Resilience is critical in today’s organizations, given the state of uncertainty and permacrisis in which most teams and individuals operate. Yet McKinsey research suggests that many leaders and organizations aren’t spending enough time building that resilience. A full 84 percent of leaders report feeling underprepared for future disruptions, and 60 percent of board members say their companies are not ready for the next major event.1
Discussions with global CEOs reveal that most remain focused on addressing acute and unexpected situations affecting their businesses. These include big crises such as changes in global trade policy, conflicts in Europe and the Middle East, and other ideological and geopolitical disruptions that end up having downstream financial and operational consequences. They also include smaller disruptions such as stock price fluctuations or product flaws.2
While time is always a constraint for CEOs, they must nevertheless be intentional about investing in and building resilience, which we define as the ability to prepare for, respond to, and take advantage of disruption. Research shows that nearly half of a company’s performance is tied to the CEO’s leadership.3 And while other leaders also contribute to the development of organizational resilience—including the chief risk officer, the CFO, and the chief HR officer—only the CEO has the holistic perspective to assess the level of resilience in the organization, increase it, and integrate it into the organization’s DNA.
In our view, there are four core types of resilience—financial, operational, organizational, and external—and CEOs must understand all of them to strengthen their resilience muscle effectively (see sidebar, “Understanding the four different types of resilience”).
With a greater understanding of these different dimensions of resilience, CEOs can take five actions to make their institutions stronger and less susceptible to shocks. These suggested actions are based on our engagements and conversations with CEOs across the globe and our longitudinal research on the topic over the past decade:
- Embed resilience in the company’s vision. Create an inextricable link between the organization’s strategy and its levels of resilience.
- Build full-body resilience. Pay attention to all the resilience dimensions in an organization and assess how and where they compensate for and reinforce one another.
- Force decisions with senior leaders when resilience is on the line. In the most critical moments, intervene directly, emphasizing the importance of resilience in daily decisions and strategic initiatives—even forcing the issue where needed.
- Cultivate a gritty team and invest in individual resilience. Hire and develop people who show adaptable traits and behaviors, are open to challenges, and commit to these characteristics and practices—then serve as a role model for them yourself.
- Create deeper relationships with a diverse set of external stakeholders. Anticipating future disruption, build strong partnerships that will allow the organization to rely on external stakeholders for support when that change occurs. These alliances can be particularly critical when companies are exploring bold shifts in strategy in response to internal or external events.
In this article, we examine each of these actions and the CEO’s unique role in building resilience. We believe CEOs who prioritize these five actions and champion resilience in their organizations can more easily capture near- and midterm opportunities for growth—and are much more likely to build lasting, future-ready businesses.
Embed resilience within the company’s vision
McKinsey research shows that a company is nearly twice as likely as its peers to have above-median performance when the top team is working in sync, following a common vision.4 The CEO is responsible for setting that vision and creating a North Star that can galvanize the team. However, it can be difficult for the CEO to rally everyone around a common vision when things are in flux. In fact, according to research from the World Economic Forum and McKinsey, more than 40 percent of companies communicate their vision and values inconsistently during periods of uncertainty.5
The CEO must recalibrate the organization toward resilience—even (and especially) during tough times. They must set the tone for everyone in the organization. The CEOs who do this well routinely focus on several key principles: They purposely consider short- and long-term perspectives and adopt a through-cycle mindset, they inextricably link resilience and growth, and they proactively inject stressors into the system.
Balance time horizons and adopt a through-cycle mindset
Alain Bejjani, the former CEO of Majid Al Futtaim, shares with McKinsey the importance of having “one eye in the microscope and the other in the telescope.” CEOs must continually monitor their businesses for unintended consequences or second-order effects from disruption—or the “second bounce of the ball”—that can affect the organization’s position. Indeed, high-performing CEOs always keep the long term in mind when determining whether and how to pivot when things don’t seem to be going as planned. They understand that, in some cases, staying the course might be the best option, forgoing short-term gains to preserve long-term impact.
That was the case for one financial-services CEO, who continued to hire for critical roles even as revenues began to fall during the launch of a new strategic initiative. The CEO recognized that top talent with fresh, outside-in perspectives and experience would be critical for the initiative’s success and for positioning the organization for future growth. He held fast to the long-term view and the team’s hiring plan—and revenues eventually rebounded.
Create a direct and binding link between resilience and growth
Most high-performing CEOs make growth a top priority, with 72 percent setting above-market targets compared with their peers in the same industry. Recognizing that resilience can fuel innovation and growth in highly disruptive and dynamic environments, these high performers engage in systematic planning and preparation. And, like the best athletes, they take advantage of relatively calm periods to hone and build capabilities that will ultimately improve the organization’s long-term performance.
CEOs should consider ways to inject stressors into the system—what-if scenarios, premortems, simulations, and so on—to assess their organizations’ readiness. Data from these initiatives can help CEOs determine current levels of resilience as well as future requirements. Reed Hastings, the former CEO of Netflix, would regularly challenge his team to consider the following scenario: “It’s ten years out, and Netflix has failed. Estimate the probabilities of the different causes.”6 Meanwhile, Sarah Friar, the former CEO of Nextdoor, regularly conducted exercises to assess how new product launches could “go off the rails” and hosted multiday offsite meetings to examine issues holistically at the company level.7 Such targeted testing and role-playing can help CEOs build a comprehensive program for strengthening and sustaining organizational resilience.
Build full-body resilience
As is the case with human physical development, organizational development can be uneven: No company will be equally strong across all four resilience dimensions—financial, operational, organizational, and external. But there are consequences for companies when one area becomes overdeveloped and another neglected. For instance, an organization may focus on improving processes at the expense of cultivating the right talent to execute on those processes. Or a hero culture may emerge, in which organizations rely far too heavily on individuals or groups to step in and fix problems when things go awry, leading to organizational fatigue and burnout.
Instead, CEOs need to clearly connect the company’s vision to employees’ daily tasks. In this way, employees can see how their roles map to the organization’s purpose and, thus, are more likely to adapt and persevere during challenges.
Specifically, CEOs must focus on building full-body resilience. Under this approach resilience muscles are developed proportionately across the organization, and CEOs continually monitor operating conditions, noting when a muscle is being strained, overused, or is atrophying. In those cases, the CEO will have developed strong processes and a crisis playbook that can be adapted to address the disruption at hand, rather than counting on a few individuals to save the day.
A critical part of building full-body resilience, in addition to installing stronger processes, is for the CEO to be a “student of crisis”—that is, in the wake of crises, the CEO quickly learns from and implements changes to support the long-term health and performance of the organization. A good example comes from the technology sector: After a software update caused a global IT outage, CrowdStrike CEO George Kurtz rolled out a framework that he termed “resilient by design.” It was focused on three core elements: a foundational lens (embedding resilience practices into every process and system), an adaptive lens (tailoring CrowdStrike to the unique security needs of different industries), and a continuous-improvement lens (pursuing ongoing improvements). “Pursuing resilience is not optional,” Kurtz says. “It’s essential for all of us.”8
Force decisions with senior leaders when resilience is on the line
In the most critical moments for the business, CEOs must intervene directly, emphasizing the importance of these moments in daily decisions and strategic initiatives—even forcing the issue where needed. That’s what the CEO at one company did when leadership was grappling with a capital-heavy initiative. He directly challenged the team, asking, “Are we leaving enough flexibility in the system? How does this initiative contribute to our overall portfolio? Are we empowering the front line through this investment, and can it execute against this plan effectively?” Similarly, another CEO questioned the recommendation of her top team to staff a strategic initiative through only external hires. She asked: “What message will we send to our employees if we don’t even consider promoting from within?” These two CEOs balanced constructive debate with decisive action, both of which are important for achieving resilience. According to McKinsey research, decisiveness is critical for enhancing organizational health. In fact, companies with decisive leaders are 4.2 times more likely to be healthy compared with peers.9
Cultivate a gritty team and invest in individual resilience
When it comes to building and sustaining organizational resilience, character and adaptability matter as much or more than credentials and track records. For instance, in the wake of business model innovations, geopolitical shifts, or disruption from AI or other technologies, it may be that the playbooks, skills, and traits that worked for organizations previously are no longer fit for purpose. CEOs play a critical role, then, in actively developing adaptive workforces and identifying the next generation of breakout leaders and employees. To that end, CEOs must create the parameters by which to test, nurture, and challenge individuals to innovate and grow; model and celebrate resilient behaviors; and maintain individual resilience.
Create the parameters for developing resilient teams
CEOs must work with talent attraction teams and other functional leaders to identify the resilient traits needed for the organization to succeed in times of disruption—characteristics such as tenacity, agility, and grit. CEOs must be sure to embed these traits in all conversations throughout the talent management life cycle—from attraction to retention to leadership development. As Bose CEO Lila Snyder tells McKinsey in a 2023 interview, in times of disruption and transformation, “you need people who have a level of grit and resiliency beyond what you might need to run a business in a steady state.” She adds, “I looked for people with the gene for change and a desire for change to be a key element of what they do.”10 This was the objective for former US Navy Admiral Eric Olson when he developed what he calls the “Big Four” framework—goal setting, mental rehearsal, self-talk, and staying calm—for building resilient Navy SEAL teams. “We look for people who know that there’s always a way to solve a problem,” he says. “[The SEALs] are composed of individuals who can unhesitatingly fall out of love with the primary plan and shift to a backup plan or develop a new one. If the map says one thing and the terrain turns out to be different, they follow the terrain, not the map.”11
Model and celebrate resilient behaviors
CEOs play a critical role in demonstrating the behaviors required to build resilience. It’s important for them to stay composed during disruptive moments—absorbing rather than amplifying stress. But, based on our research and experience, it’s also important for them to show vulnerability; in doing so, they can generate trust, forge stronger relationships with teams, and inject psychological safety into the organization. Brad Smith, former CEO of Intuit, taped his performance reviews on the glass window of his office and emailed them to employees. He told them to call him out if they witnessed him displaying any of the negative behaviors that had been cited in his review—and openly welcomed the feedback when they did. Soon his entire leadership team was sharing their performance reviews. Their transparency encouraged risk-taking and experimentation at the company, creating an environment where teams felt safe to innovate.12
Maintain individual resilience
To serve as effective role models for resilience, CEOs must first look within: How do they maintain their own personal effectiveness? In most cases, they build and maintain individual resilience by taking the long view and leaning on trusted allies. A former financial-services CEO credits her “kitchen cabinet” of advisers—a small group that included her husband, her former boss, her longtime consulting partner, and two trusted friends—with helping her handle sensitive issues in her business’s transformation.13 They offered differing perspectives, challenged her assumptions, and helped her think through critical decisions.
Create deeper relationships with a diverse set of external stakeholders
External engagement is one of the facets of the CEO role that has changed the most in the 21st century. As the primary voice and face of the organization, CEOs are increasingly expected to address complex global issues that have broad business implications, such as recent shifts in geopolitics, demographics, and technology. But while nearly 60 percent of business leaders believe companies have a responsibility to act on societal issues, even sensitive or controversial ones, only 6 percent feel very confident that businesses are taking the right steps.14
In an era where every move is scrutinized, CEOs should aim not only to endure but also to shape critical interactions and public sentiment. This requires investing in ongoing reputation building and stakeholder management—with suppliers, competitors, investors, journalists, and so on. As the co-CEOs of Warby Parker, Neil Blumenthal and Dave Gilboa, explain, “collaborating on major decisions and maintaining clear communications with stakeholders” is critical for building sustained trust. Such efforts help external stakeholders distinguish between errors of judgment—temporary lapses inconsistent with the organization’s values—and errors of principle, which reflect systemic and pervasive flaws.
Today’s CEOs must create an external-stakeholder strategy and platform that enables them to engage authentically with a wide range of stakeholders and with a focus on purpose. They must articulate a singular narrative that inspires action, alignment, and creation of the path forward, collaborating with employees, partners, and allies. For example, Kate Walsh, former CEO of Boston Medical Center, started reaching out to peers early in the pandemic, when Boston was becoming one of the country’s COVID-19 hot spots. “Hospital CEOs quickly realized that we were chasing each other around the supply chain,” she recalls. “We began to coordinate how we would at least let people know that we’re going to give everybody a mask when they come to work on Monday morning. It ended up being almost a daily call [with other hospitals] as we were trying to figure out how we could appropriately respond to the volume of cases.”15
Today’s CEOs know that disruption is a given—it’s not a question of if but when. They also understand that how they respond initially to crises is important, but even more critical is what they learn from those crises and how they position themselves, their teams, and organizations to bounce forward from disruption. Our research and experience suggest that CEOs who rise to the occasion and invest in resilience as a strategic imperative will have the confidence to pursue bold business opportunities, inspire teams to reach further, innovate more, grow more quickly, and realize the full potential of their organizations.
