Strategy

Fear Itself: CEOs Boldly Leading During Uncertainty Are Tomorrow’s Winners

Warning signals of a pending recession keep flashing, but the employment statistics keep saying no. The economy’s path forward feels remarkably uncertain and has real upside.  For example, highly credible experts forecast AI-turbocharged growth .

For the savvy CEO, this point of economic uncertainty is the perfect moment to move ahead of hesitating competitors and run to the open field that lies ahead. Recessions are notoriously hard to predict, but while fear slows most companies down, the boldest are figuring out ways to speed up.

The U.S. has faced economic uncertainty for three plus years. First Covid and supply-chain shutdowns were the culprit, then inflation caused by the rapid stimulative free money disrupted businesses across the globe. Next it was the Fed and its rapid pace of raising interest rates. Now it’s hot zones from multiple battlefields, and election uncertainty and partisan wrangling.

These are very large and very serious concerns. But they also create enormous opportunity for the CEOs who know better than to let a crisis — or just the fear of a crisis — go to waste.

If you’re waiting for the storm to blow over, you’re missing out. Like a pilot suffering from spatial disorientation, CEOs can’t get distracted by what they’re feeling — they need to trust what their instruments say. It may feel like the plane is about to stall out, but if that’s not what the actual macro trends and consumer spending indicators say, you should trust them. The stock market will predict a recession at every hiccup if given the opportunity. The only way to land your plane safely is to keep your eyes ahead and your head clear.

Whether recession comes or not, having a clear understanding of your company’s landscape and the types of innovations that are pushing the market forward is key to success. Goldilocks economies are great, but economic uncertainty provides a certain level of permission for companies to be bold and ambitious — but only if the leadership team in charge is seeing the field clearly. Divisions, areas, geographies that might be untouchable during the boon years can suddenly be reevaluated. As a business leader, you should be using this time of uncertainty to ask yourself: do I have the right team in place? The right products? Should my company’s portfolio look different in some way?

Having an answer to these questions has helped companies catapult growth in the past. Jamie Dimon grew JP Morgan to new heights during one of the country’s worst financial crises by using his company’s considerable assets to strike on competitors’ mistakes. UBS followed a similar course when it used this summer’s banking panic to buy out Credit Suisse. Legacy businesses can use these moments and their understanding of the environment to secure competitive advantage.

But these economic slow downs also provide major opportunities for transformers and startups to change the playing field. A company like Tesla, for example, was able to dramatically increase the electric vehicle market during the pandemic by doubling down on internal investments. Elon Musk increased production at a time when other car manufacturers halted, and continued to invest in capital products, helping Tesla to emerge stronger both in absolute and relative terms. The market for electric vehicles meanwhile, has increased three fold, putting legacy companies on the backfoot.

A well-funded entrepreneur won’t stop just because the market slows down. The opportunity to eat away at their competitor’s customer base through agility and innovation only increases during uncertainty.

The biggest mistake a company can make right now is ignoring the cost of time. The fear of a recession pulls leaders into a fallacy that with more information they’ll be able to make better decisions. Good leaders have all the information they need — about their company, about the environment, and about innovations in the industry — and that doesn’t change. Innovators can thrive in any market.


Scott Leonard

Scott Leonard is a managing director at Alvarez & Marsal, a global consulting firm.

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Scott Leonard

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