Financial and Monetary Systems

These are the 3 dimensions of resilience, according to a CEO

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Resilience can be turned into a competitive advantage. Image: Unsplash/ Jason Goodman

Belén Garijo
Chair of the Executive Board and CEO, Merck
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  • Resilience is what allows some companies to thrive while others simply endure challenging times, says the CEO of Merck.
  • Here, Belén Garijo details the three types of resilience - institutional, financial and reputational - that can help businesses grow and become stronger.

Have you noticed that some companies thrive while others only endure during times of change, complexity, and uncertainty? One thing makes all the difference: Resilience.

For 354 years and 13 generations, resilience has helped Merck navigate its way through many wars, recessions, and geopolitical conflicts. It's allowed us to reinvent ourselves time and time again while staying true to our purpose and values.

During my 12 years at Merck, and especially since becoming CEO, I´ve learned a lot about the three dimensions of resilience and how to make them a competitive advantage. While it is true that Merck is unique, other global leaders might appreciate some of these learnings.

Institutional resilience

Institutional resilience is the structures, systems, technologies, teams, and mindset that allow you to anticipate a crisis, not just respond to it. A diversified business and devoted base of owners with a long-term perspective help build resilience. But culture is what matters most.

Since becoming CEO, building a high-impact culture has been a priority. While our culture was already strong, we could aim even higher by bringing all colleagues worldwide together as one Merck. We wanted everyone laser-focused on creating superior value for colleagues, customers, patients, and society. Through this lens, we´ve raised leadership expectations, empowered teams, and encouraged everyone to challenge the status quo. Speed, simplicity, and impact will continue to be injected into everything we do.

Organizations that can build this style of culture-led institutional resilience should see change not as a threat but as a tremendous opportunity for growth. Because instead of waiting for events to change you, you gain the situational awareness to change the future. And by rewarding curiosity and embracing inclusion, teams also gain the courage to take calculated risks, as long as they learn from any failures along the way.

Financial resilience

Any leader knows financial resilience requires a solid capital position and strong liquidity. Yet this dimension of resilience fundamentally rests on the ability to generate efficient, targeted growth. True value creation becomes possible when all colleagues share a disciplined approach to capital allocation and the same growth priorities.

At Merck, we´ve linked ‘25 by 25’, our mid-term growth target to reach 25 billion in net sales by 2025, with three business areas that are most critical for success. These ‘Big 3’ of Process Solutions, New Healthcare Products, and Semiconductor Solutions will account for more than 70% of total capital allocation and 80% of projected growth through to 2025.

A common strategy for efficient, targeted growth can also help to unlock capital so that you can further accelerate your innovation pipeline and societal impact. That is one reason why we link financial resilience to delivering upon our sustainability strategy. By making sustainability a cornerstone for future innovation and growth, and a key performance target for our leaders, we can further strengthen this bond between sustainability and financial resilience.

Reputational resilience

Reputation and trust are vital commodities for any organization. For resilience, leaders should especially view leadership as a privilege. We cannot expect anyone inside or outside our organizations to trust us based on our title. All leaders need to work hard every day to earn the trust of their colleagues, investors, and other stakeholders.

Reputational resilience also requires a commitment to strive for something bigger than yourself. Your purpose must reflect the aspirations of the customers you serve and the society you´re part of. While Merck has been in business for centuries, we´ve never stopped being in the business of life. At Merck, we encourage our leaders to be the primary ambassadors for our culture, values, and purpose, and the champion of our customers and patients.

Leaders also need to be accountable for their actions and own the outcome of their decisions. That is why reputational resistance requires consistency, authenticity, and transparency. We can all make mistakes. But if the gap between what we say and do widens too much, our capital of trust falls. What can take a lifetime to build gets lost instantly. With the credibility of reputational resilience, you gain the courage and confidence to make tough decisions for the right reasons.

For over 354 years, Merck has never stopped reinventing itself. This history of reinvention will continue in the years and decades to come. We view change as a priceless opportunity for growth! However, it would be hubris to expect that your performance yesterday will guarantee success tomorrow. After all, it´s estimated the average S&P 500 company now survives less than 20 years.

Our institutional, financial and reputational resilience gives us the courage and confidence to ensure we pass onto the next Merck family generation a business that´s even stronger than today.

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