Steering through unprecedented, sorry, turbulent times | Unit4
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Steering through unprecedented, sorry, turbulent times

from  October 20, 2022 | 3 min read

Unprecedented is a word that has been overused, particularly during the last 2 years in relation to the pandemic. However, I do believe that we are now facing a totally unique period in history, an unprecedented time if you will.

Over the last 50 years, we have seen multiple recessions – 11 in fact – ranging from the oil crisis in the ’70s, Black Monday kickstarting a market crash in 1987, the savings and loan crisis of 1989, to the dot com bubble bursting in the early 2000s and the financial crisis of 2007- 2008… I could go on.

The world has faced, and dealt with, periods of change and uncertainty many times previously, but never before have we seen such a combination of events and varying influences coming together simultaneously. Across the globe, we are seeing high employment, rising inflation, ever increasing interest rates to try and curb the effects of those higher prices, war in Europe, energy price hikes, plus the continued economic hangover from the pandemic and a decade of excessive money supply.

With a raft of looming threats, not least of all - a global recession, how do businesses strategically plan, especially when, as we approach the Autumn, the winds of change appear to be strengthening?

 

Differences of opinion
Of course, respected economists, financial analysts, and market experts all have perspectives as to what is happening currently. You only have to dip into The Economist or other such title which looks at the global economic and political stage, to uncover insights. However, what is telling this time around is the diversity of opinion and forecasts.

Some predict a long and severe global recession which will hit in early 2023, some even predict a Bretton Woods 4 scenario, while others are forecasting otherwise and that - whilst growth will be reduced and inflation will persist - we will not tip into recession. Who should we believe and how can business leaders prepare for economic instability and uncertainty, particularly when most organizations’ operating expenses are already increasing?

 

Lessons learned
In previous recessions, ‘the winners’ – and I use that term loosely – are those who took pre-emptive action. The organizations which examined their operational efficiency, scrutinized their forecasts, analyzed their market offerings, and which researched their total addressable market and customer base before the level of crisis deepened, were those who emerged fitter, albeit leaner.  These were the organizations that rode the wave of the upturn and gained market share.

Those companies which waited for the charts to start heading south before they remediated were left losing market share, still reacting to the downturn when the upturn arrived, and worse.

It’s critical, therefore, that all organizations are proactive, rather than responding when it’s already too late. Thinking differently and building resilience in order to prepare for the rocky road ahead is critical, as is streamlining to become more efficient and better able to cope with economic adversity.  

Reducing costs alone is not sufficient and this is often the mistake organizations make in thinking that simple cost take-out will solve the problems.  Our approach is three-pronged - Streamline, Focus, and Accelerate.

  • Streamline – Reduce the run rate cost base to ensure the company is more resilient for what might come.
  • Focus – Use the economic environment as an opportunity to increase the focus and priorities of the company. In good times companies drift from the core focus, lots of side initiatives get started, and resources are spread like peanut butter across the organization.  Now is a great opportunity to focus and eliminate the “peanut butter” effect.
  • Accelerate – Identify the handful of initiatives that can and will accelerate the business as the upturn comes. Focus relentlessly on these few, ensuring you can ride the upturn wave.  But also recognize that, depending on how deep the recession is, the accelerators can also become mitigants.

If we follow this three-pronged approach, we will be better prepared to weather the economic storm - companies have to select what they believe to be their accelerators now. History tells us that if we do not look ahead, we will lose market share and, if the seemingly inevitable recession doesn’t happen, then we are more equipped than ever for accelerated growth, as and when the financial storm clouds part.

Whichever analysis we listen to, one thing that can be agreed upon is that the outlook is moderate to pessimistic - it’s likely to be turbulent and, in particular, challenging. We all need to take action now, to navigate this extraordinary time - I guess you could say it’s unprecedented.

Mike Ettling - Chief Executive Office at Unit4

Mike Ettling

I’m a CEO, Investor, builder of world class teams, champion of diversity and continuous learner, and I’m passionate about people. From my first leadership role in the Boy Scouts, to exec positions in the tech industry, my career has revolved around elevating, engaging and enabling people. I joined Unit4 to get the market as excited in our unique approach to enterprise tech as I am. We’re building systems that change how people experience work, and the impact will be huge.

Outside of work I’m a family man, a Liverpool supporter, and a proud South African.