CEO - strong organizations in times of uncertainty
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CEO – strong organizations in times of uncertainty. There have never been such great challenges for CEO’s as today. The whole world is in upheaval, in transformation. With war in Europe, crises and thus uncertain macroeconomic outlook, business leaders are confronted. How is it possible to build resilient organizations in these uncertain times?
The whole issue is very complex, because disruption exists in many areas. However, every company is affected in a different way. Leaders need to build resilient organizations to avoid being swept away.
They must be prepared to turn adversity into opportunity and build sustainable competitive advantage to survive over the long term.
What will drive strategic thinking?
Global dislocations and an increasingly complex macroeconomic outlook will shape the strategic environment for the foreseeable future. Indeed, the only certainty for CEO’s is that waiting for clarity is a futile endeavor. The best business leaders know how to turn uncertainty into opportunity. Their strategy is based on two critical elements.
The business leader, together with his or her team, has a clear view of the world on the one hand, and on the other hand, the resulting strategic challenges and opportunities are coined into a resilient and adaptable plan to win.
The plan to win
Today’s global disruptions are on a very large scale (e.g., geopolitical tensions, supply chain bottlenecks) and economic headwinds (e.g., rising inflation, rising interest rates, slowing growth, and currency fluctuations).
All of this has created a complex, unique competitive environment with significant differences across geographies and industries. To cope and navigate these complex disruptions, executives need to develop a dynamic perspective, not only on the most likely scenarios of how their operating and economic environment will evolve, but also on the various opportunities and risks these scenarios pose to their business.
Which companies will perform best?
Business leaders who do not simply sit back and wait for a recovery out of economic uncertainty, but act proactively and turn ambiguity into opportunity, will come out of the whole dilemma stronger. Making decisions is better than not making decisions. Because there’s no point in waiting for someone to make a decision for you, which you then have to live with. There is, of course, no „one-size-fits-all“ solution to such complex strategic challenges. However, there is one bright spot for leaders, two things can be done right when thinking strategically. They need to take a realistic and clear view and understanding of their strategic starting position, what nuanced and differentiated perspectives they have in economic and operational terms, in terms of the stability of the markets in which they operate.
They need to properly assess and further analyze their own financial strength, of their business. (Profit volatility, ratio between free cash flow and debt).
Secondly, they should integrate in their planning, a „dynamic strategy“ that includes three elements:
Capture: Observing trends, defining and monitoring critical uncertainties, and creating a set of scenarios against which to evaluate business decisions.
Adapt: Build operational and financial stability by designing and reshaping strategies based on market trends and data-driven forecasts.
Succeed: Move quickly from assessment to action to seize growth opportunities and strengthen competitive advantages.
These are the global disruptions you need to address as a business leader
Geopolitical tensions will not subside in the near future. This means that companies will have to rethink their business models. On the one hand, not only must risks be reduced in a multipolar world, it must also be explored what advantages your company has.
Bottlenecks in the supply chain will accompany many companies for a very long time. This will increase the strategic importance of agile and sustainable supply chains to support strategies and drive advantage.
Technological disruption, transformation into new technologies, will increase rapidly. (e.g., AI, Quantum), which will rapidly raise the bar for breakthrough innovation and reinvention.
Changing consumer behavior, consumer buying patterns are changing rapidly as a result of recent upheavals (e.g., COVID-19).
People challenges, talent is a key advantage. Companies that focus on people, culture, and new ways of working are more successful in times of uncertainty. It is not enough to talk about diversity, it must be lived internally.
The climate crisis, one of humanity’s greatest challenges, is challenging companies to adopt ambitious ESG and net-zero strategies and commitments even beyond the legal framework.
Rising inflation, the pressure of rising inflation and the resulting
consumer demand continue to impact global businesses and have implications for labor, energy and material costs. The key question in this topic is for business leaders to closely analyze how inflation will evolve globally and how can executives mitigate the impact on their companies?
Rising interest rates, will be resolutely tried to contain. Yet they will impact borrowing costs, investment levels and relative currency values. How will rising interest rates affect access to capital for businesses and consumers? Will rising interest rates lead to tectonic shifts in global competitiveness? These are questions worth exploring.
Uncertain recession outlook, global economic sentiment is gloomy, recession indicators are mixed and forecasts vary widely. Therefore, every company should ask itself, what is the economic outlook for me? how do economic downturns differ from previous ones and how do they affect individual sectors?
Source: Bosten Consulting Group
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