Hello Anders, what are the most impactful findings outlined in Ericsson’s recently released IndustryLab’s Future of Enterprises #3 - Time to rethink resilience report?
“While we have identified quite a few findings in our research that we believe will have a significant impact on businesses going forward, there are a few that might carry a bit more weight – especially the overarching insight of the report – it is time to rethink resilience. While some companies have already made significant strides towards becoming more resilient, overall, there is much that needs further attention. Decision makers involved in the research agree that we are heading towards an increasingly volatile world, and just continuing as before will not do the trick. Equating resilience handling with having enough financial muscle to weather out any disruption will also not be enough. Focusing on mitigation strategies once the disruption is upon you is not going to be enough either.
“Therefore, we see that companies need to shift from a short-term recovery-oriented resilience model to a more proactive approach where innovation (including both technological innovation and business model innovation) is used to better handle changes. Another finding is that environmental sustainability and resilience need to be seen as two sides of the same coin. When enterprises strive to become resilient there is a risk, they do so by creating more redundancy, such as duplicating systems in case one system goes down.”
Can you expand more specifically on how an organisation can continue to evolve during times of crises and disruptive changes? What steps does the organisation need to take to accomplish these goals?
“First, it is important to highlight that not all businesses are the same. Companies differ in how they carry out their business objectives depending on their size, service/product type, industry sector, and capital available etc. So, while there are many different ways of looking at the enterprise market, in this report we analysed the data about how different companies view and deal with disruption and were able to highlight five different paths to resilience. Despite several differences between these paths, some characteristics are also shared. For example, innovation is, to varying degrees, a key component in all five paths, as is proactive risk management and being environmentally sustainable. Digitalisation is another key component for almost all of the identified paths. The five groups are “Employee-led”, “Agile and cost-efficient”, “Automation first”,” Sustainability pays off”, and “Innovation through digitalisation.
“Enterprises on the “Employee-led” path focus more on employees, their skills, and work quality. Having the financial muscle to invest in employees with the right skills and upskilling existing employees can lead to further financial strength, thus creating a virtuous circle.
Agile and cost-efficient
“For enterprises on the “Agile and cost-efficient” path, key differentiators are cost-efficiency and being lean and agile. Offshoring and geographical relocation are key resilience strategies, which can be linked to their focus on cost-efficiency. Though the enterprises following this path are agile (quick to react to changes), they are perhaps not as proactive as other enterprises when it comes to resilience.
“Automation first” enterprises are typically a bit larger, more traditionally oriented enterprises. They are also more focused on cost efficiency and automation. Through a continued focus on automation rather than technological innovation, resilience can be achieved while keeping productivity up.
Sustainability pays off
“Enterprises on the “Sustainability pays off” path are hardly surprising, focused on being environmentally sustainable. This is also the only path where enterprises act less cost-consciously, implying that making sustainability a top priority means accepting that it could come at a short-term cost, but still pay off in the longer term for these companies.
Innovation through digitalisation
“Enterprises on the “Innovation through digitalisation” path focus on improving their profitability by following a path that is as cost-conscious as other paths and where innovation and data-driven processes are key defining features. Enterprises on this path are typically not traditional at all. By being forward-looking, innovative, and utilising digitalisation opportunities wherever possible, this path enables a digital resilience that has helped these enterprises come out of the pandemic better off.”
How can we harness technology and adapt societally to mitigate inevitable disruptions with a forward-looking approach?
“Even if companies are preparing themselves for disruptions through training, exercises, and drills, it is difficult for the enterprises to grasp the full consequences of crisis and disruptions – especially if they have not experienced these events themselves. In our study, decision-makers agree they need help understanding the implications of new disruptive events. Technologies such as AI, Internet of Things (IoT), AR/VR, and cloud solutions can aid enterprises in their quest for resilience. In the study we asked both decision-makers and employees about the benefits of seven different ICT powered concepts that could help enterprises become more resilient.
“Anticipating and preparing for upcoming risks and events is high on the agenda for many of the surveyed enterprises. Having a forward-looking approach is also important for environmental sustainability. In a sustainable world, the role of digitalisation cannot be understated. Digital solutions can enable society to successfully battle unforeseen crises and events while being both cost and resource efficient.
“New, emerging practices also include applying advanced use cases in data and analytics, such as nowcasting – forecasting the near future, present, and even the recent past using frequently measured indicators. A highly ranked concept in the research was an AI based service that learns from previous events and provides early preventative recommendations or early warnings of disruptive events. Another highly ranked concept was a supply chain tool that constantly searches for alternative suppliers and the best route for efficient delivery.”
What is the most common path organisations tend to follow to remain resilient and are they enough to mitigate future disruptions that loom on the horizon as a more disruptive future awaits?
“As mentioned when discussing the different paths to resilience, the organisations that have come the furthest have a higher focus on innovation, digitalisation, automation, and on sustainability than that of other organisations. Nevertheless, none of the identified paths will be enough for long-term true resilience. In fact, strategies across all five resilience paths will need to be merged and adapted to handle an increasingly disruptive future. In the report, we highlight this by talking about two key paradigmatic shifts:
- Short-term resilience-based on resource-consuming duplication of assets needs to shift to a more sustainable, long-term efficiency-based resilience strategy. This is a challenge for many, with almost 8 out of 10 enterprises still increasing redundancy in their supply chains today
- Recovery-oriented resilience needs to shift towards proactive business model innovation. While only 40 percent of decision-makers say this is already part of their resilience strategy, close to 6 out of 10 plan to increase these efforts in the future.”
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