How can you build resilience into your business strategy to withstand unexpected industry shifts?

Building resilience into your business strategy is essential to withstand unexpected industry shifts. Here are some strategies to help you achieve this: Diversify Revenue Streams: Relying on a single source of revenue can be risky. Diversify your income streams by exploring new markets, products, or services. This can help cushion the impact of industry shifts1. Develop Scenarios, Not Forecasts: Instead of relying solely on forecasts, develop multiple scenarios that consider various potential futures. This approach helps you prepare for different outcomes and adapt your strategy dynamically2. Invest in Technology and Innovation: Stay ahead of industry changes by investing in technology and innovation.

Diversify revenue streams, maintain flexible operations, and manage a robust supply chain. Keep financial health strong with cash reserves, monitor market trends closely, and invest in innovation and customer relationships. Develop your workforce through training to stay agile and responsive to changing conditions, ensuring your business can withstand and adapt to unforeseen challenges in the industry.

History shows that companies lose interest in resilience after crises (e.g., the Covid era). We must learn from past crises and systematically codify lessons learned to build true resilience, fostering a reflective and proactive approach to business. Too many organizations view resilience as short-term operational continuity during crises. However, true resilience is a company's ability to handle stress, restore functionality, and adapt to new situations. It's not just about surviving but about thriving. It's a strategic advantage that allows companies to seize opportunities when competitors are unprepared, fostering a sense of optimism and hope for the future.

To build resilience into your business strategy and withstand unexpected industry shifts, focus on diversification, adaptability, and strong financial management. Diversify your product lines and revenue streams to spread risk. Foster a culture of adaptability by encouraging innovation and continuous learning within your team. Maintain robust financial health by managing cash flow effectively and building a reserve for unforeseen challenges. Regularly analyze market trends and be proactive in pivoting your strategy to meet changing demands. This approach ensures your business can navigate and thrive through industry fluctuations.

All strategies are developed in the face of uncertainty, which can disadvantage a firm in various ways. Overconfidence can lead to corporate myopia while lacking confidence can paralyze firms. Either scenario can delay action until it is too late to avoid a negative outcome. It is uncommon for losers in a rapidly changing industry to be entirely caught off guard by change. They often need to establish a strategic direction to adapt to changing circumstances. Leading firms begin with a vision of the future: what will customers require in 30 years? Successful teams then plan for their long-term reference case while continuously monitoring the environment and making necessary course corrections.

Remember that technology is a tool and you should rule your tool, not be ruled by it. This is important for resilience because tech tools often have baked in assumptions/paradigms for operation that get institutionalized. When this happens, your organization may be artificially constrained by your technology choices. Do what is right for your business and choose the technology that best supports what's right. When tech doesn't support what's right, overrule it.

Even among companies that invest in long-term scenario planning, few consider "corner scenarios"—possible but improbable events, such as unexpected policy shocks or loss of access to capital markets. Planners frequently set aside these scenarios because they do not want to spend time developing detailed plans for unlikely conditions. However, ignoring high-risk scenarios is becoming an increasingly shortsighted strategy. Stress testing a company's capabilities has never been more critical, and it is one way that planners can identify the extreme corners to understand the implications and potential opportunities of low-probability, high-risk situations.

Be deliberate about this type of experiential learning. Build retrospective reviews into operational processes, and create a formal way to carry forward lessons learned. Many good lessons die in the meeting where they are surfaced because they aren't incorporated into future actions.

Periodically revisit and assess your strategy, making adjustments as needed. Embrace learning and unlearning, and don’t be afraid to challenge your own decisions. Nokia, for example, clung to its product design and couldn’t let go, resulting in its fall from market leadership.

A strategy isn't there just to be there. It is connected to goals. Don't wait till something big happens. Constantly review your strategy to ensure you are on target and that it is serving your end goal. Make changes as you go, if necessary. And do a big review quarterly, or bi-yearly.