In disruptive times, business agility, preparedness, and bravery must come to the for

The once-predictable patterns that economic cycles followed – influenced by consumer confidence, interest rates, and investment levels, then countered by fiscal policy adjustments from governments and central banks – are long gone.  

Now, these cycles – and businesses’ responses – must be considered in concert with the integral, significant impact of unprecedented levels of disruption.

This is perhaps best demonstrated in the technology space. Rapid technological advancements, led not only by AI but also in automation and digital transformation, continue to disrupt traditional industries and labour markets, leading to structural changes in the economy.

Businesses continue to be impacted by geopolitical tensions, trade wars, and the long tail implications of the pandemic, with shocks to global supply chains an obvious tangible example.

We should not forget environmental and climate change issues, too; not just the wider impact that the increasing frequency and severity of climate-related events pose, but also the speed and appetite for sustainability transition. The shift towards sustainable energy and practices requires significant investment and will disrupt traditional industries.

This interplay between traditional economic cycles and wider disruptive forces has necessitated a more holistic and adaptive approach to general economic policy and planning – and, critically, the running and building of businesses.

Our survey respondents clearly see the challenges immediately in front of them. For example, the retail sector is so prominent in the U.K. and remains front of mind for those there, given the high-profile recent failures, while the same holds true for the automotive sector in Germany.

In practice, though, sector distress will likely cross borders, evidenced by the common secular issues and failures we see in our different jurisdictions. The ultimate impact of these will differ according to how large and influential the sectors are in each region.

That said, it does seem that some of our key economies have developed a resilience and adaptability to manage in these conditions, and it may be this that gives people confidence that we will avoid a recession.

The dictionary definition of resilience I like most is an ability to recover from, or adjust easily to, misfortune or change. It has never been easy to run a business, and even those with the very best plans will know that things rarely follow suit in reality. It is often not the cause of the problem that becomes the issue, more finding the right solution and acting on it quickly that makes the difference.

More change and, in many cases, misfortune will be driven by the compound effects of the economic and business environment and the relentless waves of disruption that strike at a greater magnitude and frequency than management teams can remember. At this time, agility, preparedness, and bravery have never been more important.

• 72% believe their own region will avoid a recession in the next 12 months, vs just 25% in 2023.

• Climate transition, tangible benefits from AI, and workforce limitations are the top three underlying operational issues expected to not be addressed in the coming 12 months.

• 93% expect labour costs to continue to increase in the coming 12 months vs. 81% in 2023.