It has been writ large for a while, but yesterday the IMF nailed it. ‘The World economy is at risk of another financial crash’. According to them, global debt levels are well above those at the time of the last crash, and there is a severe risk that unregulated parts of the financial system could trigger a global panic. Governments and regulators have failed ‘to push through all the reforms’ needed to protect the system from reckless behaviour and a meltdown is imminent.
A dramatic rise in lending by the ‘so called shadow banks in China’ and the failure to impose tough restrictions on insurance companies and asset managers, which handle trillions of dollars, are highlighted by the IMF as causes for concern.
The warning from the IMF Global Financial Stability report is similar to those who have warned that the failure to regulate and a backlash against international agreements, especially from The Trump Administration, has undermined efforts to prepare for another downturn.
In the UK one could argue it is even worse. With the uncertainty over Brexit and ‘frictionless borders’, our troubles could be compounded. Even our former Prime Minister Gordon Brown is concerned. Last month he said that the world economy was ‘sleepwalking into a future crisis’. He added that the risks weren’t being tackled and that ‘we are in a leaderless world’. Whilst the picnic basket containing his skill set may have been short of a sandwich or two, he was pretty good at dealing with financial meltdown.
So, what does this mean for Global Corporations? How do you prepare for the predicted flight of funds? Global debt stands at $182tn and IMF head, Christine Lagarde said “This should serve as a wake -up call.”
In a separate analysis, as part of the IMF’s annual economic outlook, it warned that ‘large challenges loom for the global economy to prevent a second Great Depression’. Alarming words from such an august body!
Having worked and run companies since the Early 1980s I have witnessed quite a few peaks and troughs. I benefited from the Thatcher Privatisations, but was also employed in the financial services sector on Monday, October 1987(Black Monday) when stock markets around the world crashed. I had to rethink my career path and decided to bring my knowledge of the global capital markets and large corporations to the emerging world of Corporate Marketing.
I was running a marketing agency, when on Wednesday 16 September 1992 (Black Wednesday) John Major’s conservative government, was forced to withdraw the pound sterling from the European Exchange Rate Mechanism, after it was unable to keep the pound above its agreed lower limit in the ERM. Interest rates in both Germany and the UK sky rocketed. The Housing market crashed as The UK went into recession and large amounts of businesses closed. We kept going as we diversified into the growing industry of brand creation and management.
In the late 1990s I ran another corporate marketing agency which surfed the rise of the internet and Dot Com, only to see the bubble burst in the early noughties. Thankfully we had seen this coming and altered strategy and the use of resources accordingly (becoming leading advisers on Corporate and Social Responsibility and Thought Leadership Programmes).
Again, in the Financial 2008 crisis, when credit died after the subprime mortgage market in the US tanked, I owned both a management consulting and property development firm and had to adjust to the market conditions when the banks stopped lending!
So, faced with this predicted financial Armageddon what should a corporation do, to both ‘survive and thrive’? It’s not just all about slashing budgets and downsizing resources. Obviously, dependent on size, will determine just how fleet of foot it can be, but at DVC consultants we think the following;
Our central tenet as a consulting firm is the focus on helping our Clients ‘Win, Protect and Grow’ their global Client/Customer Relationships.
In doing such we have six specialist areas of consulting expertise, which we believe are particularly apposite in the predicted circumstances.
Thought Leadership Programmes– Make sure in this difficult time that you are seen to stay ahead of the game and demonstrate to your stakeholders that you are making sense of the fast-changing environment and are in control. Through your Content Marketing Strategy promote insights and ideas to deal with the difficulties. Above all demonstrate Market Leadership
Stakeholder Engagement and Measurement Programmes– have clear metrics and KPIs on all your stakeholders. In particular, know exactly how your customers and employees are. Have both qualitative and quantitative data on your stakeholders to make the necessary strategic business decisions and changes .Above all be informed.
Blockchain Marketing Content– Have in place an end-to end software platform for serving the right content at the right time to the right people. The competition for customers will be even hotter, so provide high-resolution insights that deliver a sustainable Content Marketing Strategy. We are entering a far more transparent and competitive market, with a far greater educated audience, Consultative roles are required that transverse verticals to be successful.
New Business Strategies– Any new business around will be very competitive to win. Pricing might become a very critical factor as budgets get squeezed and slashed, so look at cutting the fat. Know the personality of the company as well as the Key Decision Makers. People become very fearful during times of financial turmoil, so read beyond the brief. We utilise the techniques we have been taught through our Myers-Briggs and Enneagram courses, which we find very useful in identifying personality types.
Farming your Clients-Continue to create the important TOUCHPOINTS that allow you access to your clients at all levels. At DVC our Stakeholder Engagement and Measurement and Thought Leadership Programmes enable our clients to do this. New tenders might be very hard to come by so grow your current client beyond the product or service you provide.
Strategic Alliances and Joint Ventures– Now is the time to seek these out, not only to perhaps ‘shore up the balance sheet’ but also share access to technology, trademarks and assets. Companies are often more open to alliances and joint ventures in times of hardship rather than burgeoning growth.
Above all appear positive, but realistic with your stakeholders. Demonstrate that you are able to make sense of the changing market place and landscape. Show strong leadership and a deftness at adapting to change. Client/Customers will need to keep the faith through these difficult times ahead, and you need to demonstrate new strategic thinking and problem- solving techniques.