It has been a year since we spoke to the CIO of a major high street café chain, who told us that “cautious optimism is hugely important”. He was leading the optimism movement at the time, and it’s a sentiment that we’ve only seen grow and grow: business leaders are leading through precautionary principles of risk management and modelling macroeconomic shocks, with more organisations than ever saying that they have a business continuity plan in place in the event of a crisis.
Recent UK government announcements to work from home where possible - and the ever present questions about Christmas - epitomises the essence of this past year: turbulent, uncertain and changeable. However, in this environment, business optimism is holding strong, vindicated by the recovery that is being tracked across industries.
If we rewind to the spring of 2020, images of shut-up shop fronts and empty city streets are forever ingrained in the public consciousness, with the drive to “shop small” dominating our online ads. Investment Monitor tracked the companies that were hit hardest by the pandemic, with organisations from leisure & the arts, transport & logistics and construction - industries that rely on face-to-face interaction - topping the list. Some companies saw a decline in revenue of up to 87% from 2019 to 2020.
But none of this is new information. The question is, what is business looking like now? Where are we on the path to recovery? And what comes next?
THE BUSINESS HEALTH INDEX
Our latest piece of research, The State of Recovery Report, is all about tracking how businesses are bouncing back from the impacts of the pandemic. We asked our community of business leaders to rate their organisation out of 10 on a business health scale (where 0 is verging on closure and 10 is substantial growth), both for April 2020 and for today. The results allowed us to map where organisations are on the path to recovery from the impact of COVID-19, and create a Business Health Index, split by industry, digital maturity, organisation size, and disruptive mindset. Download the report here to get full access to the Business Health Index.
Let’s start by looking at where organisations sat in April 2020.
28% of respondents who ranked their business health at 5 or below in April 2020. When we break this group down by industry, it is clear that the industries that were most reliant on face-to-face interaction were the most severely affected, with the majority of respondents in this group coming from leisure & retail. (Fig. 1)
So, where are those organisations now? If we just take those organisations that ranked themselves on the lower end of the business health scale in April 2020, the shift up the scale has been encouraging over the last 18 months. As shown in this graph below, this group averaged 4.25 in April 2020, but the average sits at 7.25 for today. (Fig. 2)
Fig. 2: Comparing business health across timeframes, for respondents that ranked at 5 or less in April 2020
It’s clear that a disruptive mindset supported strong recoveries for many organisations. Despite disruptors and defenders being equally impacted in April 2020, disruptors are the group that have seen a bigger jump towards recovery in the last 18 months - powered by their natural aptitude to respond to change and the agility that’s built in for digital natives. (Fig. 3)
Fig. 3: Comparing average business health across timeframes, for disruptors and defenders
UNDERSTANDING RESILIENCE
Knowing how organisation size, digital maturity and disruptive mindset impact recovery can help us map the crucial characteristics of a resilient business. Recently, in conversation with a global technology leader at an international bank, he argued the case for adaptability: “business resilience is all about how businesses respond to challenges in the future. Adaptation to change can be favourable, but it is also important to understand the changes and pre-empt them.”
As we discovered through our research, the core characteristics of a resilient business today were:
With these elements in play, there is no reason why a business of any size or industry cannot thrive in a rapidly changing world.
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