2023 will be a year of overcoming for companies, customers, and the global economy.
Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook. Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023.
This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic. Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024. Monetary policy should stay the course to restore price stability, and fiscal policy should aim to alleviate the cost-of-living pressures while maintaining a sufficiently tight stance aligned with monetary policy.
Structural reforms can further support the fight against inflation by improving productivity and easing supply constraints, while multilateral cooperation is necessary for fast-tracking the green energy transition and preventing fragmentation.
More than 85% of central banks worldwide tightened monetary policy and raised interest rates that had been on the rise since late 2021 to cope with inflationary pressures and avoid a recession.
Beginning with the critical truth that “nobody cares about your concerns”, everyone has their own concerns and challenges.
- As we say customers are indifferent to your challenges, usually the consumers rewarded you when you met their ever-changing needs, not when you show courage in making tough decisions. As we know, in the European Union, consumer confidence is at its lowest levels today than at its lowest point in the pandemic. Talking about the business model is useful to refer to that if you´re selling to B2B, your customers are even more indifferent to your needs, as they´re focusing on delivering more value to their end users. Whether you´re in B2C or B2B, you need to be guided by customer obsession expressions.
- Add up the things every employee is concerned about (inflation, political conflicts, energy prices, purchasing power, etc) and it´s safe to assume they´re worried and distracted. Nowadays employees have their own needs and opportunities to consider, in a November 2022 survey, just 70% of US, 58% of UK, and 59% of French employed online adults said they feel their job is “safe”.
- The economy ever was and ever will be a permanent process and closed cycle, with different phases of growth and recession, but this is how the economy works and how the economy will always work. The economy`s going to do what it´s going to do, you can´t rely on a generally sluggish economy to hide your executive team´s lack of decision-making capacity.
Consider Your Long-Term Strategy When Responding to The Downturn
This downturn will be different, so you must adjust your business differently. The pandemic showed that while the unexpected circumstances were difficult for most, those who made smart bets came out on top.
This downturn will be different, so you must adjust your business differently. The pandemic showed that while the unexpected circumstances were difficult for most, those who made smart bets came out on top. Confidence in executive leadership rose from a meager 24% in early 2020 to 42% in 2022, precisely because executives led with confidence and agility when the chips were down. To be “successfully manage through a recession”, we recommend a few actions:
• Make smart cuts and smart investments. Cutting costs often means cutting staff as well as reducing budgets and investment in ongoing operations and product projects. Having learned from prior recessions to respond quickly when a downturn rears its head, panicked execs impose cuts across the board, asking the business to save 5% or 10% overall. This brute-force approach guarantees that cuts are as likely to hurt as help, as they will be independent of the organization’s long-term strategy — particularly in a talent-constrained environment — and undercut employees’ faith in leadership.
• Put talent at the center of your long-term strategy. Currently, 54% of US and 43% of UK and French employed online adults believe that their organization will make personnel decisions in a “careful and human-centric” way. Look no further than the contrast between the recent handling of firings at Twitter with those at Meta; the latter came with clear business rationales and organizational support. When considering cuts, identify the individual contributions and skills that will take your company into the future. Invest in a talent intelligence program that tracks workers’ skills and performance capacities beyond static job descriptions or faulty performance reviews.
• Choose the right customers to obsess over. Resources are precious in this particularly fraught economic downturn. Our planning guides tell you where to defend, reduce, and/or experiment across your organization based on our benchmark data. To do this right, it’s just as important to decide which customers not to serve as it is to obsess over whom to serve now and in the future. Underperforming markets lead to underutilized operations, neglected technical debt, and the waste of valuable resources that you could align to better opportunities.