You Ask, I Answer: Opportunities and Hurdles for Leaders? (TD Q&A)

What opportunities or hurdles do you see on the horizon in the next six to twelve months that will influence leaders' decision-making ability? Well, gosh, where should we start? With the ongoing pandemic, which still isn't over. Um, the uh the presence of World War III, which is a uh functionally what we're in right now in the middle of uh on a tactical level, most organizations are going to see impacts of the supply chain crisis, which started in the pandemic, has been amplified by world uh by geopolitics. Um the producer price index, everything on the on the supply side is getting more expensive.

Wages are going up, and that's a good thing because people deserve to be paid uh uh what they're worth, what the work is worth that they do. And workers are at a point now in the their uh balance of power where they can command pay that should have been commensurate with uh increases in GDP and productivity over the last 40 years. Uh they're essentially playing catch-up, and companies are not prepared for this. Prices have to increase. Everything is going to be more expensive.

Many things are going to be hard to get. When you look, for example, at import-export businesses, um, and what's happening in supply chains, metals like platinum, for example, uh, which is one of the major exports of Ukraine prior to the invasion by Russia. That's in very short supply. That impacts automobiles and imp impacts the ability to make chips uh for computers, not snacks. Um that constrains two critical parts of of major supply chains, the uh the technology piece, especially, which has all these downstream ripple effects.

And so what this creates for leaders and their decision making ability is substantial uncertainty. Uncertainty that cannot be modeled, that cannot be forecast because we don't know what's going to happen. One of the limitations of things like predictive analytics is that you can't predict what has never happened. You can predict things that have happened in the past. We have not had a a world war like conditions since 1945, right?

Uh, we have not had such a massive dislocation in the world economy uh at this scale with two large economic players um in most people's living memory. And we certainly don't have the level of data that we would need from past world wars to effectively model what's happening now, particularly with things like uh supply chains. Globalization over the last fifty years has made many economies interdependent, and those uh those supply chains now are proving to be very, very brittle and very difficult uh to accommodate uncertainty. So that uh level of uncertainty is going to substantially impact the decision-making abilities. Uh leaders in businesses need to pivot uh very quickly to figure out how do you operate in more of a real time manner rather than a predictive manner because you cannot forecast what has never happened, and therefore you cannot make informed decisions in the long term because you're working with data that doesn't exist yet.

Uh we don't know how the the uh Russian invasion of Ukraine is going to turn out. We don't know if Russia's gonna remain under sanctions for weeks, months, years. It's it's impossible to tell. We can't forecast that. We don't know what's going to happen with the current variants of SARS COV2, uh, which is the virus that causes COVID 19.

Uh it is continuing to mutate. There is there continue to be tens of thousands of new cases per day, and every single time uh a new person is infected, there's an opportunity for a game-changing mutation. So that is the biggest hurdle and challenge uh for companies to to deal with in the next six to twelve months. Those firms that are very agile, very nimble, and can make decisions um that are sometimes strategic decisions and turn on a dime, those companies will do well. What we saw during the early days of the pandemic is that there's res there's resilience and agility.

Resilience or endurance means that you can survive tough times, right? If you have a lot of cash in the bank, you could weather the pandemic for a good long time. But if your fundamental business model is impaired, then no matter how much cash you have in the bank, if your cash flow is negative, you eventually run out of gas, right? You ru you you run out of money and you go out of business. So resilience is only half of the puzzle.

The agility is the other half. Those restaurants and those businesses that were able to pivot very, very quickly, move to take out and delivery, for example, during the pandemic, or move to virtual classes online and deliver all their services digitally and go through a rapid digital transformation, that agility meant that they had to rely be less resilient. They didn't have to have a war chest of cash if they were able to keep their customers um through pivoting how they delivered their products and services. That those skills of resilience and agility in combination will give companies continued advantage in the increasingly uncertain world that we are in.