2024 Unveiled: CEO Strategies for Decoding Unfolding Systemic Shifts

Explore the rules and pitfalls of decision-making amidst the significant systemic shifts we will likely see in 2024. From significant economic change, to the chaos of being a presidential election year, to a shifting global security and power framework, uncover your strategies for navigating these uncertainties which lie ahead in this thought-provoking episode. Dive into the intricate world of decision-making during systemic shifts with this episode. We dissect the pivotal moments unfolding in 2024 which will reshape industries, economies, and the way we work. Learn the two fundamental rules that dictate decisions when situational contexts shift, paving the way for three crucial lessons for CEOs and decision-makers.

2024 is on the horizon, marked by high interest rates, personal debt spikes, and a tumultuous presidential election, all set to reshape the economic landscape. Corporate debt, government spending, and global events add layers to the shifting ground, presenting opportunities and challenges for businesses.

Discover the common errors CEOs make in the wake of systemic shifts—immovable narratives, a lack of understanding about the evolving battlefield, and succumbing to emotional responses. The antidote? Proper planning, options analysis, and playbook development to navigate uncertainties.

Your assignment? Identify the major systemic shifts for 2024 and plan accordingly. This episode serves as your guide, offering strategic insights to forecast winners and losers, steering your ship toward success in the face of evolving circumstances. Tune in for a thought-provoking exploration of the rules that govern decisions and the lessons that shape destinies.

Transcript

For today, we have two rules and three lessons. Before I start into this one, I want to give you a little bit of context and understand the arc of my career, which took me a long time to kind of figure out what the pattern was here and to understand it.

There has been an attraction in my own being to participating in large scale systemic shifts in the economy or politics or government or global affairs. And it arises from situations where I want to be in advance of that major inflection point, part of it, or in the aftermath and what comes next associated with it. 

It began with Clinton health care, which promised to transform U.S. health care. It never passed. NAFTA did, and dramatically changed U.S., Canadian and Mexican trade patterns and quite frankly, had a much more significant impact on global trade patterns and how our U.S. economy evolved and developed. Following that point in time. I went from there to an excitement about what technology was bringing in the 1990s and the fact that it seemed to be something that could have a dramatic impact on our personal lives and corporate America and how we live going forward, wanting to be a part of that. And then the bubble burst in 2002. Following that was working significantly in a rebuilding of global security, political and economic infrastructure following 9/11, which changed everything. In 2008, we had the global financial crisis. In 2010, we had Obamacare and continuing on all the way through to, most recently, the pandemic. 

There is something which happens in the wake of that, regardless of how remote we feel we are from these global events that are going on, these macro changes, and how out of control we are in shaping how they develop, they will impact you as a decision maker, as a CEO, as a leader of a government agency, a charity, a foundation, whatever that venture might be. It will have an impact. And here are the two rules. When the situational context shifts, all the rules change. That is A.  And B, you will be forced to make decisions willingly or unwillingly as a result of these changes upon you.

There are some things that we can do about this, but before I get there, before I talk about the three lessons that I want to share, I want to talk about 2024 and what we see. There is the opportunity for obviously major, significant, systemic shifts over the course of the next year. We are currently sitting at continued high interest rates. That is having an effect on housing prices, which are down. Car prices are down. Personal spending or consumer spending has just started to weaken associated with it. It's going to affect a whole host of industries associated with the US economy. Second of all, personal debt is high ever since the pandemic, maybe, perhaps before. But it has increased. And as the interest rates stay high or the economy starts to slow a bit in 2024, you're going to see individuals that are highly leveraged, and families that go under strain, maybe even default.

Corporate debt levels are significant as well, which is, you know, a favorite technique of private equity when they come in and buy businesses is that they layer on additional debt. So any of the corporations that have significant leverage, they're going to see doors that start to close. Your options dwindle when you're under leverage and not only get exposed in 2024, potentially. Government debt is high. Yields on government bonds are at all time high just because of a lack of confidence associated with the underlying securities. Government debt has increased exponentially over the last decade. At some point there will be a falling out associated with that. 

We have government spending, which is a major cog in our economy, continuously bumping up against the threat of shutdown, in part led by a chaotic and dysfunctional Congress.

In 2024, we're going to add an additional layer to it, which is a presidential election, which is also always chaotic and emotional and fractured. We have active wars on two different fronts. There is a global hotspot in the South China Sea. These sorts of events affect fuel prices, trade patterns, the value of the dollar, how power is allocated among the players, creating the opportunity for emerging powers to take a seat at the table and shift power away from the long-established players.

There will be a lot of shifting ground as that takes place. There is an opportunity in each one of those that I guarantee affects your business. So what are the three lessons? Here's the three lessons. Most of the errors that are made in the situation in the wake of these major macro or systemic shifts are unforced errors by the CEOs.

They make the mistakes themselves. It's not some external event. It's something that's going on internal. Here's what they are. The first one is an immovable narrative. I've seen it happen time and time again where a CEO or a decision maker has been successful with a particular logic or rationale set of decision making norms that they abide by, and they're unwilling to change those, even as the assumptions are all changing. That narrative is locked in and creates the blinders so that they can't adjust. 

The second one is when you don't understand what the battle or what the prize is or the trophy or what the battlefield will look like. On the other side of the inflection point, what you tend to do is pick small known battles that are right before you. So what is happening in that context? Why that's an error and unforced error oftentimes is that the changing circumstances when all the rules are changing, you're not utilizing it to change your strategies, your intelligence gathering, the logic within your organization, the capabilities within your organization, the levels of domain expertise, and so forth to adapt to the battlefield or the war that'll be fought on the other side. But instead you're winning small battles but will lose the longer term war. 

The third unforced error is emotional tinder. Every CEO I know would say that they make their decisions based on the facts as they know them. Sound rationales, hard logic. There's a dispassion to it. At least they attempt to be. But there are human beings and emotion influences their decision making quite substantially. It is triggered in this context,  by insecurity, about not knowing what's going on, fear about the potential losses that can be suffered, and the pressures that come from shareholders that are concerned about value, investors, bankers who call more frequently, and employees that are wondering if they are on a safe ship or on a sinking ship. Those are our three lessons.

Those are the three unforced errors that oftentimes happen because a CEO or a decision maker is not prepared for what comes next. 

There is an antidote to this. It's proper planning. It's options analysis. It's developing your playbooks. It's preparing your teams for a series of eventualities that will emerge in the changed circumstances. For the most gifted, they'll even go a step further, which is that they'll forecast the winners and the losers, and then they will point their ship towards being on the winning side of the changed circumstances on the other side. 

This is your assignment for today: 

A. Identify the 2 to 3 major systemic shifts that you anticipate for 2024 that could affect your decision-making somehow, some way.  

B. What are you doing to plan for that?