Shocked by the Brexit vote and unnerved by the uncertainty around it? Expected a Clinton victory over Trump? Can’t easily name all the countries in which you do business that currently admit unsettled leadership?
How’s a business owner supposed to make good strategic decisions from within all the swirling winds?
iStock (Bastun)
Remember there is a big difference between what has happened, what will definitively happen, and what might happen
One client with operations in England and sales in almost 100 countries smartly reacted to the Brexit vote with a “wait and see” attitude. A colleague involved in merger and acquisition activity shared that a British acquisition target demanded an increased valuation following the Brexit vote.
Given that we know absolutely nothing about how that complex legal decision will be executed, any adjustments made now are born from guesses, not facts. Similarly, we’ve already learned that policy proclamations from Trump may quickly slide off his radar. Strategy founded on his platform, like those Brexit-based, is currently fool’s gold. Guesses, not facts.
International socio-economic-political uncertainty has become more important because of increased globalization of our businesses. It is now a way of life. It offers short-term opportunism, but little more. For most industries, patience is a virtue when considering these extrinsic challenges.
Distinguish between short-term and long-term factors
As England delays formally initiating Brexit, the potential of overturning that vote, or making a request for readmission soon after implementation begins, rises. We don’t know yet whether that planted bomb will explode with lasting impact or emit a harmless puff of dust.
Trump will make policy decisions that can be reversed by the next president, just as he vows to reverse many of Obama’s programs. The Trump decision that will have persisting impact is that of Supreme Court Justices. He can fill at least one, and likely a few more positions. But really, just how much does the makeup of the Supreme Court impact your business?
When manufacturers first focused on outsourcing and moving operations to the Far East in search of the holy grail of cheap labor, most understood that the politics and economics of that region could easily and quickly change significantly. Anyone who made the decision to produce there without a ready exit plan and a quick expected payback was simply not thinking strategically in the first place. They were opportunistic.
Unfortunately, those choices are negatively impacting the supply of skilled labor in North America now. Clever grasping of low-hanging fruit can have unintended consequences.
Identify factors that will significantly impact your industry and your business regardless of fluid political leadership, tariffs, trade pacts, and labor laws
For manufacturers globally, the elements of operations that survival requires include agility, automation, data, speed, and energy. The strategy of every manufacturer must place high priority on those issues.
Banking, finance, and insurance can all very easily feel discombobulated right now. Whether it’s potential changes to Affordable Care Act or Dodd-Frank or currency revaluations by foreign governments keeping them awake, the fundamentals of risk management and technology will always have a leading role in their strategy.
So how can you optimize your strategic thinking in an era of uncertainty?
Simple. Look for the things that are certain, and that will matter over time. I’ve provided five that impact manufacturing and two that impact financial service industries, now and in the future.
What are those always-present factors for your industry? Ensure that your vision, strategy, and capabilities in those arenas are always top priorities. Then, and only then, add near-term opportunistic strategic alternatives to the mix.
It’s easy to react to every headline. Don’t do it. Absolutely stay abreast of advances around and in your industry. And create your own. Certainly, consider opportunities to gain market share. But don’t waste precious resources on brawling battles that are not strategic to the war you intend to win.
As published on American City Business Journals
