Balance efficiency with resilience to protect performance
Executive summary
Operating efficiency has long been the benchmark of disciplined leadership. But excessive cost cutting can leave organizations brittle and just one disruption away from costly repercussions. New data from Grant Thornton’s Enterprise Resilience Survey shows that high-performing firms achieve resilience by coupling efficiency with flexibility.
Introduction
The best leaders know that efficiency without resilience undermines performance.
Our Enterprise Resilience Survey confirms it: 69% of highly profitable companies build redundancy and flexibility into cost programs, compared with only 26% of less profitable respondents.
“Lean is good up to a point,” said Grant Thornton Business Consulting Partner Joe Mulligan. “But cut too far and you weaken the muscle organizations need to perform.”
Meanwhile, single points of failure — relying too heavily on one supplier, one site or one employee — put an organization one misstep away from a meltdown with serious business implications. Having more than the bare necessities can seem inefficient until something breaks and you need a backup plan.
Why slack is strategic, not wasteful
Supply chain shocks in recent years proved that slack can be valuable. Firms that relied on just-in-time delivery from suppliers stalled, while competitors with reserves kept producing.
Reserves are insurance against the many threats that businesses face. Inventory stockpiles, cash cushions and workforce capacity provide the option value that keeps operations moving when disruption strikes.
“Slack isn’t a liability,” said Grant Thornton Business Consulting Partner Katie MacQuivey. “It gives organizations the capacity to bounce back, adjust and remain agile.”
Leaders should cut vanity costs but preserve the safeguards that enable risk response and strengthen agility. These include:
- Inventory reserves for critical SKUs
- Supplier diversity to avoid over-reliance
- Incident response capacity for cyber and operational risks
- Surge staffing to handle spikes in demand
Management can evaluate where it stands on these key resilience issues by tracking key metrics such as time to recover, revenue-at-risk concentration, single-point-of-failure count, supplier dependency index, and critical talent coverage ratio.
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Budget for resilience
Too often, leaders treat resilience investments such as cybersecurity, compliance and maintenance as overhead or cost centers. But these are ROI-positive investments. Investments in downside protection for predictable “what-if” scenarios can contribute just as much to organizational financial health as investments in revenue-accelerating activities.
“Ultimately, you want to look at value,” Mulligan said. “You need to look at the impact of what you’re spending, and what you’re cutting.”
In cybersecurity, for example, preventive spending such as penetration testing and cyber monitoring often costs a tiny fraction of what a breach would cost. Similarly, trimming compliance budgets may reduce quarterly expenses, but regulatory penalties and remediation costs quickly dwarf the savings.
Successful firms view resilience spending as an insurance premium: modest upfront costs that prevent devastating financial and reputational damage.
Protecting people promotes profits
Our Q3 2025 CFO survey shows the tension organizations are experiencing with workforce capacity: 60% of finance leaders expect talent challenges to persist, yet 45% say layoffs could occur in the next six months.
As some businesses are now implementing AI in hopes of reducing headcount, cuts that diminish workforce resilience can have damaging consequences.
“A stretched workforce can’t innovate or adapt. You need enough capacity built in for upskilling and the creativity to push the limits and drive progress,” MacQuivey said.
When a Fortune 500 client faced slow time to market and apparent excess capacity within its marketing team, MacQuivey and the Grant Thornton team revealed that process bottlenecks, not surplus resources, were the real issue.
“Transformation to an agile organizational model and streamlined workflows allowed them to accelerate go-to-market and leverage excess capacity to experiment with new marketing strategies and AI capabilities, unlocking further improvements,” she said.
High-performing organizations invest in formal workforce resilience programs: 66% of efficient firms do so, compared with just 30% of less-efficient peers, according to our Enterprise Resilience Survey. These initiatives, from cross-training to well-being programs, keep turnover low and pipelines strong.
Don’t pinch pennies on customer service
Customers, meanwhile, can quickly abandon a company that implements cost cuts that reduce quality or service. For example, Mulligan said some healthcare providers have cut back on office staff so much, without the requisite investments in technology interfaces, that they miss critical touchpoints with potential patients.
“There are times that a healthcare provider might not even know that a prospective patient or a regular customer is trying to get in touch with them due to the fact that their call monitoring or approach to patient service isn’t what it needs to be,” he said.
Cuts that affect customer service require careful consideration across the industry spectrum. Automating and injecting self-service features throughout the customer experience can lead to more personalized products and services that increase customer acquisition, satisfaction, retention and engagement.
But over-automating interactions can frustrate customers, and cutting essential frontline service roles can weaken a company’s personal touch and erode the trust that ensures customer satisfaction and sustains revenue. Customers have many options in today’s marketplace; failing to live up to expectations could have immediate consequences for loyalty and retention.
Engineer flexibility, don’t just cut
The most resilient organizations replace blunt cuts with engineered flexibility, building agility into their systems with:
- Modular processes that can reroute work
- Multi-sourcing to avoid concentration risk
- Cross-training for employees to prevent single points of failure
- Cloud elasticity to scale capacity up or down with demand
All re-engineering should be performed with the idea of protecting core operations. The core might have a continuous improvement element that enables increased efficiency over time, but resilience processes protecting the core need to be robust.
“We don’t ask clients what’s broken,” MacQuivey said. “We ask them what can’t break. That’s where the real risk lives.”
MacQuivey described a major tech company that, after reducing headcount and vendor support within critical functions such as enterprise planning, marketing, sales and engineering, saw increased burnout, turnover and heightened risk to its core operations.
Areas outside the core, where there is less risk, are less likely to cause fragility within the organization if cuts are applied.
“Think about how you can get your organization to hum like a utility,” Mulligan said. “When you turn on the switch, you expect the lights to go on. And you expect them to stay on reliably until you turn them off.”
And if keeping the lights on is essential for your business, having contingency plans or investing in a backup generator can help mitigate risk and minimize undesirable impacts.
Practical moves for resilience
True efficiency isn’t about running the leanest. It’s about running strong, fast and prepared. Leaders can embed resilience into every decision with five practical moves:
- Apply a risk-based cost lens to distinguish between excess and strategic reserves.
- Use critical-path mapping to identify what cannot break.
- Diversify dependencies across suppliers, systems and talent.
- Automate detection and response to act quickly when disruption strikes.
- Rehearse failure through drills and simulations to build readiness.
Mulligan said fragility isn’t caused by a single flaw but by the summation of many overlooked weaknesses. Addressing them through design and discipline makes the difference between organizations that falter and those that endure.
The payoff is clear: firms that balance efficiency with resilience absorb shocks, seize opportunities, and outperform rivals. In a volatile world, leaders who prioritize resilience will outlast and outpace the competition.
Contacts:
Partner, Business Consulting,
Grant Thornton Advisors LLC
Joe is a Partner with Grant Thornton's Business Consulting practice. In this capacity, Joe partners with leaders, including boards, committees, and management that aspire to enhance the attainment of organizational, mission and financial objectives.
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