If you thought 2020 was tough, buckle up for the rollercoaster ride that 2022 has in store. In 2020, I said the pandemic will have a bigger impact than people think, and the markets will drop, but we’ll come out of it OK. In 2021, I said contrary to what everyone thinks, growth will be solid. I was right: there was 20% growth last year in most markets. 2022 is another story. I’ve never seen this type of disruption on so many fronts at one time.
Back in January, CEOs were saying the talent shortage would be their number one priority this year. Number two was the pandemic. Number three was supply chain disruption. Number four was inflation. Number five was cyber security. Number six was political instability. In just two and a half months the order has been reversed – and the pandemic is no longer among the top five concerns.
If you take a look at the market, the numbers are really challenging. The NASDAQ is down 40%, which is bad, but within the NASDAQ, Big Tech – which represents 43% of the composite – is even worse. It is down over 50%. This is the biggest correction since the Great Recession and, prior to that, the Dotcom Bubble of 2000. But there is not just an economic disruption; there is also a political disruption, supply chain disruption and an inflation disruption. The last time we had inflation this high was 40 years ago, which means current leaders haven’t seen it. And, as if that isn’t enough, as the Russian invasion of Ukraine continues and, alongside that, a rise in hacking and cyber attacks, governments and businesses are preparing for the worse. In sum, we are no longer dealing with just disruption or market transitions. What we are really talking about is a crisis and companies, big and small, are wondering how they are going to manage through this.
When you are managing through a crisis, you need to determine how much of the impact you are feeling is due to the market and be realistic about how much is self-inflicted. Then, you need to define the four to six major foundations or key pillars you’re going to develop to navigate through it. Assume the disruptions are going to be longer and deeper than you think. They usually are. Review how you are going to control expenses, interface with customers, and deal with supply chain issues, labor shortages, and the disruptions to key markets. Communicate the key pillars of your strategy to your employees, shareholders, customers, and partners. Paint a picture of what your North Star looks like. It is important to outline not only what the pillars are, but how progress will be measured. It sounds basic, but it is during these major negative market disruptions, corrections, or global instability issues where most companies stumble. This is true for companies of all sizes.
No one – and I mean no one – is immune. Take the example of Facebook, now called Meta, a major player that has had tremendous success. They’ve been hit by a change in the market (Apple’s privacy controls) which limits what they can do with data, and have had to contend with new agile competitors, like TikTok, that are taking a bite out of their market share. There’s a branding challenge, as well as issues with governments, and they’re trying to pivot to a major new market – the Metaverse – all at the same time. The rules of crisis management that I have just outlined are very much in play at Facebook. You will begin to see what Meta is doing well and where their challenges lie. How they navigate through this crisis period will determine where they are five years from now. The jury’s still out on which way this will go, for Meta, as well as for every other company.
That’s the message: The crisis is coming for you, and whether you are Big Tech, a big traditional company, or a startup – you will be impacted. Do not be in denial and say, ‘I don’t have problems to fix, this is a market phenomenon.’ The market challenges will expose your problems much faster than under normal conditions. Be realistic about the areas where you are not doing well and try to address them. I can promise you that 2022 is going to be a wild roller coaster ride and the downs are going to be rough. It is going to be the kind of ride where your stomach moves up into your throat and you’re gasping for air, but don’t lose hope. The rise of the roller coaster is usually slower than the decline but with persistence and the right crisis management strategy, companies will have the chance to reach new heights.
Former Cisco Executive Chairman and CEO John Chambers, who is widely considered one of the best performing U.S. CEOs during his 25+ year tenure at Cisco, helped grow the company from $70 million when he joined in 1991, to $1.2 billion when he became CEO in 1995, to $47 billion when he stepped down as CEO in 2015. As Executive Chairman, a position Chambers held until December 2017, he led the Board of Directors and provided counsel to the CEO and leadership team on strategy, digital transformation and strategic partnerships, Chambers oversaw 180 mergers and acquisitions during his tenure at Cisco and managed the company through multiple economic downturns He currently runs JC2 Ventures as CEO and serves as an advisor to heads of state, including France’s Emmanuel Macron and India’s Narendra Modi. This is the twenty-first in a planned series of exclusive columns Chambers is producing for The Innovator.
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