranoia. Equally critical is that, even in times of success, these organizations sustain a sense of humility, recognizing the potential for disruption and continuously taking measures to future-proof their business. There’s no one and done when it comes to being resilient.
2. Resilient firms nurture a strong core while understanding it will evolve over time. They build robust foundations, focusing on core business definition and reinforcement rather than chasing over-proliferated adjacencies. They prioritize deep relationships and trust with their core customers, ensuring loyalty even as offerings and business models change. Additionally, maintaining a healthy balance sheet provides a crucial buffer against economic shocks and enables access to capital when needed.
3. They cultivate a resilient and agile workforce. Muscle memory goes a long way when it comes to the ability to change and adapt. By practicing business model innovation as a capability, organizations can proactively test and refine new approaches. That’s why it is critical that business leaders – particularly in functions most vulnerable to shocks like supply chain and technology engineering – possess not only exceptional skills but also the adaptability to navigate uncertainty. Additionally, resilient firms frequently develop a strong leadership bench, comprised of athletic talent, who lean in and get ahead of these changes. This allows current leaders to keep a closer eye on continuity of the present business.
4. Resilient firms also lead through change with conviction. Fearlessly navigating change is what will ultimately drive organizational performance, even in the face of tumult. By effectively communicating a clear vision, leaders can unify teams and inspire confidence in the organization’s future. A shared vision provides a sense of purpose and direction that can motivate employees to work towards a common goal. Equally key is having leadership that can make timely decisions, demonstrating confidence and competence in the face of ambiguity. But confidence doesn’t have to mean sacrificing empathy. Firms with empathetic leadership are better at building strong relationships and fostering a supportive work culture, nurturing trust and loyalty among their team.
While shocks are inevitable, the ability to weather storms comes by commitment and practice. By cultivating a proactive mindset, nurturing a strong core, fostering a resilient workforce, and leading with conviction, organizations can navigate turbulent times and emerge stronger.
HighPoint Associates has the leadership experience and deep functional and vertical expertise to help your business get on the path to resilience for sustainable growth and profitability. To learn more, please reach out.
JUSTIN MOSER is Chief Operating Officer and Partner at HighPoint Associates. Prior to joining HighPoint, Justin spent over 20 years in general management, finance, strategy, and marketing leadership, first as a senior consultant with Bain & Company, and then in progressive responsibilities at Mattel, Inc. Most recently, he served as Group CFO and Senior Vice President for Mattel’s Global FP&A, Investor Relations, Commercial Finance, Brand Finance, and Investment Finance organizations.
