Digital Economy Dispatch #136 -- Building Digital Resilience: A Framework for Thriving in Uncertain Times

Digital Economy Dispatch #136 -- Building Digital Resilience: A Framework for Thriving in Uncertain Times
18th June 2023

Surrounded by the instability and uncertainty prevalent in many sectors in the digital economy, organizations are forced to accept that an ability to recognize and manage change is more important than ever. Many of these changes involve small adjustments to current ways of working. However, as organizations adopt digital technologies to improve their core operating processes, they also look to make more fundamental shifts across all their business activities. By encouraging a more disciplined approach to digital transformation, they seek longer-term systemic change aimed at revolutionizing the organization’s structure, strategy, skills, and systems.

For many organizations this is nothing new. To a large degree, all management is change management. And as Shaffer argued, leaders should view change not as an occasional disruptor but as the very essence of their management job. However, traditional change management often considered change as being detached from “normal” management tasks, treating it as a separate process that takes the organization from one stable state to another. In digital transformation where change is constant, such a perspective on change management can be very limiting. Instead, it must be considered the essence of management, with implications on all of the organization’s activities.

Yet, it doesn’t take more than a cursory review of large-scale digital transformation efforts to recognize that managing change is hard. Recent experiences such as those aimed at digitally transforming the UK’s tax systems, reveal that the struggle to stay on top of the broad impacts of change can overwhelm even the most well designed strategies. How can organizations define a meaningful approach to change that allows them to adapt to current changes and prepare for the unexpected to come? An answer may be found by placing a fundamental focus on strengthening your digital resilience.

The 6 Faces of Digital Resilience

Resilience plays a critical role in the success of a digital strategy. In the context of digital transformation, resilience refers to the ability of an organization to adapt, recover, and thrive in the face of unexpected challenges, disruptions, or changes in the digital landscape. Its importance was highlighted throughout the Covid crisis when companies that had invested in a robust digital infrastructure, cloud-based tools, and secure remote access capabilities experienced smoother transitions to remote work setups and were able to continue serving customers and generating revenue.

Throughout those difficult times, the importance of resilience to business continuity was clear. However, the importance of resilience has grown with continued pressure to find new ways to serve customer needs in a world disrupted by significant economic, political, and financial instability. As recently as December 2022, this was recognized by McKinsey who’s extensive survey showed that digital resilience remained a priority for many organizations . Add to this the disruption caused by rapid deployment of Generative AI-based solutions over the last few months and we now see that 6 distinct faces of resilience are emerging:

• System Resilience. Architecting systems and solutions to be fault tolerant, adaptive, and able to fail gracefully when operating incorrectly or compromised.

• Cyber Resilience. Ensuring that systems and data are protected from external threats and expose information through appropriate secure mechanisms.

• Information Resilience. Creating governance and management processes for data to ensure that all information is accurate, appropriate, and responsibly sourced.

• Organizational Resilience. Establishing management and decision making practices that enable rapid actions to be taken while conforming to all necessary laws, standards, and guidelines.

• Operational Resilience. Continuing to perform as expected as the operating environment changes, systems are degraded, or stakeholder demands expand.

• People Resilience. Supporting all employees and other stakeholders to perform at their best in the short term and sustain their health and wellbeing for the longer term.

All 6 of these perspectives on resilience are important, and together they form a framework for organizations to review their ability to manage change and sustain high performance in the context of digital transformation. Whilst other digital resilience frameworks focus on one or other of these perspectives, in my experience a more holistic view from a wider viewpoint of resilience is essential.

Bend Don’t Break

Based on such experiences, there are many ways in which resilience is found to be central to a successful digital strategy. To improve how your digital transformation activities can become more resilient to change, use these 6 perspectives and ask 5 questions of your digital strategy.

How prepared are we to adapt to change?
The digital landscape constantly evolves, with new technologies, market trends, and customer expectations emerging regularly. A resilient digital strategy enables organizations to quickly adapt to these changes by being flexible, agile, and responsive. It allows businesses to seize new opportunities and mitigate risks effectively.

How well do we manage the risks associated with change?
Resilience helps organizations identify and manage risks associated with their digital initiatives. This includes assessing potential vulnerabilities, implementing robust security measures, and establishing backup plans in case of disruptions such as cyber attacks, system failures, or natural disasters. A resilient digital strategy considers risk mitigation as an integral part of its implementation.

What processes do we have in place to ensure continuity and recovery from disruptions?
Resilience ensures business continuity by enabling the organization to recover swiftly from disruptions. It involves having backup systems and redundancies in place to minimize downtime, data loss, or customer impact. A resilient digital strategy incorporates disaster recovery plans, backup solutions, and proactive monitoring to swiftly address any disruptions and restore normal operations.

Where can we improve customer trust and satisfaction in how we manage change?
Resilience is crucial for maintaining customer trust and satisfaction across all digital channels. When organizations can provide uninterrupted services or products to their customers, it enhances their reputation and fosters customer loyalty. Resilience ensures that customer expectations are met even during unforeseen circumstances, which is crucial in today's interconnected and competitive digital landscape.

How do we encourage positive change to drive innovation and growth?
Resilience empowers those within an organization to experiment, innovate, and pursue digital transformation initiatives with confidence. It encourages a culture of learning from failures and setbacks, fostering a mindset of continuous improvement. A resilient digital strategy promotes exploration of new technologies, business models, and opportunities for growth while enabling organizations to recover quickly from any setbacks along the way.

A Resilient Approach to Digital Transformation

With no end in sight to the disruption and uncertainty we face in today’s digital economy, resilience is an essential component of every successful digital strategy. It enables organizations to navigate uncertainties, adapt to change, manage risks, maintain continuity, build customer trust, and foster innovation. Digital strategies must be tested against at least 6 perspectives on resilience (system, cyber, informational, organizational, operational, and people). By incorporating resilience into their digital initiatives, businesses can position themselves for long-term success in a rapidly evolving digital landscape.