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With 2023 now well underway, business leaders are feeling uneasy. 2022 was a turbulent ride, beginning with a spike of hope that the pandemic was ending, only to crash into the conflict in Ukraine and its domino effects of skyrocketing fuel prices and supply chain disruption. As the year continued, we faced economic unease and the evolution of the "great resignation" into "quiet quitting," and now a wave of layoffs that have amplified uncertainty across the business universe.
After so much chaos, it's hard to predict what the rest of 2023 will bring. The IMF forecasts a recession for approximately a third of the global economy this year, cutting its global GDP prediction to 2.7%. Economists expect that business activity will be dragged down by a number of factors, with 90% pointing at weak demand, 87% at increased borrowing, and over 60% at higher input costs, while others add concerns about talent shortages and regulatory and policy uncertainty.
But strong business leaders know that individual companies can thrive in any environment; what matters is planning ahead, adopting the right attitudes, and closing on a smart strategy.
"The long-term sustainability of a business has never been so dependent on these multidimensional factors," says Fernando Honorato Barbosa, Chief Economist at Banco Bradesco, adding that "Forging resilience, integration and financial robustness with an eye on the people and nature will be mandatory."
Here's what today's executives need to know about leading a successful business in 2023 and beyond.
Cut Costs Only After Measuring Twice
CFOs are under new pressure to check their numbers and look for ways to cut costs across the organization. But these cuts must be carefully thought-out. In a recession, success depends on bringing down expenses without restricting your business so much that you stifle innovation and hobble your ability to drive revenue.
Gartner analysts highlight the importance of aggressively seeking out cost savings while maintaining — and sometimes accelerating — investments in digital adoption and business development.
Adam Feigenbaum, who served as Chief Customer Officer at iCIMS during the 2008 crisis, observes that "It was our strategic precision on cutting spending intelligently that allowed us not only to manage financial targets, but also to increase certain investments that would eventually establish iCIMS as the market leader in our space."
Your tech stack is often a good place to begin when trimming expenditures. Lots of companies have a "shadow IT" of duplicate licenses, unapproved SaaS tools, and unnecessary tech soaking up funds. As employees increasingly return to the office, you might discover an expanded cloud toolset that was necessary for a majority-remote workforce, but isn't needed anymore.
Improve Your Ability to Predict Revenue
Business technology has moved on enormously during the last few years. Tools that use artificial intelligence have mushroomed, and costs are dropping, trends that have effectively democratized revenue ops and optimization initiatives.
Automated processes reduce manual errors and free employees for revenue-driving work, while analytics can reveal hidden money pits, opportunities that are going overlooked, and risks you were about to walk into blind. But with tighter budgets in 2023, CIOs and CROs need to prove the ROI of their choices.
Make sure that all your IT investments have a meaningful business impact, and seek out solutions that drive the business forward. One valuable functionality is predicting revenue more accurately. In a recent DealHub poll, over two-thirds of sales leaders named "improving revenue predictability" as their top priority for 2023.
"Not only does revenue predictability offer business security, but it takes advantage of scalability, meaning that businesses can grow easily with the model in place and expand as needed," asserts DealHub's Nicole Epstein.
Tread Carefully with Change Management
In our altered business climate, most businesses genuinely need new tools and different ways of collaborating. You might be bringing employees back from remote work, walking the tightrope of hybrid work patterns, and/or shaking things up with automation to increase efficiency.
But pursue these changes with care, because your employees are exhausted. Managing change fatigue is one of Gartner's top HR priorities for 2023, with 45% of HR leaders acknowledging that employees are exhausted, and workers willing to change their behaviors to enable organizational change dropping from 74% in 2016 to 38% in 2022.
HR leaders need to be hyper-aware of the toll of three years of riding change and adapting to new policies.
"HR leaders must help employees to navigate change and mitigate the impact that change may have on their work and, more importantly, their well-being," says Gartner's Jordan Turner.
Plan for Growth
Even during a recession, it's vital to maintain a growth mindset. Ira Kalish, Chief Global Economist at Deloitte, emphasizes this, saying, "In my work, executives and many clients ask how they should prepare for a recession. My answer is that they ought to prepare for recovery."
"A recession might last nine months," he continues, "but a recovery could last nine years. Many companies have strong balance sheets and can withstand a recession. Yet, when the recovery ultimately comes, they will need sufficient labour and technology to be competitive."
Planning for growth might encompass seeking out new markets and product lines. The circumstances that are causing you to face new business challenges are also rippling through society and could make your product relevant to a new audience.
Preparing for recovery is a concept that crosses departments. For example, marketing and sales investment should remain strong to retain customers for the day their budgets rise again and sales pick up. HR leaders should consider personalized employee training to fill the skill gaps of tomorrow. Business development executives should be looking for new opportunities and keeping track of trends that are still on the distant horizon.
Win No Matter What 2023 Brings
There's no way to ignore the likelihood that 2023 will be a rough year, but business leaders who prepare carefully will be able to succeed — and lay the foundations for even more success in the long term.