McKinsey Quarterly 2023 Number 1

changing environment. This will ensure that appropriate mitigation and management actions will be derived on a regular basis. A one-time analysis will simply not suffice.

Adaptation: Not just surviving but thriving Foresight may help a company anticipate potential future outcomes through simulation and early-warning indicators. Only so much can be predicted and prepared for in advance, however. This is where adaptation, the third key activity of resilience, comes in. The resilient organization is flexible, able not only to react but also to adapt to new situations, especially the unforeseen ones. Adaptation to the new environment requires deep investment in resilience. Adaptive companies are able to capture growth opportunities under adverse conditions. To confront the toughest times, leaders must possess a strong, resilient mindset, acting as role models, communicating an entrepreneurial spirit, and encouraging free thinking across an agile organization. Leaders send the right messages, providing strategic clarity and acting based on early-warning and foresight analytics. They are creating institutional resilience in the following five areas: • Speed of response. The organizational structure and operating model is set up in an agile and flexible way to facilitate collaboration across teams, with a bias toward action over bureaucracy. Decision-making and escalation processes are fast, roles are clear, and decisions are executed effectively once made. • ‘Owner’ mindset. A strong sense of ownership pervades the organization. Curiosity and humility prevail; learning and adaptation are continual. Rather than avoiding challenges, people strive to innovate and explore new opportunities. The company pushes its own boundaries and questions the status quo and long-held beliefs. Individuals are empow ered to think and develop in an entrepreneurial spirit, reskilling and upskilling as the busi ness environment changes. Knowledge sharing across the organization is encouraged - - - through cross-functional collaboration, mentorship, and open communication. Empower ment and decentralization are fostered, with only the most strategic decisions going to the senior-leadership team. • Workforce planning and skill set of the future. To execute new, adaptive strategies, the company has done some some resource planning. It finds the best people with the right skill sets and gives them the resources they need to cope with present and future needs. Resil ience strength resides in an organization’s people. Hear what they have to say and value - their experience. Let them adapt to new realities so that talent can be strategically reallocated as needs change. The positive feedback this creates will attract more top talent to the company. • Capital redeployment. Resilient organizations make investment decisions and reallocate capital quickly, based on changing scenarios. These decisions are taken with a forward-looking perspective on expected scenarios; the decisions are then communicated effectively across the organization. • Crisis response. Clear and effective responses are activated in crises. Resilient compa nies have a well-defined and well-understood response tool kit; roles and respon - - sibility are set. An effective, timely response is ensured by a fast-mobilizing organization. Leadership accountability is clearly defined and communicated, ensuring full alignment

McKinsey Quarterly 2023 Number 1

90