Insights > Winning in the Turns: How Businesses Can Thrive During Uncertainty

Winning in the Turns: How Businesses Can Thrive During Uncertainty

This article is part of an ongoing series of business and industry perspectives for leaders, exploring how companies can pursue strength amid uncertainty.

The traits required for business leaders to thrive in today’s volatile economic climate are the same traits professional racecar drivers need to win on the track. When the economy is expanding, anyone can drive fast in the straightaways, but it is in the turns where races are won and lost—and market share movement is made.

At the wheel, skilled executives know how to approach the course. Heading into the turn of a possible recession, an effective leader might reduce spending. Then, they can move sharply toward the apex of the turn by making strategic bets at the bottom of the market. A frontrunner will also guide a company out of the turn, accelerating investments in growth as the economy recovers.

Resiliency, agility, and innovation—the same traits that make for a Grand Prix champion can help business leaders make use of economic uncertainty to gain market share.

Ensure fiscal discipline through resiliency

Elite racecar drivers must maintain peak physical condition in order to withstand the intense G-forces generated by high-speed turns. Economic constraints and rapidly shifting market pressures can place similar intense demands on businesses, so it is critical for business leaders to build resilient organizations by driving continuous improvement against industry benchmarks, applying best practices, and cutting excess weight that can create drag on the organization. Effective executives should focus on transforming their organization’s fundamental cost structure rather than employing aggressive headcount reduction tactics that leave the organization unprepared for an economic recovery. Any business leader who made staffing cuts when the pandemic initially hit can likely attest to the difficulty of trying to staff back up when the economy rebounded. Like straightaway speed, profitability is crucial to winning, but without acceleration (enabled by a strong balance sheet), it is difficult to pass the competition—taking advantage of the opportunities that emerge in the turns. In a climate of rapidly rising interest rates, companies that are over-leveraged may struggle to make debt payments, inhibiting their ability to take advantage of market opportunities that emerge.

By managing inventory levels and collecting payment from customers before paying suppliers, companies like consumer sports apparel brand Gymshark have been able to fund their growth through supplier credit. A negative cash conversion cycle is a powerful tool for managing economic uncertainty and constrained capital. Today’s context and market constraints may vary from business to business, but it remains essential for leaders to take a proactive approach—considering customers, suppliers, lenders, and partners—to ensure effective cost and cash management strategies.

Seize opportunities through agility

Rapid reaction times allow race car drivers to exploit opportunities and overtake competitors who leave even the smallest opening. Businesses with sound fiscal discipline typically have the liquidity to absorb economic shocks and still place a few strategic bets. Innovations delivered during an economic downturn are more likely to enjoy a longer first-mover advantage while the competition is focused on retrenching and surviving the economic context. Strong businesses are also more likely to have the risk tolerance and liquidity to act on the more attractive valuations available in a capital-constrained environment.

Often, opportunities arise in the form of strategic acquisitions. When the pandemic shutdown caused hotel occupancy rates to plunge, some hospitality organizations were forced into defaulting on significant loans. Acting on this opportunity, hotel properties brand Highgate was able to purchase $2.8 billion in properties for $68 million while assuming $2.7 billion in debt obligations. The deal resulted in nearly 23,000 hotel rooms, making the organization one of the largest hotel owners in the United States. The ability to see an opportunity where others saw risk allowed the acquirers to pull off this highly valuable and successful business transaction.

In today’s context, there are a variety of avenues for vigilant business leaders to seize opportunities. For instance, private equity firms pursuing a roll-up strategy can benefit from the depressed valuations to acquire attractively priced assets. Then, the firm can bolt the assets onto an existing platform and be well-positioned for an exit event when valuations rebound. Tighter credit markets may push overextended competitors into shedding otherwise attractive assets, creating an opportunity for firms with well-managed balance sheets to acquire the assets required to fuel their next round of growth. While bold decision making may get all the limelight in splashy M&A deals, it is really the diligent preparation that provides executives with the confidence to place strategic bets. Business leaders should take a proactive approach to M&A by defining their strategy, identifying potential targets, and doing their research before opportunities arise.

Guide innovation through digital transformation

A winning racing team is constantly tweaking its racecar build to shave off a few seconds from their time, sometimes introducing game-changing technologies that other teams eventually must adopt in order to remain competitive. Digital transformation is today’s game-changer for businesses. The pandemic prompted one of the most significant digital transformation events in human history, with estimates showing that cloud videoconferencing platforms usage has increased 21 times pre-pandemic levels, with business travel down 34.8%, and widespread adoption of platforms like Microsoft Teams and Zoom, allowing leaders to reimagine the need for in-person meetings while savings businesses an estimated $11 thousand per year per person.

By guiding investments related to digital transformation, leaders can fundamentally change not only their organization’s cost structure but reshape the business model and influence the competitive dynamics of the market. For instance, Netflix launched its streaming service just prior to the Great Recession, markedly disrupting the technology, media, and telecommunications industry and edging out the competition through digital transformation. market-disrupting move is an obvious example of how new business models can make an impact during economic volatility, although companies should also look inward for transformative opportunities by using digital initiatives to reimagine and strengthen operations, finance, and other critical functions.

Today’s relevant avenues for technology-enabled innovation will vary by industry and competitive landscape, but a variety of possibilities exist, including advanced data and analytics solutions that offer endless ways to reimagine organizations within healthcare, energy, or financial services sectors, enhance the decision-making abilities of private equity management teams, and realize new business possibilities in many other contexts. In addition, intelligent manufacturing solutions can reimagine the production lifecycle and efficiencies of consumer product brands. When facing economic uncertainty, business leaders should work with their technology advisors to prioritize digital investments as a strategic component that enables innovation and supports competitive strength.

Business leaders should parallel elite racecar drivers in the way they address economic uncertainty by focusing on: (1) resiliency, building a strong, responsive organization that optimizes cost structures and efficiently shepherds working capital; (2) agility, making targeted, strategic bets related to organic and inorganic growth; and (3) innovation, leveraging digital technologies to disrupt the business model or cost structure—and doing so faster than the competition.


Business leaders should parallel elite racecar drivers in the way they address economic uncertainty by focusing on: (1) resiliency, building a strong, responsive organization that optimizes cost structures and efficiently shepherds working capital; (2) agility, making targeted, strategic bets related to organic and inorganic growth; and (3) innovation, leveraging digital technologies to disrupt the business model or cost structure—and doing so faster than the competition.

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Ensuring strength amid uncertainty requires a new level of clarity, a flexible approach to planning, and the ability to adapt quickly.

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