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Economic downturns are impossible to predict and sure as sunrise. Build resilience now, because when the sun comes up, you’d better be moving.
Waste no time trying to predict the next economic cycle. The running joke is that “experts” correctly anticipated seven out of the last three macroeconomic events. Unfortunately, it is unlikely that the hit rate will be any better next time around.
Geopolitics, economic cycles, and many other forces that can have substantial effects on the fortunes of your business are inherently uncertain. Higher volatility in our business environment has become the “new normal” for many. And while scenario analysis is a worthwhile exercise to rationally assess some of the uncertainties you are facing, there is no guarantee for getting it right.
So if you are concerned about the economic outlook, and if you get challenging questions from your board about the resilience of your business performance, how do you best respond?
It turns out that in times of crisis and in times of economic slowdown, not everybody fares the same. When we traced the paths of more than 1,000 publicly traded companies, we found that during the last downturn, about 10 percent of those companies fared materially better than the rest. We called those companies “resilients”—and we were intrigued. What made them different? Was it sector related? Did they simply get lucky?
Your business context is and will remain uncertain. But if you get moving now, you can ride the waves of uncertainty instead of being overpowered by them.
As we investigated more deeply, we found some noteworthy characteristics in how resilients weathered the storms: how they prepared for them, how they acted during tougher periods, and how they came out of them.
We will share some of the more specific findings with you below, but let’s start with the core insight right here: Resilients moved early, ahead of the downturn. They entered ahead, they dipped less, and they came out of it with guns blazing.
In short, your business context is and will remain uncertain. But if you get moving now, you can ride the waves of uncertainty instead of being overpowered by them.
> Read the full article and download the report on the McKinsey website
By Martin Hirt, Kevin Laczkowski, and Mihir Mysore
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