Continuous Adaptation: Why Organizations Must Think Beyond 'Resilience' And 'Agility'

Co-authored with Francisco Betti Head, Global Industries Team; Member of the Executive Committee, World Economic Forum

This article is part of: Centre for the New Economy and Society

• Resilience and agility help companies survive disruption, but in a world of rapid change, businesses must encompass "continuous adaptation" for true success.
• Continuous adaptation takes root when leaders integrate change and continuity across operations, organization and finance, creating systems that evolve constantly, rather than react episodically.
• It is an organic balance of stability and transformation; companies that master this balance don't just endure disruption, they use it as fuel to create their future.

"Resilience" and "agility." Even before COVID-19 and certainly in the five years since, these words have defined what companies needed to survive in a turbulent business climate.

They must withstand disruption – be resilient – and pivot from sudden threats to unexpected opportunities – be agile.

But resilience and agility are not enough. By nature, they are defensive and temporary; that is to say, escaping danger, weathering storms, or conserving resources.

To thrive amid sustained disruption, companies must pursue "continuous adaptation" – an enduring, flexible and proactive capability. Continuous adaptation enables companies to influence events, not just react to them; to deploy resources to shape the future, not merely defend the present.

"A continuously adaptive organization differs from a merely flexible one because it can sense the need for change without external shocks."

It's about expanding competitive advantage and enterprise value, not just protecting them. The energy transition is a clear example: it requires keeping the lights on while rewiring the building.

Many executives share this vision. The question is, how can companies make continuous adaptation real?

We believe it emerges when leaders stop choosing between change and continuity and instead pursue both in concert – driving improvement across operations, organization and finance.

Operations and strategy

History is full of case studies where companies failed to adapt to significant shifts. For instance, major mobile manufacturers did not foresee the smartphone era, automakers did not prepare for electrification and traditional banks struggled to keep pace with fintech disruptors.

These strategic blind spots are also operational issues because operational rigidity can lock a company into a strategic box. This can happen when executives focus too intently on costs and efficiencies, failing to create the bandwidth to rethink their approach and be disruptors themselves, rather than be disrupted.

A company that over-optimizes its operations (including research and development) to serve existing customers becomes too rigid to adapt to new customers or even notice them.

It doesn't have to be that way. Mass production technologies of the past forced companies to choose between efficiency and flexibility in operations.

Today, thanks to smart factories, real-time procurement and sales and operations planning, companies can adapt more easily and continuously to changes in demand beyond the factory floor, in their planning, organization and strategy.

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It provides a prime example of a virtuous cycle of continuity and change in operations. Put simply, it is more challenging for companies to adopt innovative IT solutions if they have not rigorously maintained their legacy systems.

AlixPartners data show that 75% of companies with well-maintained tech stacks say that new technology is a minimal threat to revenue. However, among companies with troubled traditional tech, two-thirds said it was a threat.

Supply chains experience similar effects. The ability to respond to tariffs or other supply disruptions increases when a company's operations can respond continuously to new information.

One of Europe's leading industrial companies operates several dozen factories, each specializing in a specific product line. That approach captured economies of scale but also created rigidities that have become problematic, particularly with the prominence of tariffs and trade conflicts.

Today, the company is utilizing smart-factory technology to retrofit its factories, enabling each to produce the full range of products with no loss of efficiency. As a result, it will be able to scale production up or down or move it from country to country, in a continuously adaptive and cost-effective way.

Similarly, the transition to the production and use of renewable energy is one where evolution and revolution should be viewed as allied, rather than opposing, strategies.

Organization and culture

Continuous adaptation can be coordinated from the top, but it cannot be driven from there. A continuously adaptive organization differs from a merely flexible one because it can sense the need for change without external shocks.

All C-level executives must consider how to unlock the receptivity and creativity of their team members. Culture is one powerful way.

Companies with strong cultures are generally better at continuous adaptation than those with fragmented or conflicted cultures. That seems paradoxical because oftentimes, constancy makes a culture strong.

However, with culture as with technology, a strong foundation creates freedom – in this case, to experiment, try new roles, reorganize processes or functions, and move into new markets. Psychological safety and shared values facilitate the emergence of new ideas.

"While operations, organization and finance can be addressed separately, they do not act independently."

Structures can also enable continuous adaptation:

• Cross-functional teams that expose workers to other ideas and needs.
• HR practices that rotate high-potential talent through new challenges and opportunities.
• After-action reviews that draw insights from both success and failure.

Organizational adaptability also needs executives who listen. Numerous studies demonstrate that the most successful strategies are developed through company-wide conversations, not executive monologues.

For instance, The Ohio State University found that fast-growing companies are 27% more likely than others to have a strategy process that allows bottom-up ideas to reach management and 42% more likely to incorporate specific ways to challenge management's assumptions.

Finance and capital

Agile and resilient enterprises are prepared for the unexpected. They maintain rainy-day funds, employ rigorous working capital management and have access to debt and equity markets. Many have variable cost structures, allowing them to expand or retrench with minimal impact on their balance sheets.

Continuously adaptive companies do that and two more things.

First, they constantly reevaluate their business portfolios. New data collected for the 2026 AlixPartners Disruption Index show that nearly four out of five companies (79%) that drive disruption in their industries expect to make material acquisitions in the year ahead and 67% expect to make material divestitures, compared to 45% and 36% for companies that react to disruption.

Second, they account for the cost of capital when analysing profitability and making decisions about where to invest.

The most important role of boards and chief executives is to allocate company capital. Knowing their economic profit allows them to invest more productively than their competitors, giving them a "reinvestment advantage" that compounds year after year.

Capital that creates more than it consumes is the fuel for continuous adaptation. This corporate fusion delivers ever-increasing amounts of energy to the flywheels that move a business forward.

self

Continuous adaptation is an organic capability, with each element taking from and nourishing the others. Like ecosystems, continuously adaptive companies strike a balance between continuity and change, recognizing that the two elements complement each other.

Companies that find that balance will be more than agile and resilient: they will be able to create their future, not just prepare for it.

Originally published by World Economic Forum.

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