If there’s one thing that business has wanted from policymakers since time immemorial, it is certainty. Just tell us what the rules are, they say, then we can plan accordingly. Not knowing what your tax rate will be, not to mention when the U.S. federal government will reopen or what exactly will happen with Brexit, makes long-term planning impossible. However, it appears we are entering a time in which uncertainty from our policymakers will be the norm. If uncertainty is the one thing business leaders can count on, what are they to do?
As measured by a team of economists, global uncertainty in economic policy spiked in July 2016, then again in 2017, and recently in the third quarter of 2018, to levels far higher than the Great Recession and 9/11. Likewise with their measure of global trade policy uncertainty — it’s way up.
We don’t need advanced degrees to know that we are experiencing a high degree of uncertainty in economic and trade policy. We just need a newspaper. France is cancelling soccer matches and closing tourist attractions against a threat of more riots in response to economic and education reforms. Prime Minister Theresa May’s Brexit plan could be falling apart, and no one knows exactly what will happen if it does. Japan’s economy is shrinking due to natural disasters while Venezuela’s man-made economic disaster is causing millions of citizens to flee the country in search of food and medicine. The status of U.S.-China trade relations changes daily.
It is tempting to wait for a reversion to the mean, or in this case a return to the paradigm of multi-lateral globalist leaders providing a stable business environment. However, it would be more effective, at least for now, to deal with the world as it is and not as some of us wish it still were. Here are four strategies to keep in mind while navigating the choppy waters:
- Get agile: Don’t just change your plans, plan to change. Do not treat sudden shifts as unexpected aberrations but as normal, natural occurrences. Prep for disasters. Run rapid-response drills. Train your teams to relish rising to the occasion. Get really good at excelling when things go horribly awry, because they will.
- Look to the horizon: Businesses, particularly publicly traded ones, have for too long been fairly criticized for being too focused on the short-term market moves at the expense of long-term sustainability. Frustrated leaders can use today’s uncertainty to refocus their business efforts on the long haul.
- Know your public: In a volatile environment, a business’s reputation can be destroyed in seconds. Often, the public is being tossed around by the same policy changes as your business is, offering an opportunity to find common ground while policymakers remain out of touch.
- Finally, know your purpose: Remember why you are in business in the first place. Chances are your business fills a necessary function in the marketplace, whether it’s selling burgers or trucks or B2B business solutions. Turning a profit and growing revenues are not your purpose, they are your prize for fulfilling your purpose. Just because the world is changing quickly and policymakers are providing unreliable guardrails doesn’t mean your company has changed what it stands for. That’s your North Star. Focus on it.
If you expect conditions to change on a dime and prepare for it, you’ll not only survive in an uncertain environment, you’ll likely thrive.