When The Chips Are Down… How To Lead Through Economic Uncertainty

These are dark times for the global economy. The International Monetary Fund (IMF) has warned that the world is experiencing a “general and stronger-than-expected slowdown,” with inflation at the highest levels in decades. The cost of living crisis, tighter financial conditions in many markets, Russia’s invasion of Ukraine and the ongoing fallout from the Covid-19 pandemic are weighing heavily on the global economic outlook.

The IMF forecasts that global growth will slow to 2.7% in 2023 from 3.2% in 2022. Businesses will inevitably feel the effects of this slowdown soon — if they haven’t already.

So, given the challenges they are likely to face, what should leaders know about leading through a period of economic uncertainty?

1. Adopt the right mindset

“Downturns are a time for calm, constructive thinking and a willingness to try new things,” says Jeremy Kourdi, a global management consultant and author of survive a downturn. “Show drive and urgency, but avoid excess emotion.”

Kourdi also believes that connecting with colleagues and customers is important. “The greatest stress is the stress we put on ourselves,” he says. “So ask for support and ideas, reach out to others, test your thinking and show gratitude. It’s hard to be afraid when you’re grateful.”

2. Be ready to spin

The word “pivoting” may be synonymous with the pandemic, but as a strategy it’s generally suited to difficult times. “Challenging situations can be a turning point for us in leadership positions and reveal fundamental differences in vision and styles,” he says Alexandre Mars, an entrepreneur, philanthropist and author of Mission Possible: How to build a company for our time.

“While some rush to put out fires or try to carry on as usual, others step back to open up new possibilities,” Mars explains. He believes the ability to turn is vital to a leader’s success, saying, “We have known since Darwin’s time that species survive by evolving to adapt to the challenges of their environment. Applied to business, this means imagining what stakeholders want and trying to make it happen.”

3. Don’t be a hero – collaborate and cooperate

The leader’s job is to “mobilize the team’s collective intelligence to create the various options from which they can then select the best solution,” says Mike Brent, a global leadership expert and co-author of When teams work: How to develop and lead a high-performing team. He argues that in order to unleash the innovative power of employees, the leader must be able to create an environment where there is “a high level of diversity” that allows people to be their authentic selves and themselves to express themselves freely without fear of criticism”.

Brent adds, “Leaders need to let go of the illusion that they are in control and recognize that people need to be heard, acknowledged, valued and have work to do that matters to them.”

4. Have a sense of humor

“Humor is the resilient leader’s greatest weapon,” says Paul Boross, business psychologist, performance coach, keynote speaker and author of Humorology: The Serious Business of Humor at Work.

Research shows that people who use humor to bounce back from adversity get back on their feet faster and stronger. Boross says, “To understand the value of humor to a leader, simply extrapolate that effect to a team or organization. No one knows what lies ahead, but a leader who connects people with humor simply makes sure we come through stronger together.”

5. Don’t prioritize the projects that will transform your business

Today’s leaders must balance a plethora of different priorities, forcing them to distinguish between things that are “urgent and important” and “important but not urgent,” with the latter taking second place.

With that comes the risk that they will delegate or worse, outsource digital transformation, says Alexandra Jankovich, co-founder of digital strategy consultancy SparkOptimus and co-author of disruption in action.

When digitization is outsourced, the immediate gains can still be realized – such as improved efficiency, greater employee flexibility and transparency in the supply chain. “But focusing on short-term wins can miss the true goal of digitalization,” Jankovich warns, “which always consists of bringing data together across silos and using it to make things better for customers.”