The big decision for this year: to wait or to accelerate

We have left behind a year that ended much better than expected, with a crisis that has not yet arrived, restaurants and hotels full and consumers who have kept spending thanks to savings generated during the pandemic. In addition, we had warmer months than normal this winter which have allowed us to save gas, less energy, and therefore we have been able to avoid greater damage to the economy.

We now have ahead of us a year full of crucial decisions at different levels that will impact the evolution of our financial markets, our companies, and our jobs. A year of major geopolitical, energy and economic decisions to which we will have to pay attention; these will be compounded by the changes resulting from the upcoming regional, local and general elections.

The diagnosis of the global economic situation has become a key element in the planning and execution of strategies in companies because any change in a global market - in a specific sector, region or raw material - has an immediate impact on other markets due to the domino effect of global contagion mechanisms. We have already experienced supply availability concerns in ships, food, energy, and electronic chips, among others. Global prices are altered due to geopolitical decisions, a good example is the decision to reduce gas consumption by 15%, causing the temporary shutdown of some factories in Northern Europe.

Therefore anticipating, to the best possible extent, how global economy will impact our business is becoming critical also this year. The outlook I am using as baseline for business decision making is moderately positive in 2023, and given the last economic data, this moderately favorable view is spreading to others as well. China is reopening, which will boost global demand, inflation is moderating, and labor markets continue to show resilience. Now is the time for executives, entrepreneurs, and boards of directors to decide whether to prioritize the short-term or the long-term view. I have no doubt: the most important thing is the long term. This is a vision that is typical of family-owned businesses, which always have their sights set on infinity. But those who have worked for listed companies with quarterly profit releases know well the importance given to the short term. The key is to balance both perspectives in a way to avoid some easy decisions in the short-term penalizing the company in the future.

Why is this reflection particularly important in 2023 across Europe? The year will be a roller coaster ride as geopolitical conflict, and in particular gas stock levels, will determine economic activity in each quarter. We will be faced with dilemmas such as choosing between investing in new production capacity or waiting for the storm clouds to clear, reducing headcount, limiting salary increases, etc. It is difficult to give recommendations because each case is different, but if we want the companies to grow this year, and for this to be the basis of growth for the next five or ten, then we must do better than our competitors, companies that have been growing for many years and are also doing well. Keeping our investments and reinforcing our capabilities is courageous and can make a difference. Long-term objectives should drive our short-term decisions, and not the other way around.

We must analyze the growth vectors and decide whether to enter new geographies or gain share in current ones, whether to launch innovative products or enrich the portfolio through acquisitions and, why not, reposition our portfolio by targeting new consumer segments in which we have a low market share; whether to give depth of assortment in our current distribution or reach new customers and channels where we are not currently present. Working the growth vectors can be done through sustained aggregation or by generating focused disruption.

Deciding which strategic blocks will provide the expected growth is very important, also preparing the organization and the team for it, making it evolve by incorporating new organizational capabilities. Recruiting experts in e-commerce, digital marketing, revenue growth management and many other areas of expertise will allow the organization to better manage decision-making focused on growth and value creation.

2023 is a year that seems to be like many others, but we should make the most of it. When crises are short and shallow, opportunities arise for companies that continue to focus on growth, while others slow down and wait. It is time to decide in which group to position ourselves. Those that decide to focus on growth will have to take advantage of the moment to execute strategic changes well, something difficult and something that very few companies manage to do in the long term. Those companies that decide to step on the accelerator will find themselves one step ahead of the rest once the tide goes down and the situation calms down. It is time for decision-making!