Actionable Insights Backed by Research
New research shows that digital capabilities don’t just boost growth and competitive advantage — they also enable digital adaptation, which is a key ingredient for long-term resilience.
By Russ Browder, Sean Dwyer, and Hope Koch
To explore how digital adaptation can boost resilience, Browder, Dwyer, and their coauthor conducted extensive case studies with two companies impacted by the Covid-19 pandemic. Through more than 80 interviews as well as a comprehensive review of online materials and six years of field observations, they found that while only half of the 72 adaptations these companies made to adapt to the pandemic involved digital capabilities, more than 90% of the adaptations that endured long-term (and ultimately helped these companies grow and make it through future crises) were those that leveraged digital capabilities. In light of these findings, Browder and Dwyer offer practical strategies to help organizations improve digital adaptation by utilizing digital capabilities to build resilience before, during, and after a crisis.
In an era of polycrisis, disruptive events are no longer an exception. Facing one crisis after the next is the new normal. Leaders cannot assume that they will experience long periods of stability between shocks such as economic downturns, supply chain breakdowns, extreme weather events, geopolitical instability, and technological change. In this operating environment, simply growing faster than competitors or optimizing for efficiency is not enough. Today, effective organizations must also engage in a third critical pursuit: resilience-seeking.
This shift has important implications for how leaders think about digital investment. For years, organizations invested heavily in digital transformation to drive growth and efficiency. Today, those same digital capabilities play a broader role because they allow organizations to adapt quickly, respond to disruption, and build resilience. In this new reality, digital capabilities support not only performance, but also the capacity to navigate the next (inevitable) crisis.
To explore what it takes for organizations to develop and leverage the digital capabilities that will boost their long-term resilience, we conducted extensive case studies with two organizations: a grocery chain we call GroceryCo and a distribution company we call SupplyCo. In our analysis, we focused on how these large organizations engaged in digital adaptation — the use of digital capabilities to quickly adjust how work gets done when organizations face novel or unexpected challenges — as they responded to one of the most impactful crises of the last decade: the Covid-19 pandemic. We then examined how these digital adaptations boosted their resilience, ultimately helping them grow and succeed in the face of future challenges as well.
We took a three-pronged approach to our study. First, we interviewed more than 80 employees, executives, prospects, and customers from both organizations. Next, we reviewed the companies’ online materials, including websites, financial information, and news articles. And finally, we spent more than 300 hours conducting field observations before, during, and after the initial outbreak of the Covid-19 crisis. Field work included weekly visits as regular customers both in-person and via online shopping, attending internal management meetings, and site visits to observe work practices between 2016 and 2022.
Digital Adaptation During Crisis
Through our multifaceted analysis, we found that some of the 72 adaptations these companies made during the pandemic did not leverage digital tools. For example, GroceryCo asked employees to work longer hours to meet increased demand, while SupplyCo negotiated expanded payment terms with affected vendors, neither of which required much in the way of digital transformation.
In contrast, about half of the adaptations these companies made relied on digital capabilities. These capabilities helped them connect people to systems and to one another, move information quickly to decision-makers, and push decisions rapidly into the automated systems and human workflows that ran the business. Together, they allowed leaders and frontline employees to adjust how work was done in real time by coordinating remotely, making faster decisions, and implementing changes consistently across the organization during a period of disruption.
Digital adaptation occurred when leaders and teams leveraged digital capabilities to solve unforeseen problems and meet shifting stakeholder needs. While non-digital adaptations played important roles in GroceryCo and SupplyCo’s near-term survival in a highly tumultuous time, our analyses demonstrated that digital adaptations had a lasting impact on the firms.
Digital Adaptation Drives Long-Term Impact
We found that of the adaptations that endured long-term, more than nine out of ten were digital adaptations. These enduring adaptations both helped GroceryCo and SupplyCo weather the pandemic and enabled them to boost their competitive advantage and resilience in the face of future crises.
For example, during a 2021 natural disaster, GroceryCo used the algorithmic capabilities it relied on during the pandemic to quickly adjust its pay and product substitution algorithms. Similarly, in response to a labor shortage, SupplyCo used its algorithmic capabilities to adjust aspects of its accounting, inventory, and HR practices.
In other words, our research demonstrates that when organizations make digital adaptations, they increase their chances of not only surviving but thriving when — not if — the next crisis emerges. Digital capabilities enable organizations to adapt to unforeseen challenges in ways that would otherwise be infeasible, making digital adaptation critical for long-term success in an increasingly unpredictable world.
Digital Adaptation Enables Resilience-Seeking
Indeed, the ability to adapt is critical for today’s organizations to thrive long-term. While entrepreneurial leaders have traditionally focused on opportunity-seeking, or efforts to create new sources of competitive advantage, resilience-seeking refers to efforts to become more resilient in the face of crisis.
Resilience-seeking is unique in that it can prompt organizations to engage in seemingly counterintuitive practices that contradict a more traditional focus on sustaining competitive advantage. For example, we saw SupplyCo adapt by reprogramming its credit algorithm using real-time credit analytics and rapidly changing government guidelines to extend credit terms for non-paying customers, who would typically have been cut off for not paying under normal conditions.
Moreover, our research highlights that resilience-seeking is a process that starts long before a crisis hits — not only in reaction to it. Resilience-seeking complements more immediate crisis management plans in that it helps companies detect novel challenges facing their own organizations or their stakeholders, and it enables them to adapt accordingly. When problems go beyond issues that an organization has seen or planned for before, and when stakeholder needs shift significantly in response to some external disruption, it can prompt companies to take action that helps them not only survive the current crisis, but emerge stronger on the other side.
So, what does this mean for leaders? Our research informs several practical takeaways to help organizations boost their resilience through digital adaptation:
First and foremost, our research shows that viewing digital transformation as an ongoing process is essential not just for driving growth and maintaining a strong competitive advantage, but also for cultivating the resilience necessary to weather the crises — whether social, political, environmental, health-related, or any of the countless other challenges today’s leaders face — that have become an ever-more inevitable part of the modern world.
Indeed, neither GroceryCo nor SupplyCo initially saw themselves as digital-forward tech companies. Although this initially hindered their pursuit of digital transformation, their investments to get started put them in a position to make digital adaptations amid the urgency of crisis.
In addition, leaders should focus on identifying contingencies in real time, not just tracking market and competitive trends. Digital capabilities enable organizations to monitor and respond to changing stakeholder needs quickly when crisis strikes, rather than having to start from scratch or guess at how a given situation will impact employees, customers, and other key stakeholders.
In our study, for instance, the disruption of the pandemic meant that overnight, stakeholder demand for digital options suddenly surged. For both GroceryCo and SupplyCo, it was vital that their established systems could rapidly shift to online shopping, new delivery protocols and patterns, and virtual access and collaboration for employees.
During a crisis, an organization’s responsibility to take care of its stakeholders comes to the forefront, while focus on short-term profit is deprioritized. As such, building resilience means not only proactively staying on top of disruptions to protect your internal stakeholders, but looking out for external stakeholders as well.
Our research also highlights that organizations benefit when leaders are empowered with the autonomy to make time-critical, on-the-ground decisions. When unexpected events occur, the organizations that survive and thrive are the ones that can act fast and adapt to changing circumstances without getting stuck in endless bureaucracy or approval processes.
Digital capabilities enable leaders to act quickly by translating decisions into immediate, system-wide changes. For example, GroceryCo leaders used algorithms to limit product orders and later reprogrammed a substitution algorithm to curb unexpected losses, allowing leaders to adjust pricing rules in real time as conditions changed.
Digital adaptation changes how leaders work with standard operating procedures. Rather than abandoning procedures altogether, digitally enabled leaders can adjust, override, or temporarily reconfigure them as conditions change, using systems and data to implement those changes quickly and consistently. This flexibility allows leaders to act decisively in crisis without losing the structure and oversight that procedures are meant to provide.
Finally, what you do after a crisis is just as important as what you do before and during one. To make the most of lessons learned, start by conducting a structured post-crisis review evaluating what worked and what didn’t. Then, use the results of these reviews to capture strategies that will both support responses to future crises and drive broader, lasting value.
On the one hand, it’s essential to document the temporary solutions that proved effective in crisis but that will not be needed under normal operations. While leaders won’t continue investing in these initiatives once the current crisis ends, they should absolutely add them to their crisis management playbooks, so they are ready when the next crisis strikes.
On the other hand, our research highlighted that digital adaptations improved agility and innovation, offering substantial long-term benefits beyond their role in crisis response. While these adaptations were made out of necessity, better competitive positioning often emerges as an indirect effect of these adaptations after the fact, making them worth continued implementation and investment even after the crisis is over.
Organizational resilience is complex, and seeking it effectively requires a wide range of digital and non-digital capabilities. Even organizations that have invested in digital transformation in the past must continually strengthen their digital capabilities to enable digital adaptation.
Our research shows that digital transformation can be a powerful ingredient not just for driving growth and competitive advantage, but also for equipping organizations for resilience-seeking in an age of polycrisis. From a global pandemic to extreme weather events, social unrest, and whatever other crises tomorrow may bring, the ability to leverage digital adaptation to build lasting resilience will only become more critical for the organizations of the future.
