Predicting what will happen in 2023 is foolish—but smart businesses can prepare for anything
22 Dec 2022
At this time of year, there is always a torrent of prediction articles packed with educated guesses at what the next 12 months will bring. But how useful are they, really?
On the eve of 2020, many commentators smugly claimed to have "20/20 vision" and foresight. And yet very few supposed experts—if any outside the healthcare space—saw the coronavirus coming. So, with tongue firmly in cheek, I offer my predictions for 2023.
By nature, there are pluses and minuses to every prediction. But that’s not the point here. No one should take detailed trend forecasts too seriously and build strategies around them. It’s more about understanding the potential challenges and opportunities and being able to react – or even be proactive – accordingly and quickly.
Indeed, how can anyone make firm forecasts in a world where change is the only certainty? The fallout from the pandemic has had a massive impact on every aspect of the business world, from ways of working, supply chains, energy costs, sustainability and more.
We live and operate in a so-called VUCA world, a term coined by economists Warren Bennis and Burt Nanus in their 1985 book Leaders: The Strategies For Taking Charge. VUCA is an acronym for volatility, uncertainty, complexity, and ambiguity. And despite being almost 40 years old, it is very relevant today.
With the ongoing war in Ukraine, a slowdown of business growth, a looming global recession, the deepening energy crisis, and other geopolitical issues, volatility is likely to exist on different levels across the world in 2023. What I can predict, however, is that if you, as a business leader, don’t have a good way of managing that volatility, then your organisation will be in a very poor situation this time next year.
One good option is to run more business scenarios to better understand the most likely outcomes, whatever happens. For example, in the recent past, organisations would have a good idea of supply and demand throughout a given year, with many enjoying a peak in the latter in the so-called golden quarter. But with the worsening cost-of-living crisis and rising inflation, no one truly knows what consumers will do – are they saving for Christmas, or are they struggling to save anything?
Again, this is why smart businesses are planning for all eventualities and focusing on data-driven horizon scanning so that they can adapt at speed and possibly gain a competitive advantage. A key element, though, is engaging and gathering data, including from customers and the Internet of Things.
When inflation does eventually reduce, in theory, there will be an increase in demand. But if you have not satisfied your customers, and failed to communicate any supply chain problems that have caused a backlog in orders, then perhaps they will look elsewhere. So unless you have detailed visibility of supply chain lead times and understand customer sentiment, by the end of 2023, your business might be saddled with working capital and stock.
Given that one prediction one can make with certainty is that cyber breaches will increase in 2023, cybersecurity is another area that needs to be boosted in the next year. Once more, investing in technology solutions is vital. But, even better is working with trusted expert partners. Most business leaders understand that it is not a case of if the organisation will be breached, but when. If bad actors want access to your digital assets, they will find a vulnerability sooner or later. Now is the time to re-evaluate the security of your IT infrastructure and services.
With a holistic strategy around cybersecurity and data management, and by building a culture of better cyber hygiene from the top down, the risk and damage of any attack will be reduced. Running desktop exercises and crisis scenarios is the only way to ensure everyone knows what to do when the inevitable breach happens. A mindset change at the leadership level is needed because many c-suite members are not moving with the times and changing ways of working.
Mindset change required
Similarly, the most progressive businesses have realised that the traditional annual or biannual check on numbers, and even in-year thinking, are not frequent enough. In a VUCA world, organisations have to evolve and, for instance, embrace rolling assessments and integrated business planning.
Financial predictions made half a year ago – with conversations around year to go versus next year and the year after – based on the usual metrics, are likely to be woefully off target today. So to survive and thrive and make realistic future plans, businesses have to think long-term, consider more data points, use artificial intelligence to run scenarios, and continuous evaluation – and evolution – is paramount.
Finally, I’d like to conclude with my personal hopes for 2023 rather than any more predictions. The events of the last two-plus years have widened the equality gap, unfortunately. As a result, over a quarter of a billion more people will sink into extreme poverty by the end of 2022, according to Oxfam calculations. The World Bank defines extreme poverty as someone living on less than US$2.15 daily. Some 860 million people - 11% of the global population - are expected to drop below this mark before the year is out. I wish that those on the lowest incomes, who suffer the most during economic downturns, will be better supported by governments worldwide. And not just in the short term but for years and decades to come.