By HPA Founder & Managing Director Sumeet Goel
“It’s going to be a bumpy ride.” Or at least that was the headline in a recent Fortune daily newsletter. A couple of days later, Lloyd Blankfein, former Golden Sachs chairman and chief executive, was quoted as saying, there’s a “very, very high risk” of recession, and further, “If I were running a big company, I would be very prepared for it.”
None of this is likely to come as a surprise to any of us. Inflation is high. Markets are uncertain. The Ukrainian invasion has an unclear ending. A correction is normal and almost unavoidable after twelve years of never-before-seen growth – not even curtailed by a global pandemic that for a time shut down the world.
Here are some figures for the data-minded: From the Global Financial Crisis low in March 2009 and the COVID-19 low in March 2020, the S&P was up 600% and 107%, respectively, through 12/31/21. This is a randomly chosen point of comparison, but the fact remains indisputable: In the history of the S&P, the previous greatest 12-year and 21-month rises were 473% and 73%, again respectively.
Add to this inflation levels not witnessed since 1981, the Fed raising rates 50 basis points at one go for the first time since 2000 (with more expected), U.S. government debt running at 130% of GDP, and the list goes on. Regardless of how many telltale signs point to an obvious oncoming recession, the important question is: Is your business prepared?
Many businesses were caught off guard in 2000 and then again in 2008. This indicates the time is now to get ahead of what is likely coming. As we recognize our 20th anniversary, HPA has weathered its share of economic ups and downs, and while we realized a record 2021 and year-to-date, we met as a team recently to discuss the likelihood of a recession and the ways it might impact our business. We’ve started to explore what each of us on an individual level and collectively can do to prepare. The lessons in HPA Senior Advisor Alex Nesbitt’s 2020 blog, Managing the Whipsaw: Planning for the Next Normal, ring true today: to succeed, make agility and adaptiveness a way of life, not a coping mechanism.
Raise awareness, not an alarm bell within your organization.
Even if your business is prepared for volatility, our recommendation is that you start thinking about how you can be proactive within your own purview – today. Ask teams and stakeholders: What have we done for customers during volatile times before? How can we get those engines at the ready again? Far from stoking anxiety, educate your business about what may be coming down the pike, and then lead thoughtful conversations about what adjustments, preparations, and selective accelerations you can make in the immediate and near-term. Our blog on Success Factors for “Acrobatic” Strategic Planning can guide you as you anticipate and plan for uncertain times.
In the words of Churchill, “Never let a good crisis go to waste.” And while we aren’t in a recession yet (well, not a recession crisis, at any rate), the returns of preparing now are higher than the costs of potential distraction. As we’ve noted before, leading firms gain share during volatility, and this is a time not to retrench but to accelerate select initiatives while enhancing agility.