By Eamonn Percy
August 25, 2015 A series of economic, financial and technological shocks are currently battering the global economy, creating waves of uncertainty, fear and disruption.
The price of oil has dropped below $40 (US) per barrel, Canada has been in recession for the first part of this year, China inflamed the currency wars on August 11, 2015 when it devalued the Yuan (accelerating the flight to the US dollar), the volatility of major equity markets has increased significantly with a 1,000 point drop in the Dow Jones Index at the opening yesterday, and finally, there are strong indications of a slowing economy in China.
From a technical perspective, innovation driven by information technology, automation and the Internet of Things (IoT) is causing significant disruption to existing industries as I pointed out in my May 2015 article in the Globe and Mail.
While business cycles are a normal part of life (there have been 13 recessions in the US over the last 100 years), many businesses are woefully unprepared for these shocks and will pay the ultimate price in the months and years ahead. As Milton Friedman articulated, they will become victims to “The Tyranny of the Status Quo” by thinking it was safer to stay the course, rather than adapt.
People who have followed my posts on LinkedIn, or subscribe to my blog or read my articles, will know that I am a strong proponent of combining people (leadership), products and processes to build a great business.
During these uncertain times here is what you need to remember to thrive:
People: Both you and your employees are likely feeling a strong sense of uncertainty and fear right now: channel your inner courage as a leader and stay fearless. Control your emotions by focusing on what you want to achieve and visibly demonstrate to your employees that you have the courage, plan and perseverance to lead them and the company through tough times. Don’t over-react. Stick to your plan.
Products: Use this period to expand your market presence while your competitors may be pulling back. Cut back on non-core expenses and redeploy your capital to sales, marketing and new product development. Great fortunes are made during periods of economic uncertainty. Follow Warren Buffet’s Maxim, “I get fearful when others get greedy, and greedy when others are fearful.”
Processes: Good systems are the backbone of any great company. Reread my October 2014 article in the Globe and Mail on how to build scalable systems in your business, and execute immediately. This current round of economic turbulence will likely get worse before it gets better so it is never too late to build better systems. Focus on Lean Thinking Principles and innovate on low-cost, innovative and fast ways to deliver value to your customer.
Do not over-react to the turmoil in the world. Keep your emotions in check and remind yourself that great fortunes are created by the bold during difficult times. Use the next few months to focus on shock- proofing your business, so you can thrive and ultimately dominate your sector.
This article first appeared the Percy Group Blog and is reprinted here with the kind permission of the author. Read more insights from Eamonn Percy and learn more about the many services provided by the Percy Group here.