Automotive Resilience in Focus

Even before the full ramifications of the coronavirus were evident, BSI research shows that automotive industry leaders’ confidence in the resilience of their organizations had faltered for the first time since 2017. Rob Brown, Global Head for Automotive at BSI, explains.

Towards the end of 2019, BSI published its annual Organizational Resilience Index, the third such survey of business leaders worldwide. The study could hardly have been more timely, coming just a few weeks ahead of the COVID-19 pandemic, as it highlights key challenges that influence the long-term ability of an organization to survive, thrive and prosper.

Overall findings

The Organizational Resilience Index provides a powerful, data-driven insight into what 805 global company bosses see as their own business’s strengths and weaknesses.

The Index finds that, across all sectors, Innovation, Horizon Scanning and Adaptive Capacity have the greatest impact on Organizational Resilience, but that relative performance in these areas has declined over the last 12 months.

Overall, it also reveals that business leaders are struggling to adapt to the introduction of new technology amid political and economic uncertainty. Those surveyed in the report identify technology as both the greatest opportunity and the most severe threat to their success.

Automotive anxiety

Now, of course, the further impact of COVID-19 threatens some sobering outcomes for a number of sectors, not least the automotive industry.

2020 was already expected to be a poor year for the vast automotive industry in China, which is largely centred on Wuhan, at the epicenter of the coronavirus pandemic. Now though, every part of the sector has been affected by the pandemic, with its damaging impact reverberating across the world. It’s not just manufacturers that are losing out on business, but a myriad of companies in the supply chain, from component makers and dealerships to maintenance and repair organizations. Many suppliers also face a cashflow crisis, having geared up for high levels of production they are now suddenly forced to apply the brakes.

Disrupted supply lines, plant closures, falling customer numbers and a reduced cash flow are very different business challenges for automotive industry leaders, highlighting the constant need for them to question how resilient their organizations really are.

Alongside helping them to manage and mitigate varied risks, the aspiration to achieve organizational resilience can strengthen their ability to grasp opportunities – even in the worst crisis, opportunities can still arise.

BSI’s Organizational Resilience Index

BSI’s Organizational Resilience Index can provide deeper insight by indicating the automotive industry’s performance in the key aspects of resilience, and then by highlighting the impact of these aspects on the sector.

Automotive leaders’ responses have enabled BSI to benchmark the resilience of their organization through the impact of – and their perceived performance in – 16 core elements of their business, ranging from Financial Aspects to levels of Community Engagement.

Note that this is a ‘relative’ study. Leaders may well think all 16 core elements have an impact on their business, but they do not see them as having an equal impact and have ranked them accordingly. Similarly, they perceive variations in performance between the 16 elements, again resulting in a ranking.

Using the rankings, we can gauge organizations’ resilience in two ways: first, and most obviously, by seeing where they perform relatively well; second, and perhaps more significantly, by focusing on how well they perform in the elements that have the most impact on their business.

Top five resilience ranking for the Automotive industry

 47 of the 805 organizations surveyed identified their area of operations as in the automotive industry

In the automotive sector, organizations regard their best performance to be in Vision and Purpose, and this is also ranked highly in terms of its impact. The result suggests that they recognize the need for a clear strategic direction for their business – and also deliver on this.

At the same time, the current crisis is testing their Adaptive Capacity and Leadership, and it is these elements that are seen as having the most impact in maintaining Organizational Resilience in the sector.

The Index suggests that an increase in the disruptive effects of technology – in areas ranging from driverless cars to alternative fuels – are the driving force behind the Adaptive Capacity agenda. For example, five years ago electric vehicles made up only a fraction of a per cent of global sales, whereas the figure today stands at nearly three per cent. Despite recent events, such long-term trends seem certain to continue.

Where are your strengths and weaknesses?

It falls to boards and individual leaders to build organizational resilience at both a strategic and operational level. There are tools to help, from automotive industry-specific standards to broader certifications for disciplines such as business continuity management and information security management, as well for Organizational Resilience itself.

To find out your organization’s relative strengths and weaknesses – and how you compare with the organizations behind the BSI Organizational Resilience Index – complete the BSI Organizational Resilience Benchmark tool, a simple questionnaire located online at www.bsigroup.com/organizational-resilience.

This tool will present your results in a spider diagram. It will allow you to compare how you perceive your performance in the 16 core elements against the overall benchmark results.

If, in light of your results, you want to investigate further through a more comprehensive comparison against others in the survey, please contact us at Organizational-Resilience@bsigroup.com.