“We must resist the temptation to return to business as usual”

Business can never be the same again. If there is one lesson we must take forward with us as we emerge from the Covid-19 lockdown, it is how unacceptably vulnerable the machinery of commerce and our livelihoods are to shocks beyond our control.

To go back to our past ways of leading and managing businesses is simply to assume that there will never be another shock. Although we cannot control when any future shock might hit us, we can shape our businesses so that they are more resilient and less vulnerable.

Over the coming months, as we focus on the challenge of bouncing back, the critical task for any board must therefore be to identify how their organisation must change in order to become more resilient.

This is not simply to reduce the risk of it being upended in the future, as so many were by Covid-19. It is because without resilience there can be no sustainable commercial success in the long term.

Building back better

This job of building more resilient businesses cannot be done without first acknowledging that leaders need to change the way they think about risk.

From economic inequality, to excessive financial leverage; from exposure to climate change to over-reliance on finite resources, today’s business models remain underpinned by basic structural risks.

So, as businesses emerge into the ‘new normal’, business leaders must resist the temptation to return to the kind of business as usual which treated these risks as distant issues to be dealt with sometime in the future or as something for others to worry about.

Leaders must confront systemic risk with greater urgency and accept that responsible, resilient and sustainable business practices, far from being too costly or too niche to be relevant in advanced diverse global economies, are the very structure that underpins long-term business viability and success.

Courage to change

This is a job that cannot be done unless we challenge every assumption about the way we operate our businesses today. And it is only by measuring resilience through the lens of sustainability that we can then reimagine the kind of changes we need to make so we can thrive in the future.

While in the past leaders may not have felt adequately equipped with the knowledge to do this on their own, the experience of the pandemic means that every business is now armed with insight around the vulnerabilities of the system and the kind of changes they need to make.

One example is the way we organise our supply chains. Having witnessed the international scramble for PPE equipment early on in the pandemic, or empty supermarket shelves, it is clear that resilient, transparent supply chains are vital. We need to know where things come from, how they are made and who made them – not just the first level, but right through the chain to the raw materials and every item which contributes to the final product. Of course getting this right is a competitive advantage but it also can be an essential component of business survival.

Climate change is a whole new level of risk

The next frontier for managing systemic risk will surely be climate change. The disruption wrought by Covid-19 is nothing compared to the widespread upheaval we can anticipate if global heating goes unchecked. We cannot act soon enough to prepare our businesses for future shocks or its effects which will interrupt food supplies, water availability, production of basic raw materials and many people’s lives – not to mention the civil and political unrest this would result in.

The evidence could not be clearer that sustainability, far from being a cost or a luxury, is really the only basis on which our businesses and institutions will survive in the future.

That requires a level of ambition, a leadership mindset and a willingness for business to act boldly and decisively to make the changes which recognise that it is people, planet and profit together which will drive our businesses forward and secure their future.