2019 is shaping up to be a year with increasing opportunity, and a lot of unknowns – especially for Australian businesses whose growth depends on exporting.
Global headwinds
While the numbers of Chinese customers buying Australian food, wine and vitamins is increasing, Brexit means that exports of Australian wine through the UK to Europe are likely to decrease. Few thought Donald Trump would become President – or shut down the US government if he didn’t get funding for his wall. Brexit and Trump have only begun to have an impact on global economies. China is flexing its muscles in the South China seas, Russia has announced the most sophisticated defense system on the planet, global warming is increasing at a pace much faster than anticipated, and intense heat waves, droughts and fires are ravaging California and Australia. Add to this the uncertainty created by the changes in where and what consumers are buying, falling housing prices, new regulations stemming from the Royal commissions, the upcoming federal election, and it’s clear that every company in “the lucky country” needs to develop strong skills in assessing the impact of externalities on their business.
An eye on risk
Spotting opportunity and mitigating risk are two responsibilities of boards and executives. Some externalities are catastrophic and can devastate your company, and for those you mitigate the risk by taking out insurance. One winemaker I know was glad he “insured everything on his balance sheet” when a cable snapped while loading a container with $1M worth of wine headed for the USA. The company not only survived, but the insurance proceeds enabled him to expand and upgrade the vineyard and tasting room.
Heed early warning signs
When there are early warning signs, you need to do more than listen and watch. You need to think, “What impact will this have on our business?”. If you export to or through the UK, as soon as the Brexit vote passed, you should have begun making a list of the ways the vote could impact your business. The laid-back, “She’ll be alright, mate” approach doesn’t work when you are playing in a global economy. Companies exporting are not spectators watching the movie of global events; they are part of the movie, and so they must think through and prepare for the possible impact of these events on the business. As the CEO, your job is to make sure the company endures and thrives. So finding alternative partners, getting help from Austrade, building cash reserves, investigating different shipping routes, and ramping up sales to new markets are all ways to reduce risk.
The art of leadership is knowing when to put the pedal to the metal, and when to shift your speed up or down. Leaders must know when to stop, prepare fall-back plans, or proceed slowly with caution. When to wait and see, test the waters, or go full speed ahead. Take the time to think through the unthinkable, and plan for the unplanned. The exploration of risks and opportunities can lead to success.
Dr Jana Matthews is the ANZ Chair in Business Growth, Professor, and Director of the Australian Centre for Business Growthat the University of South Australia’s Business School. She has a doctorate from Harvard, has founded five companies, and was on the founding team of the Kauffman Foundation’s Centre for Entrepreneurial Leadership. Matthews is internationally recognised as an expert on entrepreneurial leadership and business growth, has written eight books, and has designed award-winning programs that teach CEO’s and executives how to lead and manage growth companies.Selected by AFR in 2018 as one of 100 Women of Influence in Australia. Twitter
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This article was first published by The Advertiser