Business

Forget resilience, to truly thrive, businesses must set their sights on regeneration

Businesses need to focus on regeneration

Businesses need to focus on regeneration Image: Photo by Sean Pollock on Unsplash

Alex Liu
Managing Partner and Chairman, Kearney
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This article is part of: World Economic Forum Annual Meeting
  • Regeneration is a bolder, proactive way to think about business strategy, instead of holding steady, regenerative companies make courageous moves.
  • Companies that focus on active regeneration, as opposed to reactive resilience, have higher profitability and growth.
  • The leaders we spoke to pointed to operations as a critical opportunity point.

For the past few years, most business advice has been about survival. How can we all hang in there and make it through tough times? How can we follow best practices to survive another year? How can we be more resilient?

When we’re just trying to survive, we end up standing still – treading water until things get easier. But in our volatile, uncertain, complex and ambiguous world, the chaos is unlikely to ebb. There is no future date when business will be simpler. Complexity is here to stay, simply surviving is not enough. Disruption is everything, everywhere, all at once.

To cope, our teams and our stakeholders need a different kind of leadership. We can’t focus on resilience anymore. To truly thrive, it’s time to set our sights on a different 'R' word: regeneration.

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What is regeneration?

Regeneration is a new, bolder way to think about business strategy. It’s a proactive approach to people, the planet and profits. Instead of holding steady, regenerative companies make courageous moves. They strive to reconnect with the social and environmental systems they’re a part of, instead of fighting against them.

Regenerative leaders prioritize reflection, self-awareness, constant evolution and making micro-changes to stay ahead of the curve. They are open to new ideas and change. Instead of setting five-year plans, they experiment, pivot and learn.

And, when our teams know that they’re not just surviving another quarter, they can reframe their expectations. We can help them thrive, not just survive.

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While it’s certainly a gentler way to run a business, 'regeneration' isn’t something we do out of benevolence. It’s better business sense. Instead of thinking about ESG topics in a silo (and despite the current backlash), regenerative businesses leverage the latest analytics to connect their core work, operating models and supply chains to their broader sustainability goals: to drive the entire 'system' to be fair, viable, liveable.

Regeneration is also a concept that comes directly from the Darwinian natural world. Survival of the most adaptive. We all know that if humans want to thrive for generations to come, we have to get our business systems much closer aligned with the natural systems around us.

Optimizing for resilience got many companies to where they are today. But regenerating will move them forward.

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What’s the current state of regeneration?

The underlying energy is there. Researchers at Kearney surveyed nearly 800 senior business leaders around the world. We heard enthusiasm for this shift from reactive 'resilience' to more proactive regeneration. Most leaders agree that being regenerative is important and their companies need to do more to become regenerative and ready for the future.

The leaders we spoke to pointed to operations as a critical opportunity point: “A regenerative supply chain is beneficial and fair to all parties involved,” said a COO in South Africa. And they agreed that a regenerative future would be better for everyone. “Regenerative business allows people and markets to prosper — that’s what is sustainable,” said a CFO in the UK.

The economics also show the value of running a more regenerative business. The numbers are clear on this: Companies that focus on active regeneration, not reactive resilience, have higher profitability and growth.

How to implement regeneration: three pillars of action

How do you build a regenerative business? Consider specific ways to unite the organization – the operations building blocks, people and digital technology – to prepare for what’s next.

Think of these three pillars as the 'regeneration starter pack.'

1. Operations

Focus on repeatable value

The key to regenerative operations? Develop business models that build on themselves for greater long-term value.

That could mean rethinking supply chains to be less dependent on a sole source, to be both adaptive and analytically informed and to be circular with built-in carbon transparency, leading to more diverse and distributed networks.

2. People and communities

Do good by people inside and outside the organization

As with any business initiative, people are at the heart. Bring people along on this journey by communicating what’s important, supporting leaders who courageously create change and rewarding regenerative behaviour. People crave a purpose. Give it to them.

Regenerative leaders think beyond output. They don’t fixate on productivity. Instead, they prize true impact and inspire those we need to drive solutions.

A CEO in the UAE described a regenerative approach to people this way: “Regenerative means creating a culture of continuous learning and development, where employees are encouraged to develop new skills and explore new ideas.”

3. Tech and data

Learn faster, waste less

There’s a clear opportunity to use powerful technology to unlock new value. Regenerative companies are constantly looking for new ways to understand the state of the business, create personalized customer experiences and flag key business opportunities. Regenerators rely on data, not on gut feel.

Case study: How one company committed to regeneration

In a major consumer packaged goods client, we found that the company’s goal was simple: improve bottom-line profit. But in a world that’s changing constantly, optimizing and making tweaks weren’t enough to create a long-term impact. Instead, the company was ripe for regeneration.

Its regeneration journey started with returning to the company's core DNA. What are the critical consumer problems they’re solving for? And how can they invest long-term in creating a company to solve those problems?

They reinvented how they worked together: how could they invest more proactively in their people, from the employees working in warehouses and factories to the management team members, to create a long-term impact?

The goal shifted from short-term profitability (staying afloat) to long-term sustainability (regenerating for the future).

It’s time to benefit from a world of our own self-disruption. Rather than remain a victim of external circumstances, it’s time to proactively and constantly regenerate. The way to drive real, repeatable change is to actually focus on it.

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