During the past months, we have seen leadership across many organisations ask themselves comparable questions: How does the turmoil in the financial markets affect my business? Which scenarios should I consider in my planning? What are the long-term themes and investment opportunities that I should focus on amidst the current uncertainty? Executives are facing a “polycrisis” made up of smaller crises that together create higher degrees of uncertainty. One thing we counsel our clients is that planning for a single high-probability scenario is a mistake. Optionality is key, and that calls for considering a range of scenarios, including extreme but plausible outcomes. To prepare for these scenarios, it is important to recognise the true symptom in the broader spectrum. So, which major trends were identified to prepare these scenarios? And more importantly: what actions do winning organisations take? These organisations are actively taking steps to address three key trends that are shaping the business landscape: digital disruption, the risk of high inflation and economic downturn, and the escalation of geopolitical risks. Addressing digital disruption Organisations focus on developing advanced analytics, enhancing cybersecurity, and automating work. These are all critical areas where technology can provide a significant competitive advantage, and companies that fail to invest in them are likely to fall behind. Managing the risk of high inflation and economic downturn Business leaders are prioritising cost reduction, redesigning products and services, and reassessing strategic and economic assumptions. These actions are designed to ensure that organisations are lean, agile, and able to weather any economic headwinds that may arise. We also experience increased activity in footprint reconfiguration, as in consolidation / optimisation, nearshore and reshore. Dealing with geopolitical risks Leadership is building robust compliance capabilities, creating resilience in supplier networks, and investing in monitoring and response capabilities. These are all key areas where organisations can proactively manage risks and ensure that they are well-prepared to respond to any geopolitical developments that may arise. Overall, these actions are critical for winning organisations to remain competitive and thrive in the face of a rapidly changing business environment. Anyone can hold the helm when the sea is calm, but the nimble will thrive in these periods of extraordinary uncertainty.
