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Leadership can be challenging in the best of times. It can be tough enough getting all the internal threats managed and opportunities prioritized so a company can be considered well-managed and on track for growth. Add in the external forces that can impact a firm, and it’s no wonder, so few are ultimately considered great American companies. Leading through uncertain times can be taxing. After all, CEOs are human, and it's difficult to remain confident when it seems a new challenge is thrown at you every day.
In a recent article in CEO Magazine[1] C.J. Prince explains:
“Market volatility, high inflation, impending recession, geopolitical uncertainty, labor shortages and climate change are just a few of the challenges facing leaders today. Together, they conspire to make scenario planning much more difficult….”
Even when we have the data, as is more often the case now with the availability of data lakes, powerful business analytics, and fast cloud-based networks, it’s the insight we lack.
This makes every executive function more difficult to perform.[2]
Uncertainty makes it much more difficult to plan for the future with confidence.[3] When leaders lack confidence it increases uncertainty for employees, which has many negative consequences.[4]
This is very challenging today as we are in the midst of a very confusing economic situation. Economic indicators are mixed and that makes it difficult to predict the future, even for the experts who do it for a living.[5]
The Conference Board, a global, nonprofit think tank that has been providing economic forecasts for over 100 years, says economic weakness will intensify and spread more widely throughout the US economy over the coming months.[6]
“Looking to 2024, we expect the volatility that has dominated the US economy over the pandemic period to diminish. We forecast that overall growth will return to more stable pre-pandemic rates, inflation will drift closer to 2 percent, and the Fed will bring rates closer to 3 percent. However, due to demographic challenges we expect tightness in the labor market to remain an ongoing challenge for the foreseeable future.”
Other experts have pointed out that inflation is already coming down and point to a benign outlook for extended inflation in the coming year.[7]
The general economic uncertainty in the market today impacts all businesses, and makes every day business challenges even more difficult to overcome. It's important to stay on top of the current economic situation and surround yourself with the most accurate data when making decisions that impact your business.
We will focus on eight distinct challenges that Owners/CEOs and their teams will face this year. We will explore their causes and the threats they pose to the enterprise if the leader fails to navigate them successfully.
Keep calm, push forward, and keep these 8 primary business challenges top of mind when leading through uncertain times.
Table of Contents:
8 Challenges to Prioritize When Leading Through Uncertain Times:
5 Elements That Will Help Your Organization Handle A Changing Business Environment
Long-range planning is an essential function for all business owners and executives. It is the process of setting goals and developing strategies for a company's future growth and success. It involves forecasting future trends, identifying opportunities and challenges, and developing plans to achieve the desired outcomes.
A good long-range plan brings the company’s vision into focus for the entire team. It illuminates a possible future, provides direction, and makes it possible to create plans of action for the company’s various departments.
In fact, studies have shown that involving all employees in this planning process, enabled by the implementation of open-book management, creates more cohesive teams that work better together in support of the firm’s overall long-term goals.
We call this High-Involvement Planning™, and it provides significant benefits, some of which include clarity of purpose, improved decision-making, better resource allocation, adaptability, increased stakeholder engagement, and employee motivation.
Operating without a long-range plan puts the company in a sort of limbo where growth if it happens at all, comes as a result of chance. As business management gurus have told us for decades: “If you’re not growing, you’re dying.”[8]
Finding the best employees has always been a challenge for business leaders. Over the years, advances in worker upskilling have made it easier for companies to bring in younger workers and train them up in order to build strong teams.
This has proven a very significant challenge in a market where 70% of younger workers say they are already planning on quitting.[9] Making this challenge even more serious is that we already have a worker shortage in America,[10] in part because the workers we do have are aging out of the workforce. The US Bureau of Labor Statistics now estimates that by 2024, a quarter of the workforce will be over the age of 55. Of these, a third will be 65 or older.[11]
Success will require leaders to become very good at engaging with and recruiting younger workers. To do so, they will pay attention to the specific requirements of this group of prospective employees.
Some of these factors include generally higher expectations from this group, particularly about work-life balance and access to technology; strong social awareness; increased competition for workers; importance of company reputation in the marketplace; and different communication preferences.
Recruiting the right people and engaging them from the very first interview is what sets business leaders apart.
Even the smallest enterprise must depend upon a supply chain in order to do business and produce a profit. For industries that require raw materials or parts from other manufacturers to complete their products, managing the supply chain, which is almost always global, is a critical imperative.
Unfortunately, there are many factors that are currently making this more challenging.
According to KPMG, “Disruptions to supply chain operations are set to stay in 2023, whether they be existing or new geopolitical conflicts, inflationary pressures and the recessionary environment, climate change weather events, or other issues yet to emerge. They can all impact access to goods and how they flow to their final destination, create port holdups, reduce container and ocean freight availability, and surge prices, among other concerns.”[12]
Other challenges include complexity in the environment, globalization, risk management, inventory management, communication, technology, and government compliance.
Download the PDF formatted version of this article and tools to help you with long range planning.
Raising prices is not a business problem, strictly speaking. In fact, for many businesses, it’s a viable strategy for growth and increased profitability. But in a highly competitive market, raising prices can cost the business customers – the one thing they can’t afford to lose.
Unfortunately, in today’s inflationary environment, many businesses feel compelled to increase prices. According to one survey, 40% of US small businesses are planning to increase prices by at least 10%.[13]
Businesses, particularly smaller and mid-sized firms, have been struggling to keep costs down for at least the past year, according to CFO Magazine.[14]
“Two out of three (67%) small businesses have raised prices during the past 12 months and 85% are concerned about the persistence of the highest inflation in 40 years, according to a quarterly survey by the U.S. Chamber of Commerce and MetLife.”
As companies grow, controlling costs becomes more difficult as department heads and the employees working there often don’t have a clear picture of how their own efforts to reduce costs impact the enterprise as a whole.
Cost control is critical for both making competitive pricing decisions and increasing and maintaining profitability, so it should be a top priority for all leaders.
Energy management is becoming an increasingly important issue for corporations in America today, as it can impact cost savings, regulatory compliance, reputation, competitive advantage, and innovation. Whereas, this function has always been important, until recently energy was treated as just another work input.
Today, the ways companies create, consume, and manage energy is under review by government regulators and nonprofit watchdog groups. Lawmakers worldwide are considering new rules for the kinds of energy companies can access; the prices, taxes, tariffs, penalties, and other fees they must pay for it; and the way they offset the emissions and other byproducts created.
Meanwhile, the companies involved in the creation and distribution of power are facing their own challenges.[15] Their ability to overcome these challenges will impact all energy users.
The ultimate impact of these evolving rules is not yet clear, making it more difficult for leaders to create and implement long-range plans. There are clear hazards for companies that cannot manage this part of their business effectively. These include higher costs, reputational risk, government noncompliance, and competitive disadvantage.
Leaders who can motivate a workforce will create higher-performing teams and stronger companies. Employee motivation is a complex and ongoing process that depends upon a number of factors. These include:
How leadership views the people the company employs has a huge impact on employee motivation. Employees who believe they are viewed as “cogs in a machine” will be very hard to motivate. While they may perform a function for pay, they will leave as soon as a better opportunity presents itself.
When leaders view people differently, motivation increases. Companies that treat their people like owners create very effective teams. Doing so requires management to be very clear about company goals and expectations as well as recognition and rewards available to workers.
Increasingly, workers are demanding more concessions than previous generations, including autonomy and empowerment, opportunities for growth and development, a positive work environment, a better work-life balance, and fair and transparent policies.
All of these factors can impact overall worker motivation, but more powerful than any of these, especially for younger workers, is a sense of belonging to a team that is making a difference in the world.
One key to easier recruiting, better worker motivation, and retention, as well as higher overall company performance, is workforce upskilling. The days of working a job for decades in order to accumulate the skills to be highly effective are long gone. Today, companies must train constantly, preparing their workforce for the challenges they will face in an uncertain future.
Amazon recently commissioned research firm Workplace Intelligence to survey workers from a number of industries and companies to find out how they felt about the skills they currently had, their employers efforts to help them increase their skills, and their confidence about their future employability.
“The study revealed that most employees are concerned they lack the skills (78%) and education (71%) required to advance their career, and the pandemic is at least partly to blame. In fact, 58% of employees are afraid that their skills have gone stale since the onset of the pandemic, and 70% feel unprepared for the future of work.”[16]
No workforce that feels unprepared for the future can be effectively motivated to face future threats or capitalize on future opportunities. Therefore, upskilling and retraining of employees is a necessity that must be addressed in order to ensure that businesses remain competitive.
Every challenge we have identified in this paper impacts the company’s ability to remain profitable. Without the ability to ensure profitability, there is no company.
Every challenge the leader fails to manage will have a marked negative impact on the company’s profitability. This is the ultimate challenge for the modern business enterprise. Everything depends upon succeeding here.
But do most business owners even know if they are profitable?
It seems like a ridiculous question, but Intuit, makers of the popular Quickbooks business accounting software, says that most business owners only understand profitability from a fundamental standpoint.[17]
“Business owners should look beyond a simple profit dollar amount. The basic dollar amount doesn’t indicate why the business is profitable. Analyzing key metrics can help business owners determine whether their company is healthy, and profitability is sustainable.”
Success comes to leaders who understand the metrics that ensure profitability and then get their people motivated to use those levers to increase it.
“Only the numbers can tell you how you are doing, show you where you need to focus your attention, allow you to identify and solve problems, and let you know how your own day-to-day actions affect everything and everyone around you,” wrote Jack Stack in his book The Great Game of Business.[18]
Success, according to Stack and the many companies that have used his book as a business guide for the past 20 years, requires leaders to share these numbers with the teams they lead.
“Open Book Management is the best way I know of to keep people focused on the important issues facing a company,” he writes.
The careful reader will see that every challenge discussed in this paper is related. They all share a set of common factors that must be considered in order to arrive at a solution, including:
There is no specific business strategy that will be effective in dealing with the challenges in this paper. Each business and every industry will bring its own requirements.
After working with business owners and CEOs for decades, we have found that effective strategies for dealing with a changing business environment take these five elements into consideration.
Open-book management is a management philosophy and approach that involves sharing financial and business information with employees and teaching them what this financial information means, in order to provide them with a better understanding of the company's operations, performance, and goals.
This has been an accepted management process for decades[19] and typically involves regular sharing of financial statements, performance metrics, and other key indicators with employees, as well as involving them in setting goals, creating action plans, and tracking progress.
In particular, helping employees learn to create accurate forecasts of future activity gives them insight into how their actions can contribute to positive change over time. This approach is believed to increase employee engagement, motivation, and accountability – ultimately leading to improved business performance.
In hundreds of companies around the world, in a wide range of industries, this approach has been successful. As a younger workforce takes on a more prominent role in the operation of businesses, this approach is expected to be even more effective.
Traditional business management is structured according to a fixed hierarchy, where managers create and implement plans to achieve the goals of upper management, and workers complete the work in the plan.
According to Stack, the ultimate higher law of business is:
When you appeal to the highest level of thinking,
you get the highest level of performance.[20]
When leaders provide enough information to workers to conceive of better ideas for operating the business, they will come up with those ideas. When they are empowered to put those ideas into practice, they will assume a high level of responsibility for seeing those ideas produce positive results.
This is the foundational thinking beyond our own High Involvement Planning process where entire company units come together to share the numbers that matter. It makes sense if you consider what Jack Stack says about numbers: “they are just stories about people.”
When those stories are shared with the people in the company, it demystifies the financials and empowers everyone in the company to improve them.
It’s outdated thinking to believe that business is the place workers go to trade time for money. While it makes sense for part of a worker’s compensation to be based on time spent on the job, when leaders create games that allow workers to achieve additional monetary awards for achieving company goals, profitability increases.
It has been clear to management consultants for some time now that turning goal achievement into a game is the best way to keep people engaged in its achievement.[21]Humans love games, and business is a perfect environment in which to run them.
There are many examples of companies operating in this manner today that are highly successful.
No idea or concept espoused by a leader will have any impact on an enterprise if that idea isn’t communicated effectively. Effective communication is frequent communication. It must be clear in order to ensure that all stakeholders and team members understand the state of the business, the leader’s vision of the future, and their part in achieving company goals.
It's important to avoid making the mistake of believing that effective communication travels in only one direction. It’s just as important for successful leaders to listen to and hear managers and employees as it for them to receive messages from leadership.
Effective communication fosters collaboration and teamwork, improves employee engagement and morale, enhances organizational alignment, promotes innovation and creativity, and enhances quality and customer satisfaction.
One benefit of living in an always-on, fully-connected digital world is that it’s easier than ever before to become part of a community that can increase our performance. Whether that be a membership network like Vistage, an executive group on LinkedIn, or a one-to-one coaching relationship delivered remotely.
Leading executives are finding that these communities provide a number of benefits.[22] For business owners or CEOs, these benefits can mean the difference between success and failure. They include objective advice, accountability, skills and knowledge, networking opportunities, and improved performance.
While every business is different and has its unique needs, hiring a coach can provide several benefits that can help businesses grow and thrive.
If you’re interested in finding out more about dealing with any of the challenges outlined in this paper, finding a community of business leaders who are actively working on building stronger businesses now, or finding a coach that can help you implement the five elements of a successful solution provided here, call on us today.
The Great Game of Business® offers so much more than organizational business consulting, resources, and hands-on training. We offer a network of professionals that can help you change the way you do business. Connect to a community of like-minded business owners, managers, factory workers, accountants, lawyers, frontline employees, designers, engineers, hairdressers, truck drivers, landscapers, and much, much more.
Over the last 4 decades, The Great Game of Business has built a community of businesses that are committed to a better life for themselves and for their employees. People often tell us The Great Game of Business sounds wonderful, but they want to know if it really works. Will it work in a retail business, a Fortune 500 company, a union shop, or a nonprofit?
The answer is a simple, yes. Any organization whose performance can be measured with financial statements can play The Great Game of Business. From one guy working in his basement to multinational corporations, The Game will work anywhere, provided you want it to work.
[1] Prince, C. (2023). Decision-Making In Uncertain Times. CEO Magazine. https://chiefexecutive.net/decision-making-in-uncertain-times/
[2] Effective Decision Making Must Be Connected, Contextual and Continuous. (2023). Gartner. https://www.gartner.com/smarterwithgartner/how-to-make-better-business-decisions
[3] 6 Strategies for Leading Through Uncertainty. (2021). Harvard Business Review.
https://hbr.org/2021/04/6-strategies-for-leading-through-uncertainty
[4] Commentary: In uncertain times, leaders must normalize fear to overcome it. (2023). Fortune. https://fortune.com/2022/06/28/uncertain-times-leadership-fear-stress-overcome-bad-news-success-business-baird-sullivan/
[5] Sherman, Erik. (2023). Experts Keep Guessing at When the US Will See a Recession | GlobeSt. https://www.globest.com/2023/02/28/experts-keep-guessing-at-when-the-us-will-see-a-recession/
[6] Economic Forecast for the US Economy. (2023). https://www.conference-board.org/research/us-forecast#:~:text=We%20forecast%20that%20real%20GDP,recession%20starting%20in%20Q1%202023.
[7] Beaulieu, B. (2023). Inflation Update: 3 Things to Know. https://blog.itreconomics.com/blog/inflation-update-3-things-to-know
[8] The Missing 98%: How to Become an Execution Expert | Vistage Research Center. (2011). https://www.vistage.com/research-center/business-growth-strategy/the-missing-98-how-to-become-an-execution-expert/
[9] Smith, Morgan. “Gen Z and millennials are leading ‘the big quit’ in 2023—why nearly 70% plan to leave their jobs.” CNBC. https://www.cnbc.com/2023/01/18/70percent-of-gen-z-and-millennials-are-considering-leaving-their-jobs-soon.html
[10] Ferguson, S. (2023). Understanding America’s Labor Shortage. https://www.uschamber.com/workforce/understanding-americas-labor-shortage
[11] Commentary: Here's what an aging workforce means for America's employers. (2023). https://fortune.com/2022/09/20/labor-shortage-aging-workforce-us-america-employers-talent-job-market-james-wooten/
[12] Liddell, P. (2023). The supply chain trends shaking up 2023. https://kpmg.com/xx/en/home/insights/2022/12/the-supply-chain-trends-shaking-up-2023.html
[13] Kinnery, Emma. “Four in Ten U.S. Small Businesses Plan to Raise Prices by at Least 10%” Bloomberg https://www.bloomberg.com/news/articles/2022-04-25/four-in-ten-u-s-businesses-plan-to-raise-prices-by-10-or-more#xj4y7vzkg
[14] Tyson, J. (2023). Surging inflation compelling small businesses to raise prices. https://www.cfodive.com/news/surging-inflation-compelling-small-businesses-raise-prices/621220/
[15] Energy crisis: The five challenges for 2023. (2023). https://phys.org/news/2022-12-energy-crisis.html
[16] Upskilling Study – Workplace Intelligence. (2023). http://workplaceintelligence.com/upskilling-study/
[17] business, F. (2023). Four ways to measure profitability and grow your business. https://quickbooks.intuit.com/r/pricing-strategy/4-ways-to-measure-your-profitability/
[18] Stack, Jack. “The Great Game of Business,” Penguin Random House. 1992.
[19] Opening the Books. (1997). Harvard Business Review. https://hbr.org/1997/03/opening-the-books
[20] The Great Game of Business | About Jack Stack and SRC. 2023. https://www.greatgame.com/jack-stack
[21] Making Goals Fun & Gamifying The Process – FranklinPlanner Talk. (2023). https://blog.franklinplanner.com/making-goals-fun-gamifying-the-process/
[22] The 5 Biggest Benefits of Business Networking. (2023). https://www.linkedin.com/pulse/5-biggest-benefits-business-networking-sonia-holt-/
