For months the OODA C-Suite Report has underscored for our readers to expect a slowdown in the global economy. Many who track the explosion of government spending plus quantitative easing plus low interest rates came to similar conclusions, especially after the Russian attacks on Ukraine and the China Covid shutdowns. But it took evidence of higher than expected inflation before governments began to discuss this potential. Now many institutions and business leaders are openly discussing the potential for recession. World Bank president David Malpass is warning that “for many countries, recession will be hard to avoid.” Jamie Diamond of JP Morgan has warned not just of potential clouds on the horizon, but an “Economic Hurricane”. Elon Musk put things in a unique way, saying he has a “super bad feeling” about the economy.
Is the US in a recession? The way Jamie Dimon put it is “Who the hell knows!”
The way economists and government policy makers define the term recession means we will not know until economic data comes in and is evaluated and official pronouncements are made about lengthly, multi-quarter declines in the economy. Since recession is only declared months after markets shift, this is not necessarily the most important question for a CEO to be asking right now. What matters more is if your market is in a recession right now or if you anticipate your market will be in the future.
Your assessment of the environment of your market in the near future is especially important if you are building a new technology or creating a new line of business. It can be very hard to start something new in an environment where business spending is declining. But for those with vision and an executable strategy anything is possible. For those building new capabilities it can be inspiring to learn that many of the world’s greatest companies were started in economic downturns. A few of note include General Electric, IBM, General Motors, Disney, Microsoft, CNN, Apple, Netflix, Airbnb, Uber, Cloudera and FusionX.
With that in mind, the following are considerations the C-Suite and entrepreneurs when it comes to preparing to survive and thrive in an economic downturn:
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Bob Gourley is the co-founder and Chief Technology Officer (CTO) of OODA LLC, the technology research and advisory firm with a focus on artificial intelligence and cybersecurity which publishes OODALoop.com. Bob is the co-host of the popular podcast The OODAcast. Bob has been an advisor to dozens of successful high tech startups and has conducted enterprise cybersecurity assessments for businesses in multiple sectors of the economy. He was a career Naval Intelligence Officer and is the former CTO of the Defense Intelligence Agency.