Companies that are strong on the inside are showing resilience in the economic storm. Richard Barrett outlines how companies can build resilience through a value-based approach
If there is one thing that companies are learning in the cur
rent economic crisis, it is the importance of resilience –
the ability of an organisation to withstand shocks and
remain sustainable under prolonged periods of duress.
The most resilient companies display the following char
• A high level of staff engagement
• A low level of cultural entropy
• A vision of the future shared by all employees
• A set of values shared by all employees
• A focus on adaptability and innovation
Not only do these qualities create resilience, they also
lead to internal cohesion – a key component in building a
strong internal community that can drive the goals and
performance of the organisation. The current crisis shows
us that organisations that are strong on the inside are also
strong on the outside.
Being strong on the inside means having a values-driven
culture, a highly aligned, cohesive and effective leadership
team, a low level of cultural entropy, and a high level of
Cultural entropy is the degree of dysfunction in an organ
isation. It is the amount of energy unavailable for useful
work. Cultural entropy arises from the presence of limit
ing values such as bureaucracy, internal competition, blame,
short-term focus, firefighting, etc. Research shows that low
levels of cultural entropy are accompanied by high levels of
financial performance and high staff engagement. Com
panies with these attributes are able to grow their incomes
three times faster than companies with high entropy.
The following checklist of actions will help you to build
your company’s resilience, support you in traversing the
economic downturn, and place you in a strong position for
success when normalcy returns.
Based on the core principles of the Barrett Model, each
of the seven items on the checklist represents a critical step
in building a full-spectrum, sustainable organisation.
Step 1: Focus on building financial stability. Build up
your cash reserves. Seek ways to stay financially sustainable.
Step 2: Communicate with staff and customers. Confi
dence is important. Ensure everyone knows what you are
doing to get through this crisis.
Step 3: Focus on your core business. Get lean. Streamline
your systems and process to reduce costs and increase agility.
Step 4: Learn to adapt to a changing environment. Work
on reducing cultural entropy and building innovation.
Step 5: Get clear on your direction. Re-energise your
vision, mission and values to build internal cohesion.
Step 6: Build strategic alliances. Align with your cus
tomers and suppliers to create mutually supportive, ben
Step 7: Keep the long-term in mind. Ensure that your
short-term plans do not compromise your long-term via
1. Focus on survival & build stability
In an economic downturn, where money is in short sup
ply, cash is king. Your first objective in an economic down
turn is to make sure you survive the immediate impacts of
the situation by building up your cash reserves. The sec
ond objective is to strengthen your long-term financial
position so that you may grow and expand when eco
nomic conditions improve.
The danger right now is knee-jerk reaction to cutting
costs by firing people. This would destroy your cultural
capital and undermine the commitment of your organi
sation’s top talent. Your first line of attack when faced
with difficult trading conditions is to improve your per
formance by reducing cultural entropy and increasing
The opportunity: focus on financial prudence and eco
nomic sustainability so that you remain in a strong posi
tion to secure loans for future growth. In difficult times,
a strong cash reserve gives you better access to credit.
The values: in an economic downturn the values you
need to focus on are economic prudence and financial sus
tainability. Let these values guide your decision-making.
2. Communicate with Staff and Customers
In an economic downturn, people worry about their future
– employees and customers alike. Maintaining open com
munication with staff is essential at this time. Communica
tion is a key ingredient to building trust. Trust is the antidote
to the fear your staff or customers may be feeling.
More frequent communication with customers also is
important at this time. They need to know that they can
count on you to be a solid partner. The more your cus
tomers depend on you for their business success, the more
you need to reassure them of your support in keeping
their businesses going.
It is important for the CEO and executive team to
appear calm and on top of the situation in order for peo
ple to maintain focus on the business of earning income
and providing superlative customer experience.
The opportunity: reach out to your customers to find
out how the economic downturn is affecting their buy
The values: all stakeholders need to be assured that
your organisation will withstand the economic down
turn. The values to focus on are open communication
and customer loyalty.
3. Focus on your Core Business
In hard times, focus on what is essential to your busi
ness success – strengthen your core business and delay
or eliminate speculative projects and investments.
The opportunity: remove unnecessary bureaucracy.
Think of steps you can take to improve agility, reliabil
ity and quality while maintaining your competitive edge.
The values: at this time, focus on your internal effi
ciency and effectiveness in supplying and delivering prod
ucts and services.
4. Learn to adapt to a changing environment
The Fortune 500 constantly changes as companies go
bankrupt or are taken over by fitter and more resilient
companies. The principal impediments to achieving high
levels of adaptability are control and micromanagement;
blame and internal competition and elitism,
Key antidotes to these issues include: teamwork – dis
solving the barriers of separation; accountability –
empowering people to take responsibility for delivering
on time and in budget; and adaptability – rapidly
responding to changes in market conditions. Focus on
unleashing innovation by empowering employees and
giving them a voice.
The opportunity: get to grips with what is not work
ing in the organisation, and more importantly, strengthen
what is working. If you have conducted a Cultural Val
ues Assessment, focus your attention on the desired cul
ture values and the top value jumps. Also, work on
reducing cultural entropy.
The values: values that promote adaptability are
accountability, responsibility and empowerment.
5. Get clear on your direction
There is no better time than periods of deep uncertainty
to revisit your vision, values, mission, and strategy – with
the objectives of refocusing everyone’s energy around
your core business and building internal cohesion.
The four critical elements to this are: vision, values,
The evidence is clear – long-lasting companies have a
compelling vision and a shared set of values that are
embraced by the company as a whole.
The opportunity: in difficult times people naturally
come together to protect themselves from external threats.
Set a clear intention for the future direction of the com
pany and the values that will support the company on
The values: to create an environment of trust, focus on
the values of honesty, integrity, openness, and transparency.
6. Build strategic alliances
Ultimately, the resilience of your company is not only
about developing collaborative internal relationships,
but also about developing collaborative external rela
tionships with your customers, suppliers and the local
In difficult economic circumstances, relationships really
matter. Companies with strong links to their customers and
suppliers stand the best chances of survival.
The opportunity: when the going gets tough you need
the support of others, and others need your support so that
everyone can weather the crisis. The opportunity given to
you now is to reach out to your customers and suppliers –
in fact, to all your stakeholder groups – to develop mutu
ally beneficial alliances.
The values: to build strategic alliances, embrace the
values of empathy, customer/supplier collaboration, and
7. Keep in mind the long term
In times of difficulty and crisis, there is a natural tendency to
focus on the short term, forgetting that you may have to live
with the implications of your decisions once the crisis is over.
Ask yourself if the decisions and actions you want to take
now are also right for the long term. A knee-jerk reaction
now may cause more problems in the future. Be considered
in your responses and bring experience and wisdom to bear.
The opportunity: in an interconnected global world, those
who reach out to each other for mutual support survive and
thrive. This is the opportunity. Overcome your fear-based
reactions that are rooted in self-interest, and collaborate with
your customers, competitors and suppliers to create the con
ditions that support the common good and provide a sus
tainable future for everyone.
The values: at times such as these, we need wisdom, humil
ity and ethics to build a sustainable future for everyone.
Richard Barrett is author of Building a Values-Driven Organisatiaon. www.valuescentre.com