The recent furore around not only the free-fall of the Chinese and Asian stock markets but also the continued drop in oil prices has brought this into sharp focus. Global markets took another beating last week as Brent Crude prices dropped below $30 a barrel. The continuing pessimism in the market was also supported by economic data out of the US showing industrial production and retail sales were weaker than anticipated. To add to this the lifting of sanctions on Iran has put further downward pressure on the oil price.
But right now the business landscape in the UK is good. Certainly when you look at the macro picture we have the lowest interest rates we have experienced in decades. And the third quarter data from the Office of Budget Responsibility confirmed that the economy grew by 2.4% in 2015 with many City economists having pencilled in 2.5% growth for 2016. So, compared to our European counterparts, that is a pretty stellar performance.
That said the latest Thames Valley Business Barometer (of which we are a panel member) shows that the overall economic outlook in the region feels somewhat suppressed. Businesses don’t appear to be as buoyant as in previous barometers, with improvements in confidence at 56% versus 62% in the last survey and compared to the peak or 90% in the previous year. Just 35% of companies surveyed felt that confidence remained the same. Perhaps businesses feel we have reached a new level, in other words - this is as good as it is going to get!
Today we operate in a VUCA (volatile, uncertain, complex and ambiguous) business environment and doing business is much more complex than it was 25 years ago. Confidence feels fragile as if at any moment it could be swiped away from under our feet.
Sure there are macro issues that impact on our confidence such as terrorism, the Eurozone, China, global oil prices and so on. But equally, we all know that there are just as many companies who are successful in a bear market as they are in a bull market. So this brings me on to how we continue to drive forward and maintain confidence, particularly in our own businesses.
From my perspective it is all about having the right mind-set and control over your business destiny. Of course economic certainty drives mind-set behaviours and perhaps we have a tendency to lose confidence when we hear negative news far more easily than we used to. Part of this is due to the fact that we operate in a global economy and what impacts other markets will invariably flow through to us.
But my overriding view this time around is let’s not talk ourselves into another recession. Let’s not lose our business confidence. Let’s try and hold our nerve and not be overly-influenced by media reports that appear to be interested only in potential bad news stories. I’m not suggesting for a moment that such stories aren’t important or have a profound impact on those directly (and indirectly) affected, but I would welcome a more balanced approach that also reminds people it’s not all doom and gloom. A sense of perspective that enables people, particularly consumers, to remain, if not naively confident, then at least pragmatic about what’s going on. That way we can perhaps remove some of the subjective uncertainty that tends to undermine confidence.
A part of this is a wider recognition that the world of business rarely runs smoothly. Those nice graphs which forecast income and profit escalating on a continuous upward trend are rarely sustainable. In reality, businesses are far lumpier and there will always be times when performance is impacted by events that are outside our control. The important thing is how one reacts to this and retaining a perspective, based on balanced data is crucial in determining this.
Small steps are also important, recognising your wins no matter how insignificant. If you possess good ideas, but unfavourable sentiment has created a paralysing phobia of moving ahead, take it step by step. Even in uncertain times it’s necessary to keep moving, or risk being left behind by more nimble competitors.
Negativity has the ability to reduce confidence and drag a business down. When we surround ourselves with good energy we are automatically more productive. Have a power group of positive influences around you who'll support your goals. Not only will they be able to provide you with a little push when you are feeling indecisive, they will also be able to reel you in when you get a bit off track. If you’ve been down in the depths of a seemingly intractable problem, spend some time with people from the creative side of your business – I know from experience how invigorating this can be.
Helen Keller once said: "Life either is nothing at all or an adventure." In today’s highly competitive environment standing still is not an option. But in order make progress, this requires a mind-set that is open to new technology, fresh ideas, and occasionally an uncomfortable environment. So whatever is going on in China, or with the oil prices, or any other macro issues for that matter, I would urge leaders to have the courage of their convictions to press ahead with confidence. Otherwise we may be in danger of ending up where we were a decade ago.
