Are you fortifying your business against the current political and economic uncertainty?
We’re living in incredibly uncertain times. An election year in SA driving political uncertainty. War in Europe creating political and economic uncertainty globally. Is it possible to fortify our businesses against all this uncertainty?
Isaac Newton once said: “If I have seen further than others, it is by standing on the shoulders of giants.”
Of course, we can never really forecast the future, or the risks associated with economic and political unpredictability. But there are ways to “fortify” your business so that it is prepared to confront new problems. One way to do this is by standing on the shoulders of GROW business coaches (figuratively speaking, of course) and implementing GROW’s winning formula to keep your company agile, adaptable and reactive.
Although external factors, such as political and economic issues are frequently outside your control, they have a significant impact on your company’s success and should not be overlooked when developing your business development strategy.
Leaders of mid-market businesses must build their leadership teams to be agile and adaptable. This ensures that the team can position the business not only to survive but to grow stronger, irrespective of the macro-political and economic environment it finds itself in. We see business leaders who don’t do this, using victim mentality excuses and complaining about these external factors rather than asking the question, ‘where’s the opportunity in this uncertainty?’. We sometimes find that these leaders haven’t taken the time to think about how to extract themselves from the day-to-day operations of the business, very often believing that ‘no one else can do it as well as I can’, or ‘there simply aren’t good people out there’.
The message we want to leave with business leaders is that there is no excuse for not starting today to build agility and adaptability into their business. Thousands of mid-market businesses have transformed themselves from struggling to thriving businesses, irrespective of external macro conditions, by adopting some basic disciplines and business principles.
GROW’s 2022 Strategy Summit
Consider GROW’s recent Strategy Summit. In this summit, three leading futurists and scenario strategists spoke on scenario planning and thinking about the future.
Clem Sunter (Thinking the Future), Justice Malala (The Age of Turbulence), and Dr. Azar Jammine (Economic Outlook), joined together to discuss political and economic factors affecting businesses. The result was unanimous in thinking: CEOs and business leaders within the GROW community need to consider political and economic factors and then adjust their businesses strategies accordingly.
How are you, as a leader in your business, thinking about some of the highlights below that came from their talks?
Political factors impacting businesses
According to Justice Malala, South Africa is in the age of political turbulence, so fasten your seatbelts.
Common local political factors that could impact your business include:
- A lack of trust in the ruling and opposition parties
- A lack of trust in public institutions and leaders
- Vigilantism
- Raised racial tensions
- Challenges between government and investors
- VAT increases and Personal Income Tax increases
- Quotas on foreign nationals
Malala explains that 2022 will be tough on many businesses, citing the following eight reasons:
- Crises may come all at once
- It’s an election year
- ANC internal battles will affect SA
- There are few angels and many demons
- Cynical politicians will exploit divisions
- Fluid ‘frenemy’ dynamic
- Struggle over foundational values
- Weak coalitions at key municipalities
Economic factors impacting businesses
Just as political factors can significantly influence your business, so too can economic factors.
“When we look at the long-term history of the South African economy, the country was experiencing growth from 2003 of well over 5% growth per annum. In 2007 a peak in growth was reached, which happened to coincide with the 52nd National Conference of the African National Congress in Limpopo, Polokwane, where Jacob Zuma and his supporters were elected to the party’s top leadership and National Executive Committee (NEC), ” says Dr. Azar Jammine.
“Since the Conference – and Thabo Mbeki’s subsequent removal as President 9 months later, the economy has been experiencing a downward trend. For the last 6 years, the growth in the economy has been less than the growth of the population, with average living standards being lower, resulting in citizens growing poorer. When Covid-19 hit the world and its economy in 2020, like much of the rest of the world, South Africa suffered a dramatic decline.”
Dr. Jammine continues, ” Even after the RET faction was eliminated in early 2018, the economy has yet to restore the speed it enjoyed more than a decade ago.”
According to Dr. Jammine, the IMF Forecast of growth for 2022, reflects South Africa is at 1.9%, making South Africa the second lowest in the world, after Brazil. By 2023, the IMF forecast growth of 1.4% – the lowest of any economy in the world.
What then are the most critical challenges facing the global economy that can affect your business’s success?
- Withdrawal of fiscal relief for Covid-19
- Prospective rise in global interest rates
- Potential financial fallout from the withdrawal of Quantitative Easing Liquidity
- Possible social unrest from the rise in inequality
- Geopolitical tensions
- Climate change
- Threats to cyber security
Reading all the above makes the outlook look quite bleak. How can you lead your business through this kind of outlook?
Thinking the Future
Clem Sunter, author, and highly regarded scenario planner and strategist said that “looking at the future like a fox with sharp eyes and in-built agility is vital for success”.
“When you’re thinking of the future, you’ve got to look around you. It’s not just about having great thoughts from within when thinking about what could happen; it’s about really trying to observe what’s going on around you and projecting that into the future,” says Sunter.
Sunter encourages business owners to apply the following 5 five-step process:
- Consider how the rules of business are evolving. For instance, the global Covid-19 pandemic has resulted in the establishment of home offices and virtual meetings
- Identify the 2 most critical uncertainties
- Create the probable outcomes (scenarios) from these uncertainties
- Identify signals (flags) that pertain to the scenarios you’ve generated and be on the lookout for these flags
- Assign a daily probability to your scenarios
Sunter discusses this more in-depth in his book ‘Thinking the Future: New Perspectives from the Shoulders of Giants’, co-written with Mitch Ilbury.
The book talks about how the goal of constructive futurism is not to forecast specific events but to plot a series of scenarios that show what could happen. According to Sunter and Ilbury, scenario planning is far better than normal forecasting.
Every business needs extra support in these uncertain time
On an annual basis, business leaders should be scanning the horizon for things coming their way, considering what the signals could mean, looking at multiple different possibilities, being open to new ideas, and listening to distinguished speakers to glean insights into the future. In doing so, business leaders can determine and monitor external influences that could affect the success of their organisations both now and in the future.
GROW uses the PESTEL tool to determine political and economic factors and four other major external elements that might affect and impact a business: social, technological, environmental and legal.
Using the PESTEL tool, you can identify, evaluate, organise and track the macro factors that are outside of your control and influence your business’s outcomes.
You can then use this information to work towards the future you want, avoid the ones you don’t, and be prepared to manage the risks and opportunities no matter what external factors are thrown your way.
GROW coaches can help your business navigate critical political and economic uncertainties, plan for and flag different relevant scenarios, and help your business free itself of political and economic barriers.
If you want to take your company to the next level, contact us today to learn how our coaching solutions can help you and your business reach new heights.
