Brexit is happening!
The world woke up this morning to this reality. The level of volatility is off the charts this morning, with Stock Prices and Foreign Currency Exchange rates moving wildly. The Volatility is being fed by genuine concerns for the future, as people try to work out what will happen.
Already in the economy it was clear that business decisions were being held up pending the outcome of the result. Investment and growth decisions and corrective actions were being filtered through guessing at what the outcome might be. Already there was a slow-down in the strong growth that had been experienced in the last two years.
What are we to do in the short-term?
The problem for Business Managers is that decisions to do nothing and “wait and see” can be dangerous – failure to react will be criticised.
Reacting, and more particularly over-reacting, will potentially be self-proving – particularly on decisions to cut business levels. If everyone cuts similarly then there will be a collective reduction in economic activity, and it will create conditions for, if not lead directly to, a recessionary environment.
Opportunity, on the other hand, might be there for those who look for it, rather than be frozen into a state of shock.
The “Black Swan” event has happened – success in the future is for those who react most effectively to the event.
Line Management Decisions
Here’s the to-do list:
1. Make a quantitative assessment of your Order Books, and an assessment of the decision making of your customers in the coming months. Understand at a rudimentary level if Brexit and/or related volatile market conditions have an immediate impact on your business and your direct vertical market? Negative or Positive?
2. Review previous and planned Investment Decisions – are the reasons and conditions for making these investments still valid?
3. Opportunities – assess if the new market conditions and/or volatility create opportunities that can be taken advantage of? Assess if speed is of the essence
4. Business Improvement – review the current levels of committed and expected orders, business efficiency and profitability and decide if the conditions now exist for a drive to change the business model to ensure profitability levels are safeguarded. Investment decisions into efficiency tools, like new systems, improved processes & productivity and increasing automation are more justifiable when there is a clear business need to shore up profit levels.
5. Communication – everyone is worried now and sentiment is high. A cool head and a clear assessment of the variables in the short-term should be converted into effective communications to the team, to customers and suppliers.
In a period of high volatility, a clear sense of what’s controllable and what’s not needs to be developed. Actively take readings – don’t assume. Take appropriate action, and communicate clearly about what’s happening and what the organisation is doing about it. Keep Calm and Take Action.
John Eager is the Principal of WinAbu Consulting. He has a background in turnarounds and start-ups – both are periods of high uncertainty. Visit www.WinAbu.com.
He is also a member of the Chartered Accountants Interim Managers group.
Published on LinkedIn on 24th June 2016.
Written by: Winabu
Date: July 24, 2017