24: Business Model Resilience

Being resilient is more than just recovering from setbacks. It entails evolving and adapting to new situations. A business model's ability to adapt and innovate in the face of new problems can be strengthened by creating strategies and systems that can foresee and address possible risks.

Business model resilience refers to a company's capacity to rapidly adapt to unpredictable and arduous conditions by effectively evaluating and improving upon its approach for strategy, operations, and value proposition.

This includes predicting and adapting to changes in a proactive manner, successfully utilizing internal resources and competencies to reduce risks and seize opportunities. A long-lasting, resilient business model is built on the principles of customer-centricity and sustainable business practices, which equips an organisation with the capabilities to remain competitive and relevant.

Significance of Business Model Resilience for Companies

No matter the size of industry/organization, business model resilience is crucial for the following reasons:

• Survivability: A resilient company model is better able to withstand and survive unforeseen difficulties, disruptions and crisis. Companies can prevent monetary losses, harm to their reputations and even bankruptcy by predicting and preparing for such crisises.
• Adaptability: A resilient business model enables a company to quickly pivot, shift course, and investigate new prospects without jeopardizing its essential principles or goals. This means remaining adaptable and open-minded, looking into fresh opportunities for development and innovation, and routinely reviewing and revising business strategies not only makes the company become resilient, but also helps it to stay ahead in the competition.
• Innovation: Innovative businesses are more resilient, stay ahead of rivals, and create new value for clients through a culture of experimentation and creativity. Sustainable businesses aim to reduce their impact on the environment and conserve resources through creative methods. By embracing innovation like new technology or circular economy models, they can enhance sustainability efforts and create opportunities for growth and competitiveness.
• Sustainability: A sustainable business prioritizes environmental stewardship through prudent resource management and ethical behavior. Sustainable practices such as using recycled fabrics, reducing waste, and responsible material sourcing can attract socially conscious clients and boost employee engagement while lowering the carbon footprint. They help to boost brand loyalty and sales.
• Competitive advantage: Businesses can position themselves for long-term success by creating and utilizing their distinctive assets, such as a strong brand, devoted consumers, or a dependable supply chain. To get this advantage, a solid and resilient company plan is essential.

Practices to Strengthen Business

1. Pursue advantage in Adversity:

Businesses should seek advantage in adversity by reacting to new realities and spotting chances in the middle of a disaster, rather than just attempting to prevent harm or restore what was. Green buildings aim to be energy-efficient, environmentally sustainable and healthy for occupants. New technologies like biophilic design, net-zero energy buildings, and smart buildings are helping companies meet the demand for sustainable structures and also help lower their carbon footprint.

2. Think ahead:

Despite its apparent short-term character as a tactical/ operational concern, a crisis affords an opportunity for long-lasting and revolutionary growth. Organizational leaders must broaden their temporal horizons through revolutionary thinking in order to take advantage of these favorable opportunities.

3. Envision in terms of collaborative systems:

Though building resilience depends on integrated and systemic solutions, collaborative systems imply a critical component of visionary thinking. The success of such solutions depends on the collaboration of many different stakeholders, including staff members, customers, and other interested parties.

4. Evaluate more than just performance:

During assessment/ analysis, it is imperative to consider a corporation's adaptability, flexibility, and other resilience-related characteristics, in addition to the extracted value. Such an evaluation should encompass more than just performance.

5. Foster diversity:

Organisations that are resilient uphold the value of cognitive diversity and recognize the necessity of variance and divergence. This helps to come up with innovative responses to problems faced by a company.

6. Innovation and change as the default action:

In modern organizational theory, the adoption of innovation and change as the customary mode of operation is crucial for fostering resilience. Specifically, organizations and support systems that embrace ongoing change and experimentation tend to exhibit greater resilience than those that make sporadic modifications in response to extraordinary circumstances.

Best Practices for Resilient Business

The business may follow a system based on six principles, including redundancy, variety, modularity, flexibility, prudence, and embeddedness, to increase resilience^[1]. We can contend that by including these concepts into practice, businesses can flourish in the case of uncertainty or change.

1. Having redundant systems and solutions in place to guarantee business continuity in the event of an interruption is known as redundancy. Businesses should spend money on backup plans and disaster recovery strategies. They should also test these strategies frequently to check their viability.
2. Diversity helps to reduce the effects of changes in any one region by providing a variety of goods, services, and markets. To reduce reliance on any one area, diversify your product offerings, enter new markets, and create new goods and services.
3. Modularity is the process of disassembling complicated systems into smaller, easier-to-manage components to increase flexibility and adaptability. Utilize agile development approaches and modular technologies to support quick updates and modifications.
4. Adaptability is the capacity to improvise and create new solutions when circumstances change. Companies must cultivate a culture of innovation and experimentation, inspire workers to use their imaginations and adapt to shifting circumstances, and be receptive to fresh perspectives.
5. Prudence is the ability to take calculated risks, avoid being overly committed to one approach, and keep some financial and operational flexibility. Companies must create a solid risk management plan, keep a close eye on operational and financial data, and maintain some degree of adaptability to deal with changing conditions.
6. Developing close ties with stakeholders and being aware of the environment in which the firm operates are two aspects of embeddedness. Develop trusting connections with clients, vendors, and other stakeholders while being aware of the business's cultural, social, and economic environment. Continue to interact with the larger community and pay attention to their demands and issues.

Case Study

Decline of Nokia: When Staying Breezy is Not a Good Look^[2]

Imagine holding a Nokia phone in your hand, with its sturdy hardware and iconic ringtone. Nokia was the market leader in the mobile sector for many years. But as time went on, the company struggled to keep up with emerging trends and technologies and eventually paid the price.

What went wrong with Nokia, then?

The company's marketing and distribution plans hold the key. The research suggests that one element in Nokia's collapse was its marketing and distribution tactics, which prioritized hardware over software. The corporation struggled to keep up with technology changes and failed to provide the software features that users wanted, resulting in outdated products. This was because of concerns about the risks of introducing innovation to phones.
Furthermore, Nokia may have overestimated the significance of its brand. The corporation anticipated that despite the late release of its smartphones, consumers would still swarm to retailers to buy devices made by Nokia. The once-dominant competitor in the mobile phone market, found it difficult to keep up with changes in technology. Nokia, in spite of its early success with its hardware products, overlooked the importance of software in the mobile phone sector. This led to the company's demise as rivals like Apple and Samsung started to provide their products with more cutting-edge features and user-friendly software.
Nokia's market share was further damaged by its resistance to adopting 3G technology throughout the development of 4G. While the business did launch the Nokia Lumia and Asha series in an effort to take back market share, the products' lack of innovation and unappealing features failed to draw in buyers.
The failure of Nokia serves as a cautionary tale for companies and makes them aware about the need to change with the times. Industry leaders must focus on R & D, to keep up with shifts in consumer demand. Manufacturers of mobile phones with competitive advantages must consider if their fundamental technology still satisfies consumer demands. The business should keep making investments in technical innovation while maintaining its fundamental competitiveness. Additionally, it's critical to create fresh competitive advantages based on customer demands. Businesses with excellent adaptability can only survive intense rivalry.

In conclusion, Nokia's loss serves as a reminder that no firm is invincible and that in order to remain competitive in the fast-paced environment of today, companies must continue to be innovative and nimble. Businesses may develop resilience and maintain an edge over the competition by embracing change and taking appropriate risks.