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Resilience: Building back better

U.S. Findings

Together we thrive
Contents

Context 3

Overview 3

Findings – summary 4

1. Impact of COVID-19 7

2. Building blocks of resilience 10

3. Reshaping supply chain 11

4. Looking to the future 12

5. Technology 14

6. Culture 15

7. Sustainability 16

8. Reshaping supply chains 17

Survey Methodology 18

Resilience: Building back better  | 2

Context Overview
Businesses face their greatest challenge The Navigator survey
in a generation. results paint a picture of
challenge and change. 98%
Almost every business has
been impacted by COVID-19
and short-term challenges
dominate the thinking of 3 in 5
business leaders.
operate. And technology is not only

2,600
Even as restrictions necessitate about automation, but also its ability to
Beyond the terrible human physical distance, the data show shape culture and enable agility.
toll, the COVID-19 crisis has that more than 4 in 5 businesses
precipitated the worst global have grown closer to employees, So while the results show that
recession since the Great suppliers and customers; challenges are real, they also reveal
Depression. businesses acting on a clear preference for self-awareness about the need to
across collaboration over self-sufficiency. change and adapt. Accelerating
This survey of over 2,600 technological change and
businesses across 14 This crisis is also catalyzing long- sustainability are deep structural
countries, markets and term change. Business leaders trends with potential to drive growth
territories was conducted increasingly focus on culture. This but also disruption. Companies are
between 28 April and 12 May enables firms to become more agile making rapid and quite fundamental

14
2020. These markets had and responsive to change – learning changes in response. Supply chains
varying degrees of business a lesson from this crisis where agile are being reshaped, but not
activity – from mainland China companies have proven resilient. reshored, with a continuing trend
where domestic business There is a broad focus on employees towards near-shoring evident.
largely resumed, to Europe countries and – both to build resilience and shape
under stringent lockdown. territories the transformation they are seeking. Broadly consistent findings across
surveyed markets evidence the shared
This report considers actions This cultural change can enable nature of the COVID-19 challenge,
taken by businesses to weather emerging opportunities to be and the universality of the deep trends
the crisis; and how they are realized. Technology and companies have identified. Resilience
shaping the new normal to seize sustainability are only becoming must be built into businesses’ DNA to
emerging opportunities. more ingrained in how businesses prepare for crises.

Resilience: Building back better  | 3

Findings
The immediate impact Companies that build resilience into
of COVID-19 has been their DNA will better weather crises.
felt by almost every
company surveyed. This becomes more The data suggest firms are adopting
important as the sources of new ways of working to better serve
potential disruption multiply: customers. Many are prioritizing a
Around 3 in 4 felt either strong or very whether infectious diseases; change in culture to become more agile.
strong impacts, reflecting the severity environmental change; financial
Factors such as adaptation and
of the crisis. Yet 9 in 20 businesses felt shocks; or political instability.
management decision-making
as well prepared as they could be. And The findings show that there is no were identified as key characteristics
only 8% felt completely unprepared. blueprint for navigating crises, but of resilient businesses by 3 in 4
reveal that resilience is multifaceted. companies surveyed.
The importance of a strong financial
foundation to weather storms is
clear. But resilience runs deeper.
COVID-19 impact level
Very strong (25%)

77% 76%
Strong (47%)
A little (26%)

Firms in the automotive, None at all (2%)

Top 5 characteristics of a
wholesale and retail sectors
are most acutely impacted. resilient business

1 2 3 4 5
of companies surveyed had fully ceased
operations as a result of COVID-19. Values Treats employees Adapts fast to A strong balance Acts

5%
customers well external events sheet and steady sustainably
These businesses are therefore excluded cash flow
from the results within this report.

Resilience: Building back better  | 4

Findings

At a time of great challenge Technology is critical to business

and change, culture emerges continuity. And more broadly it is
as a cornerstone of seen to enable cultural change
business resilience. and greater agility.
A healthy organization can set The Navigator Made for the How businesses that prioritize
a business apart. Culture can Future report, published in 2019, adopting technology believe it
create sustainable advantage highlighted a trend of increasing will benefit them
given it is unique to a business. investment as companies adopt
Respondents are taking steps new technology to improve
to improve employee wellbeing, productivity.
through an emphasis on both
This year’s survey shows technology
innovation and inclusivity. Greater
investment is geared towards
They are doing this because agility enabling collaboration and close agility and
strengthens resilience and enables working, rather than automation flexibility

37%
companies to grasp the long-term alone. This suggests cultural change
opportunities created by innovation, is an increasing focus and that
technology and sustainability.
of businesses
technology has a role to play.

Adoption of technology is seen to

50%
New ways of working appear set
improve agility, productivity and
to enable this cultural change.
The data suggest an inflection
expect remote help prepare employees for
the future.
point: with workplaces reimagined
through flexible and remote working
working to Increased
becoming commonplace. become the productivity

norm in the next 50%

two years Upskilled
workforce

47%

Resilience: Building back better  | 5

Findings
A crisis can bring clarity to Supply chains are
decision makers’ thinking. undergoing change.
Nowhere is this clearer than on But the view that COVID-19 will resilience. Companies that identify
sustainability. Far from being only accelerate retrenchment as sufficiently agile have greater

85%
a ‘nice to have’ in the good and deglobalisation appears transparency and digitization
times, it is increasingly integral premature. The survey points to across their supply chain.
to how businesses operate. supply chains being reshaped,
Businesses have also supported

80%
rather than reshored.
Environmental sustainability is one the companies they work with:
aspect of building resilience and The importance of connectivity
is evident. Businesses feel closer • 26% have collaborated to
a deep trend creating long-term of businesses
to their suppliers and have taken get products to customers feel closer to
growth opportunities. prioritize
active steps to support partners. strategic and supply
environmental • 25% have offered better
This collaboration facilitates chain partners
Those businesses which prioritized sustainability payment terms
sustainability felt better prepared the control and transparency
for this crisis. This also matters businesses are seeking to become • 26% have given advice to
for the future when, as the World more resilient. This appears other companies
Economic Forum’s Global Risks particularly timely, given the
Report highlights, environmental elevated level of threat felt by • 25% have shared information
risks are intensifying. components manufacturers and
also service companies. As well as helping each other, 32%
of businesses have changed their
More sustainable companies may
As 2 in 3 businesses seek greater products or services to support
benefit as both consumers and
control of their supply chain (67%), COVID-19 relief efforts.

93%
investors favour companies with
they place greater emphasis on
superior Environmental, Social
supplier resilience. More broadly,
and Governance performance.
they are reconsidering the shape of Following a 2012 fire in a
their entire supply chain – variously German factory producing half have supported the
pursuing diversification, digitization the world’s cyclododecatriene businesses they
Top 5 environmental risks* (a chemical used in the work with
and vertical integration –
1 Extreme weather production of plastic parts),
approaches which are considered
2 Climate action failure the Automotive Industry
in Section 6. Action Group convened
3 Natural disasters
4 Biodiversity loss competing car manufacturers
Beyond control, companies are
5 Human-made and suppliers to manage the
environmental disaster seeking transparency (44%). This limited supply.**
enables sustainability and also

*World Economic Forum Global Risks Report 2020. ** The Power of Resilience, Yossi Sheffi, MIT Press 2015 Resilience: Building back better  | 6
1. U.S. Findings: Immediate impact of COVID-19 is a changed and
challenged business world
The impact of COVID-19 Preparedness to face the uncertainty
The impact of COVID-19 in the USA of the past six months
has been universal (100% USA, 98% all
markets). Marginally more US businesses 100% More than nine in ten companies in the USA think that they were prepared to some
extent for the challenges of the past six months (93% vs. 92% all markets). Just
said that they had felt the impact very
strongly (30% USA, 25% all markets). USA above two-fifths (42% vs. 45% all markets) of US businesses thought that they
were as well prepared as they possibly could be, and around half (51% vs. 47% all
markets) felt that they were reasonably well prepared but in hindsight feel that they
could have done more. A very small minority (7% vs. 8% all markets) feels that they
were not well prepared at all.

Goods businesses and domestic businesses were more likely to feel that they were
as well prepared as they could possibly be:

USA Across all markets

77% strongly felt 72% strongly felt

47% 47%
30% very strongly felt 25% very strongly felt

Service Business Goods Business

Goods Domestic
Businesses Businesses

of goods businesses of domestic businesses

83% 34% 68% 24% compared with 38% of were as well prepared
services were as well as could be vs. 37%
In the USA, the impact was felt more strongly by services prepared as they could be of international ones
businesses (83% strongly felt, 34% very strongly felt compared
to 68% strongly felt, 24% very strongly goods businesses).

Resilience: Building back better  | 7

U.S. Findings: Immediate impact of COVID-19 is a changed and
challenged business world
Current trading situation Business health
The situation for businesses in the USA is marginally less positive than across all Just over a tenth (14%) of US businesses felt that their agility has made them stable,
markets. Overall, about a fifth (18%) of US businesses compared with a quarter (26%) and only 1% feel that their long-term survival is threatened.
across all markets surveyed are operating as normal, and slightly more (13% vs 11% all
However, the proportion of those who think that they are strong overall but had to
markets) have partially ceased trading. The two-thirds (69%) majority is operating with
make a number of adjustments is the highest across all of the markets, meaning that
an even split between major and minor changes.
the combined total of two-thirds (66%) of businesses that fall into the stable / strong
category is the same proportion as across all markets (65%).

18%
of US businesses are operating
as normal (26% all markets) 14% sufficiently agile to be stable (22% all markets)

69%
are continuing with changes (major
52%
strong overall but have had to make a number
of adjustments (43% all markets)
34% USA, 27% all markets; minor
34% USA, 36% all markets)

have been challenged but expect to survive

31% (30% all markets)
More non-services companies
(45%), international
businesses (43%) and US
corporates (40%) have had to are significantly challenged and will need to
make minor changes 2% transform (5% all markets)

13% 1%
say that their long-term survival is threatened
of US businesses said that they have partially (1% all markets)
suspended trading (11% all markets)

Resilience: Building back better  | 8

U.S. Findings: Immediate impact of COVID-19 is a changed and
challenged business world
Impact of current environment
Specific changes on balance have veered to the positive, but we should assume that
businesses have found positive workarounds and more than a third recognize the
need for new solutions. The balance towards the positive potentially challenges the
myth of the impacts of COVID-19 being entirely negative.
Changes to production /
There were positive balances in relation to changes to products / services
(positively: 44% vs. negatively: 26%), changes to customer demand
office location

34%
(positively: 41% vs. negatively: 33%).

The areas where the

need for a new solution Access to
was most strongly key markets

recognized were:
35%
Delivery / shipment of
products / services

39%
Access to
finance

42%

Resilience: Building back better  | 9

2. U.S. Findings: Building resilience is not a single thing and is about more
than a strong balance sheet
Defining resilience Past preparations for resilience
US businesses felt that resilience is built on 4 main platforms – customers, employees, In the past two years, US businesses, in common with all other markets, had taken
agility, and a strong balance sheet, indicating that businesses see the importance of the three main types of action to build resilience – technology / innovation, diversification
first three to their balance sheet. This is similar to all markets. and consolidation of finances – and these reflect their views on the characteristics of
a resilient business.

Investing in technology and innovation was the main focus across businesses (59%
vs. 65% all markets), and this was also found to be the most effective measure for
building resilience (26% vs. 31% all markets).

56% 54% 49% 45%

56% chose valuing 54% mentioned 49% selected 45% a strong 59%
invested in technology /
43%
focused on
customers (50% treating employees adapting fast to balance sheet (41%
all markets) and well (49% all external events all markets) and innovation consolidating their
16% selected as top
priority (12%
markets) and 13%
selected as top
(47% all markets)
and 11% selected
15% selected as
top priority (13% all
(65% all markets)
43%
diversified their business
financial position
(44% all markets)
all markets) priority (10% all as top priority markets)
(49% all markets)
markets) (12% all markets)
A considerably higher proportion of service businesses were focusing on
finances (50% services, 33% non-services) and diversification (47% services,
38% non-services), while more of the non-services companies were investing
in technology / innovation (65% non-services, 54% services).

Resilience: Building back better  | 10

3. U.S. Findings: Businesses have grown closer to customers / employees
and supply chain partners and have become more collaborative

Closeness to customers / Being a good business citizen

partners / employees
Despite the current situation worldwide putting greater distance
Collaboration is becoming increasingly evident and
important in the current climate. 88%
have supported other smaller businesses
between businesses and their customers, employees and About nine out of ten businesses surveyed in the they work with (93% all markets)
supply chain partners, a significant majority of US businesses, US said that they have extended support to other
in common with all markets, reported becoming closer to each businesses in the past 6 months, and a similar
of the three stakeholder groups. proportion said that they received support from others.

This included both sharing of expertise and premises

91%
have received support from other
as well as more favorable financial treatment. There businesses they work with
were also examples of COVID-19-specific support. (92% all markets)

84%
felt closer to their
employees (83%
51% have shared information, 33% have collaborated 35% have relaxed
all markets)
premises or expertise with smaller with other businesses to payment terms for their
businesses in the past 6 months in enable them to get their smaller partners and
order to support them through products to customers, 39% received better
the challenges, while 53% while 34% received payment terms from
received such support such support their partners

80%
felt closer to their
customers (82%
all markets)

77% felt closer to their

strategic / supply 51% 33% 35%
chain partners (80%
all markets)
The main responses that businesses observed from companies generally in the past six months include
changes to products / services (34% vs. 37% all markets) and contributing monetarily (33% vs. 32% all
markets) in order to support the COVID-19 relief efforts.

Resilience: Building back better  | 11

4. U.S. Findings: Looking to the future
Despite having to focus on the short term in the past six months, US companies are still
keeping their eyes on the long-term growth / survival of the business.

Long-term vs. short-term planning Current situation

with uncertainty preparation Thinking beyond the short term is evident in the fact that US businesses
are focusing on implementing contingency plans (64% USA and all
Over the past 6 months, three times as many US businesses spent their markets) and pursuing new prospects (61% USA and all markets).
time focusing on short-term rather than long-term planning.

60% 21%
spent equal proportions
spent more time on of time on both (22% all
short-term planning markets)
(58% all markets)

LONG TERM contingency new

VS. plans prospects
SHORT TERM

19% 64% 61%

spent more time on long-term
planning (20% all markets)

Resilience: Building back better  | 12

U.S. Findings: Looking to the future
Barriers to resilience Changes to working capital /
Maintaining employee morale and cash flow are the top barriers to resilience in the
cash flow management
eyes of US businesses. Spending too much time on short-term planning is the next
biggest barrier. Again, this emphasizes the perspective that business resilience is However, in order to address the cash flow concerns, based on the experience
not only about the balance sheet. of the past 6 months, US businesses intend to increase both working capital
as well as available cash flow (40% vs. 30% all markets). And this is the
The biggest barriers to building resilience over the next six months, which were all a highest in the USA compared with all other markets.
little more identified by businesses in the US, were:

30%
Employee morale Maintaining Spending time on
40% Both working
All other
markets
(41% vs. 33% all sufficient cash flow immediate recovery USA capital and
markets), which is (37% vs. 31% actions (28% vs. 23% cash flow
a challenge to all markets) all markets)
be addressed

Resilience: Building back better  | 13

5. U.S. Findings: Adoption of technology and innovation is one of the top
priorities for businesses in the next five years

Preparations for the next 5 years

Investing in technology / innovation is the biggest measure businesses plan to take in the next 5 years
(53% vs. 63% all markets), and it is their top priority (20% vs. 28% all markets).

But, also tied as the top priority is the intention to focus on the workforce (20% vs. 15% all markets).

Benefits of technology, changes to ways of working Changes brought about

brought about by it and the importance of technology by technology
In line with other markets, businesses in the USA see multiple benefits from technology and that it High-speed internet (63% used in
is a major enabler of change. the past vs. 54% vital in the past 6
months) and videoconferencing tools
Based on the past 6 months, US businesses have felt the advantages of technology: (46% used in the past vs. 46% vital in
the past 6 months) remain the most
internet important technologies.

Usage of customer support tools

increased in the past 6 months (40%
vital in the past six months, 31% used
prior to the past six months)

48% 51% 47% 50% 47% 46% videoconference

For their customers For their workforce In their ability to be innovative

(48% vs. 51% all markets) (47% vs. 50% all markets) (47% vs. 46% all markets)
And in the near future, two-thirds (66%) of
US businesses foresee virtual collaboration /
conferencing tools becoming absorbed
In the next 2 years, businesses foresee that technology will increase the incidence of flexible work into standard ways of working. And this
arrangements (74%) and virtual meetings (56%). will be the top development priority for
customer 35% of US businesses in the next 1-2 years
Nearly half (47%) of businesses in the US strongly agree that times of adversity showcase how support compared with 25% across all markets.
businesses can leverage technology to enhance or improve how they work.

Resilience: Building back better  | 14

6. U.S. Findings: People / ways of working indicate an expectation of
significant change and challenges ahead

Changes in ways of working through technology use in the next 2 years

With adoption of technology and
changes in the ways of working, new
norms will be established requiring
new thinking and greater agility.

And as a result, these substantial

changes in the ways of working
are expected, with 74% expecting
flexible work arrangements and 56%
expecting virtual meetings to become
the norm in the next 2 years.

In the light of this level of change

and the impacts on individual
employees, it is probably unsurprising

59% 53% 48%

that a high proportion of businesses
identify aspects of the workforce,
particularly employee morale (41%
vs. 33% all markets) as a barrier to
future resilience suggesting that it is
invested in technology / intend to invest Technology brought an important priority, which has the
innovation in the past in technology / benefits for customers potential to become a barrier if it is
1-2 years (65% innovation in the (48%) and the not addressed. And US businesses
all markets) next 5 years (63% workforce (47%) in understand this quite well as indicated
all markets) the past 6 months by their focus on the workforce as
one of the top priorities to prepare for
uncertainties in the next 5 years.

Resilience: Building back better  | 15

7. U.S. Findings: Sustainability hasn’t decreased in importance;
its emphasis is either unchanged or it has increased in importance

Perspective on sustainability based Relevance and pressure of sustainability

on the past 6 months The three top aspects of sustainability that US businesses felt would directly impact
their business were consumer-led sustainable consumption, managing resource
Based on the events of the past 6 months, sustainability has either scarcity, and diversity and inclusion (all 27%).
remained unchanged or increased in importance for over three-fifths
(61% vs. 65% all markets) of US businesses.

21% 40% 22%

of US businesses feel feel it is more feel that though it

sustainable managing diversity and
that sustainability is important than is still a priority, it is
as important as before ever before currently less important
consumption resource scarcity inclusion
(23% all markets) (42% all markets) (21% all markets)

Transformation as an opportunity More than half say that they will be monitoring the impacts of increasing transparency
through data (54%), sustainable infrastructure (55%) and increasing transparency through
to prioritize sustainability data (54%) and a similar proportion (52%) also mention that they will monitor diversity and
inclusion in their business.

A significant majority of US businesses Just over half of the businesses (51%) feel that regulatory measures (from the
(93% vs. 91% all markets) agree that the government 34% and through industry regulations (32%) will be among the top 3

93%
need to reassess / review their operations sources of pressure to become a more sustainable business.
will enable them to rebuild their business
on firmer environmental foundations. This Beyond regulations, sustainability pressures are expected from employees and
is further evidence that sustainability will customers (both 41%) as well as business leadership (38%).
remain at the top of their agendas.

Resilience: Building back better  | 16

8. U.S. Findings: Security is the driving force in reshaping supply chains

The two key changes US businesses surveyed are planning to

make to their supply chains in the next 1-2 years are the same
Enhance The ultimate objectives of these
changes are to enhance business
as those planned across all markets to increase their supply business growth growth (40%), be more efficient (36%)
chain security (66% vs. 67% all markets) followed by increasing and reduce costs (35%) in order to
transparency, which is at a somewhat lower level than the enable long-term survival (32%).
market average (34% vs. 44% all markets). Improving quality / reliability despite
the increased cost (28%) is another key
The top means of securing the supply chain were to desired outcome from making changes
identify and secure critical suppliers (36% vs. 31% to the supply chain.
all markets) and to diversify by working with more
suppliers (28% vs. 29% all markets). Creating a more
traceable supply chain (24% vs. 26% all markets)
is mentioned as one of the key means
of increasing transparency.
Improve
quality /
reliability
Be more
efficient Supply
chains
The Ultimate Objectives:

Enhance business growth 40%

Be more efficient 36%
Reduce costs 35%
Reduce Enable long-term survival 32%
costs Improving quality /
28%
reliability despite the
increased costs
Enable long-term
survival

Resilience: Building back better  | 17

Survey methodology For further information about the research please contact:
The Navigator survey is conducted on behalf
of HSBC by Kandar. It is compiled from responses Oksana Poltavets
by decision-makers at 2,604 businesses, ranging US Communications
from small and mid-market firms to large oksana.poltavets@us.hsbc.com
corporations, across a broad range of sectors.
All images copyright HSBC Holdings plc.
The respondents hold influence over their All reasonable efforts have been made to obtain copyright where permissions required.
company’s strategic direction and represent a Any omissions and errors of attribution are unintentional and will, if notified in writing to
broad range of roles including c-suite, finance, the publisher, be correct in future printings.
procurement, supply chain, sales and marketing.
Note: There may be a slight discrepancy between the sum of individual items and the
A total of 14 markets were surveyed between total as shown in the tables due to rounding.
28 April and 12 May 2020.
• Americas: Canada, Mexico, USA While every effort has been made in the preparation of this report to ensure accuracy
• Asia Pacific: Australia, Hong Kong, India, of the statistical and other content, the publishers and data suppliers cannot accept
Indonesia, Mainland China, Malaysia, Singapore liability in respect of errors or omissions or for any losses or consequential losses arising
• Europe: France, Germany, UK from such errors or omissions. The information provided in this report is not intended
• Mena: UAE as investment advice and investors should seek professional advice before making any
investment decisions.
Results have been weighted to be representative
of markets international trade volume (World
Trade Organization data for 2017-2018)

Issued by HSBC Bank plc

8 Canada Square
London E14 5HQ
United Kingdom
www.hsbc.com

Resilience: Building back better  | 18