Half empty or half full; why business leaders should stop speculating about the economy and get transformation done
Looking the latest data releases, with inflation plateauing or declining, an expectation of more moderate interest rate rises, robust labor markets and improving corporate and consumer sentiment, one could think that we are already out of the worst. But at the same time the war in Ukraine, remaining COVID-19 epicenters, trade tensions and piled up transformation homework are heavy, potentially catastrophic burdens for business leaders.
Are markets and companies more resilient, as they have proven to be in the last two years, or are the reserves slowly running out and is the worst yet to come? Can we just rely on the continuing resilience of markets and companies, or have we reached the limits of “in-the-box adaptations”?
The pace of growth in 2023 is still highly uncertain. The International Monetary Fund (IMF) has upgraded its forecasts for growth in 2023, but it is still below the long-term average. But I think it’s too early to tell whether this downturn will be temporary and shallow or more severe and persistent, or some other combination. It is more likely to be country-specific and will be dependent on both the monetary and fiscal decisions made in those countries as well as their dependence on energy markets and sensitivity of key supply chains.
In this context, we do not see the clear-cut cycles and counter-cycles that we know from the past. The disruption that we are currently experiencing has multiple drivers and is likely to stay. While monitoring the markets can provide a signal for the strategic planning process it should not be the main reason to procrastinate on necessary transformative to-dos.
There may be many perspectives on the market outlook in an environment with low visibility, but the fact that we are in a major societal and corporate transformation is clear.
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So, what does this mean for CEOs and the decisions they make about their strategy going into 2023 and beyond? Again, the decisions they make this year need to be based on the experience and lessons learned from the past three years as well as evidence from that post-GFC environment.
What we do know is that those companies that made bold decisions in the face of uncertainty in those crises reaped the benefits of a faster growth in the eventual upturn.
CEOs will need to focus on five critical areas in 2023:
The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms
Very interesting article!
Technical Asset Manager | Johns Hopkins Alumni
1yGreat article! The past years indeed provided us with memorable lessons about the importance of being able to adapt and be flexible in the ways of working, not only in terms of processes but also interpersonal skills which is seldom part of transformation processes. Sustainable and long-term strategies should focus on resilience. I highly recommend reading "The Age of Resilience" (2022) by Jeremy Rifkin as he states, "From now on, it's no longer about efficiency, but about adaptability.".