Podcast Ep 140 | Planning to win in 2023 - (1 of 5)

2023 is look­ing like one of the most inter­est­ing years in our lives and careers. We did­n’t real­ly see 2020, it just hap­pened to us, and we all responded. 

But 2023 looks to have major chal­lenges that are slow­ly developing. 

So what can we do in order to win in 2023? 

In this first of five episodes, we look at what we know about 2023, and what we can do to man­age the head­winds and challenges.

EPISODE TRAN­SCRIPT

Please note that this episode was tran­scribed using an AI appli­ca­tion and may not be 100% gram­mat­i­cal­ly cor­rect – but it will still allow you to scan the episode for key content.

Brad Giles 00:13

Wel­come to The Growth Whis­per­ers where every­thing we talk about is build­ing endur­ing great com­pa­nies, com­pa­nies that thrive, com­pa­nies that lost com­pa­nies that peo­ple are proud to work for. My name is Brett Giles, and as always joined today by my co host, Kevin Lawrence in Van­cou­ver, Cana­da. Hel­lo, Kevin, how are things today with you?

Kevin Lawrence 00:32

Awe­some, Brad. Real­ly look­ing for­ward to this think­ing about next year. And look­ing for­ward to this episode. I think it’s going to be a lot of fun today.

Brad Giles 00:41

Yes, me too. Make sure as always we’d like to start with a word or phrase of the day. What might you have in mind today, Kev? What’s been going on in your world?

Kevin Lawrence 00:53

What would be a great word? Phrase?

Brad Giles 00:58

Yeah, that’s some. That’s what I just asked you.

Kevin Lawrence 01:01

Yeah, I know. I’m just I’m ask­ing the ques­tion. That’s just my stalling tac­tic. Brad, I’m try­ing to take a sec­ond to think that this is this is mak­ing it up on the spot, you know, what it is, is belief. Yep. It’s belief. It’s inter­est­ing, I was out for a walk with some­one the oth­er day and we’re chat­ting, and they said, you know, we’re talk­ing about what is it that makes the dif­fer­ence? And they said, Well, you know, you’re the kind of per­son that just believes things are pos­si­ble. helps oth­er peo­ple believe it. And next thing is you know peo­ple start doing it. And then they achieve it. So then they have more belief. So it’s almost like this, this upward spi­ral of belief. And I said, Yeah, in my own world have been prac­tic­ing for years, I have a crazy thought. And instead of just a crazy pos­si­bil­i­ty, dream type thought would be amaz­ing. Instead of just dis­miss­ing it, I just believe it’s pos­si­ble I’ve learned to. And then the more you do it, the more you believe it and achieve it, the more you believe in an achiev­er there, the more you believe it and achieve it and believe in achieve­ment, believe it or do it. And that’s a lot of what we do with com­pa­nies is we get in a room and you actu­al­ly find a way to believe in what’s pos­si­ble. And then as you march toward it, you believe it more so then you pick some­thing else cool to believe. Any­way, it just is. It’s just won­der­ful fly­wheel of belief. And yeah, it was it was real­ly I take it for grant­ed, because that’s, of course, I know that if you believe it, you can find a way if you want it bad enough. And that’s all we do all day any­way. So I want­ed a moment on a long tire loop there. But it’s it’s belief. And truth is real­ly the root of it. And what we talked about those that most peo­ple won’t even hold on to that aspi­ra­tional thought long enough to try and even get some belief in it. Peo­ple will dis­miss those things so quick­ly. And then they don’t even give them­selves a chance to get their head around believ­ing that it’s pos­si­ble. And that’s kind of sad to me.

Kevin Lawrence 03:17

Did you have a word, Brad?

Brad Giles 03:21

Oh, I’m glad you asked my word of the day is what’s a phrase real­ly, I was work­ing with a team last week, it was their first quar­ter­ly. So we did an ini­ti­a­tion two day work­shop. We we set a very broad draft plan. And we came back togeth­er for the first time last week. And there was some under­ly­ing frus­tra­tions that were expressed, right­ly so with­in the team. So why have we not got a strat­e­gy? Why have we not locked every­thing in? And so it’s a bit I sup­pose it’s a bit like it’s an evo­lu­tion not a rev­o­lu­tion would be the phrase like we build, we build on bit by bit by bit by bit. And it’s nev­er real­ly worked to have a sin­gle plan­ning ses­sion where all of the prob­lems are ironed out and solved, and you’ve got a clear direc­tion to go. If you don’t know how to do that. Now, cuz it does­n’t happen.

Kevin Lawrence 04:27

No. That’s why when peo­ple ask us to do one, hey, can you come to a plan­ning ses­sion to help us reset our plan? No, like, well, just so you know, we can run that meet­ing. But to get the val­ue out of that meet­ing, you need all of the fol­low through meet­ings to iter­ate and pol­ish and dial in. Because you’re gonna have a hypo­thet­i­cal plan.

Brad Giles 04:50

Yeah, we say we don’t do it because it does­n’t work.

Kevin Lawrence 04:52

It does­n’t it does­n’t it does­n’t add a lot of val­ue unless they have an amaz­ing exe­cu­tion engine in the com­pa­ny. Some com­pa­nies do But gen­er­al­ly it’s not what we see.

Brad Giles 05:04

So any­way, that’s my, that’s my, what’s on my mind, I sup­pose is yeah, it’s just an evo­lu­tion not a rev­o­lu­tion. It’s bit by bit and we grow and we evolve. So with that, let’s talk about what we’re talk­ing about today, as we go to talk about it. Plan­ing to win in 2023. Episode one of five. This is the this is the long, long view here over the next five episodes. And real­ly, I sup­pose, you know, it’s an inter­est­ing time at the moment, would­n’t you say? I mean, gee inter­est rates every time they meet. It’s it’s like the peo­ple who set the inter­est rates at the cen­tral banks just keep on putting things up and up and up. And I don’t, I heard that it takes like nine to 12 months for an inter­est rate change to actu­al­ly impact nine to 12 months. Yeah, for the full effect to actu­al­ly take effect. And so they’re just like Final these bul­lets left, right and cen­ter, increase, increase.

Kevin Lawrence 06:15

increas­ing lands why they over­cor­rect? Because his­tor­i­cal­ly, yeah, they’ve increased them in the end too much, because they don’t see enough change. But there’s that much of a lag time. No wonder.

Brad Giles 06:26

Yeah, yeah, yeah. And so that’s what they’re doing. Every time increas­ing inter­est rates might be a lit­tle bit less where I live. But cer­tain­ly in oth­er parts of the world, we’ve seen prop­er­ty decline, the inter­net world, or let’s say, com­merce in the inter­net world as those stocks and val­u­a­tions have a bru­tal, some of them like down 70 – 80%. And, and then there’s just the broad­er uncer­tain­ty around war, and geopol­i­tics. And so many, so many, many fac­tors that are play­ing in. At the moment in Aus­tralia, we’ve got our politi­cians at every oppor­tu­ni­ty going out and telling peo­ple, there’s going to be a real­ly bad reces­sion next year. Now, I don’t know what that does.

Kevin Lawrence 07:10

Well they’re try­ing to cool off the mar­ket. They’re try­ing to scare peo­ple out of spend­ing. So the econ­o­my slows down. And I don’t know what the right thing to do is, but I know a sim­i­lar things are hap­pen­ing in the West. And we’re hav­ing, you know, rates keep creep­ing up, things aren’t slow­ing down Brad, some seg­ments and some indus­tries that we see it. I mean, places like in real estate, the rates are mak­ing projects, not prof­itable for devel­op­ers and things like that, in some cas­es. But the real­i­ty is, it’s a wild time. And there’s places that are boom­ing. Like cer­tain seg­ments where even you know, at this point auto­mo­tive because there’s still a short­age of new cars and a lot of parts of the world. So places like that can still be strong oil and gas is doing spec­tac­u­lar. It’s doing real­ly what’s oth­er seg­ments that are doing well, or seg­ments that are not, it’s, it’s quite wild, actu­al­ly. And you know, as we look into 2023, we know it’s a slow­down on a macro slow­down is com­ing to many coun­tries in the world. And it’s almost like, with COVID, it was like, wow, it was like a car crash. It was It hap­pened quite quick­ly, in con­text. We’ve been see­ing the slow­down com­ing for six or nine months, but it’s kind of like a slow train crash very slow­ly, inch by inch. You can see it and you can tell it’s com­ing, but you don’t know exact­ly when it’s going to be, we know it’ll be chal­leng­ing in many areas. But you know, we we don’t know for sure what’s hap­pen­ing, we do know, is that some sec­tors are going to do fine. Like is always the case. Afford­abil­i­ty for con­sumers is get­ting hard­er with rates going up, espe­cial­ly if they have vari­able rate mort­gages, where there needs to be adjust­ments. I heard some­thing inter­est­ing from some­one the oth­er day, they said that, you know, for many vari­able rates, and this is maybe the Cana­di­an bank­ing sys­tem and might be dif­fer­ent. That they often don’t imme­di­ate­ly change the pay­ment amount, they just change the amount that goes to the prin­ci­pal. So if some­one had a mort­gage of $3,000 a month, vari­able and the rate goes up, I should ver­i­fy this with a friend of mine who’s a mort­gage bro­ker, I should ver­i­fy this to under­stand it. But that the pay­ment will still stay 3000 But instead of you know 1000 going to inter­est in 2000 to prin­ci­ple, it might flip and basi­cal­ly extend at some point they make adjust­ments and I don’t know if that’s true for sure. But no mat­ter what, you know, peo­ple hav­ing things where they’re pay­ing vari­able amounts of inter­est, and costs of food and fuel and all these oth­er things. So there’s pres­sure on the con­sumer. And we just also know it’s next to impos­si­ble to pre­dict. There has­n’t been a time like this before, it’s hard to know exact­ly what’s going to hap­pen except for that some­thing is happening.

Brad Giles 10:09

The oth­er thing that I heard Kev, is that with mort­gages, maybe not in Amer­i­ca, they’re going to slight­ly dif­fer­ent mort­gage sys­tem as I under­stand it, but they do cer­tain­ly in Aus­tralia, prob­a­bly Cana­da, and def­i­nite­ly the UK. What hap­pened in 2018, and 19, pre COVID. All of the inter­est rates were real­ly low. And every­body was lock­ing in fixed rate, low inter­est. Yep. For five years. Yep. And so all of those five year inter­est fixed rate inter­ests, just about to expire in 2023 2024. And so there’s going to be a bit of a shock to the sys­tem, when once inter­est rates goes from, let’s say, 2%, to like, 5 or 6%.

Kevin Lawrence 10:57

Right, because in the Cana­di­an sys­tem, which is prob­a­bly like yours, there’s a renew­al peri­od, we’ll get a three year rate or a five year rate, maybe 10, but rarely 10. The US I under­stand that many of their mort­gages, it’s a 25 year rate, like it’s locked for the term that they pay­ing down the prop­er­ty. Dif­fer­ent sys­tem in Cana­da, yes, but when those renewals come up. Those will be big shock­er. So no mat­ter what, it’s pres­sure on peo­ple, and it’s uncer­tain­ty. So when we’re look­ing into 2023, it’s like, Well, okay, all that no smart peo­ple, we can see that there’s stuff hap­pen­ing, you know, and I was talk­ing to a CEO this past week. And he reached out want­i­ng to have a con­ver­sa­tion, anoth­er CEO we work with for them, as is nor­mal­ly the case, and I’m just chat­ting with him. He’s describ­ing his busi­ness and going. Okay, that’s good. Like, it sounds good. What are you con­cerned about? It was well, back in 2008, I almost lost my busi­ness. Right? 08 – 09, they almost went bank­rupt. And he goes, I think we’re doing all the right things. But I want a coach or advi­sor by my side, to help be a sound­ing board to see things I can’t see. And to be a guide through this, because I’m not going through that again. And they’re actu­al­ly doing a lot of things very well. But in his case, he wants to dou­ble down and make sure and have some­one to help him if and when things get hard in his par­tic­u­lar busi­ness, which I thought was very smart. And but it’s because he does­n’t, he knows enough to be con­cerned. But he does­n’t exact­ly know what’s going to hap­pen. And he want­ed to get some extra horse­pow­er to help him. So I was think­ing about this metaphor­i­cal­ly. And, you know, as I’ve been talk­ing to CEOs and think­ing about this, and you and I talked about it. The best way I can think about is it was like a week you and I, Brad decid­ed we’re going to do a tour across Aus­tralia on motor­cy­cles, which would be kind of fun. Actu­al­ly. Let’s pick the US, the US pick to us for sure. Yes, no, for sure. Yeah, I don’t want to dri­ve to the mid­dle of Aus­tralia. But also the US has high­ways that go any pos­si­ble any in every direc­tion, there’s a high­way in us. So if we were start­ing in Van­cou­ver, BC, where I live, and we want­ed to head down to Flori­da, right, like to diag­o­nal­ly across the whole US our end goal would be to get to Flori­da. But if we were smart, we would be open to tak­ing many, many dif­fer­ent routes, we plan a route. But for our motor­cy­cles, we’re going to prob­a­bly think about the weath­er. Yeah, and we might go a dif­fer­ent direc­tion based on the sun. And maybe there’s 1000 dif­fer­ent ways we could get from Van­cou­ver to Flori­da. But and we might have a pre­ferred choice. But we’d also stay open to the weath­er, espe­cial­ly this time of the year as it’s get­ting cold­er. If you’re dri­ving a car or an RV, it prob­a­bly does­n’t mat­ter. But in a motor­cy­cle, you’re con­nect­ed to the ele­ments, so it’d be more. And that’s kind of what I want to put out as a phi­los­o­phy today for us to dis­cuss and con­sid­er is you still need the goal to get to Flori­da, which would be your plan for 2023. Think we just need more flex­i­bil­i­ty in our think­ing and be open and even con­sid­er dif­fer­ent sce­nar­ios of the how to get there based on how the year goes. And that’s kind of it’s kind of the best think­ing because try­ing to pre­dict is very, very dif­fi­cult. Except to know that there’s gonna prob­a­bly be some bad weath­er. But where, when, how, I don’t know. We tell that’s kind of what I would plant is the think­ing for us today.

Brad Giles 14:43

Yeah. We don’t know. And that’s the point. Like we’re not try­ing to be pur­vey­ors of doom. What we’re say­ing is, there’s enough out there that we need to, we need to pre­pare for what might hap­pen and plan In for what could hap­pen, but con­tin­ue to build an endur­ing great busi­ness. Because it’s sim­ply worth that you don’t, you know, you can’t say this or that is going to hap­pen. I mean, we aren’t, no one knows that. Nobody knows that.

Kevin Lawrence 15:21

Even the econ­o­mists don’t know. And it’s their job to know this, isn’t it? This is hard stuff to predict.

Brad Giles 15:27

Look, we’ve said this gag before that we know that econ­o­mists, God put econ­o­mists on the earth to make astrol­o­gist look good. So yeah, they don’t know they don’t know.

Kevin Lawrence 15:40

By the way, though, I did hear some­thing fas­ci­nat­ing. Read this great book called Rebel Ideas, shout out to Simon he rec­om­mend­ed it. And what he did say is if you take one econ­o­mist and then make a pre­dic­tion, take this, ver­sus you take a group of five or six, the group of five or six will always be notably smarter and more accu­rate, because they have dif­fer­ent per­spec­tives, dif­fer­ent views, dif­fer­ent sources of data, ver­sus one per­son. It was very, very inter­est­ing book about how peo­ple are smarter when they are togeth­er. But no mat­ter what, put 100 togeth­er, it’s still hard to know for sure. And, hey, it’s just our busi­ness, this is our life’s work. You know, we don’t we don’t want to kind of just be rolling the dice on or try­ing to be arro­gant enough to think that we know for sure. And, you know, what’s inter­est­ing is I, one of the real estate devel­op­ers that I work with in anoth­er coun­try, you know, part of their strat­e­gy, always in good times, if they’re build­ing a mul­ti tow­er devel­op­ment, is they don’t start build­ing the sec­ond tow­er, until the first one is sold, close to 80%. Yeah. And it’s not just about cash. It’s because they learn and they want to poten­tial­ly be able to recon­fig­ure your tow­er to, if three bed­rooms are sell­ing like hot­cakes, and they can’t sell one bed­rooms, they might elim­i­nate the one bed­rooms in Tow­er two, and make it all three bed­rooms or make it, you know, some two bed­rooms, and maybe they maybe they find there’s demand for four bed­rooms. But the point of it is, is it’s being as iter­a­tive as you can, sort of as you’re learn­ing, even in old school bricks and mor­tar busi­ness­es. And it’s also step­ping away from the arro­gant belief that you have the answer. And in tur­bu­lent times, you just you just need more flex­i­bil­i­ty in your think­ing based on data. And what hap­pens. And again, you might not need to change tow­er to at all. But but it’s to be open and flex­i­ble and struc­tur­ing things in a way where you have an open­ing to do that. Ver­sus lock­ing down, you’re think­ing too hard, too early.

Brad Giles 17:58

So think about like to zoom in and zoom out. So if you zoom in, if you go back to March, April 2020, when the pan­dem­ic was very was at its very first stages. Yeah. And the real­iza­tion was com­ing to every­body. This is a big deal. And it’s hap­pen­ing and chang­ing real­ly quick, what are we do. What we did, and what we advo­cat­ed, then when we start­ed, this pod­cast was focused on what’s in your con­trol. And that’s kind of if you zoom right in, focus in what’s in your con­trol. So look­ing at to your anal­o­gy about the real estate devel­op­er, focus­ing in on, okay, we know that three bed­rooms are sell­ing, let’s incor­po­rate that into our plans. But then also zoom out. And a great exam­ple I love is Jack stack from SRG, who wrote the great game of busi­ness. I saw him speak recent­ly. And he says that the econ­o­my will always go in cycles. It always does for all of the rea­sons that we know. And so you’re sav­ing cash in the good times, so that you can buy depre­ci­at­ed assets or under­val­ued assets in the down times. So when you zoom out, and you think it’s always going to be a cycle, in those down times, hope­ful­ly we’ve got enough cash to weath­er that storm and to be able to buy or to be able to take advan­tage of the bar­gains that are on offer. Yep. It gives us a bit of per­spec­tive, to be able to main­tain steadi­ness through that those chal­leng­ing times.

Kevin Lawrence 19:41

Yes, and that’s the thing. There’s always cycles and there’s growth that always comes after­wards. Right after the fall and win­ter, there’s spring and sum­mer again, always. That’s that’s the world that we’re in as long as you’re not you know, gam­bling and too deep into crazy stuff if you’re in real busi­ness­es that solve real cus­tomer prob­lems. So yeah, it was it is. So the idea is mul­ti­ple sce­nar­ios and being very, very flex­i­ble in your think­ing. And, you know, that’s why some com­pa­nies dur­ing COVID, we’re doing like month­ly plan­ning. And I’ve got some clients that do that all the time when I worked with in the Mid­dle East, you know, they got into the habit of because there was a bunch of tur­bu­lence there of reg­u­lar­ly like, they had a dis­ci­pline around fore­cast­ing every month, which many com­pa­nies have, but real­ly re fore­cast­ing, and then they would adapt their hir­ing plans based on if they plan to hire 50 peo­ple over the course of the year, they would adjust it based on what the fore­casts were. So they did­n’t get to do build­ing too big of a team. Even with some of the the mod­er­ate cap­i­tal expen­di­tures, right, they would have trig­gers that if this hap­pens, then we’ll do it. And if we don’t get to that point, we might delay it. And again, if your busi­ness can do that, not all busi­ness­es can, but it’s about its con­tin­u­al­ly updat­ing and not just sit­ting there with a set fixed way of look­ing at the year. Inter­est­ing I was shar­ing with this CO chat­ted with the oth­er day, about one of the CEOs that I that I worked with, they also said that they change their cred­it strat­e­gy dur­ing chal­leng­ing times. And they some peo­ple get more relaxed with their cred­it, so that they can keep the busi­ness flow­ing. This guy did the oppo­site. When when times get tough, he got tougher on cred­it and gave cred­it set basi­cal­ly set the cred­it thresh­olds high­er, because he says it’s tough times. I don’t care if we get a sale. And if we miss a sale, I’d rather miss a sale than do a sale and not get paid for it. Now that’s a dif­fer­ent phi­los­o­phy gets more aggres­sive on cred­it, and also more aggres­sive on receiv­ables, they are nor­mal­ly hired and an addi­tion­al accounts receiv­ables clerk to help and col­lect there. So they’ll basi­cal­ly dou­bling down on the cash, almost kind of pro­tect­ing the fortress of cash.

Brad Giles 22:03

That’s awe­some. And what an inter­est­ing segue into so how do we take from this broad con­cep­tu­al dis­cus­sion into tan­gi­bles, that peo­ple can take away. So what we’re going to be plan­ning to do is to say, each of the next four episodes, we’re going to be talk­ing about what do you need to do around peo­ple in these uncer­tain times of 2023? And then strat­e­gy? How do you meet your core cus­tomers need bet­ter than any­one else in a way that posi­tions you in a unique man­ner, rel­a­tive to the com­pe­ti­tion in 2023? Exe­cu­tion, so impor­tant in tough times, get­ting the right meet­ings, the right pri­or­i­ties in the right data and met­rics so that you can weath­er those storms? And then that is the segue into cash. Which is, how do you like your friend that you just men­tioned, with the tight­en­ing up the cred­it? How do we make sure that we’re man­ag­ing cash that our busi­ness mod­el will sur­vive and endure? We know it’s going to be chal­leng­ing? We’re real­ly, real­ly, real­ly sure about that. But how can we endure, that’s what matters?

Kevin Lawrence 23:20

And how do you have the right tools, your dis­pos­al just even on the cash? Well, we’ll get into this when we do the episode, but it’s the report­ing and under­stand­ing and to be able to see it, you know, the report­ing of most com­pa­nies is vague and mediocre at best, you know, peo­ple will have an income state­ment looked at from a cou­ple dif­fer­ent per­spec­tives and ver­sus last year in ver­sus the bud­get. But even that, gen­er­al­ly, if you real­ly want to run a busi­ness and chal­leng­ing times has start­ed off, there’s too much stuff that can be hid­den and buried in what’s hap­pen­ing. And you need to real­ly be able and the peo­ple run­ning the busi­ness­es need to be able to see it, and to real­ly under­stand what’s hap­pen­ing in their busi­ness. And a lot of peo­ple don’t have enough, so we’ll get into it. So the key point we’re get­ting at here is that when you’re look­ing at next year, I mean, it’s a healthy way to look at any year, but par­tic­u­lar­ly when you’re know you’re going into more tur­bu­lence is to con­sid­er mul­ti­ple sce­nar­ios, still pick your path, still have an ini­tial path, but treat it and make your com­mit­ment to the prof­itabil­i­ty of the orga­ni­za­tion is going to achieve. But be open to being flex­i­ble and hav­ing to change things around as you go. And it’s almost in many ways if you know hav­ing a goals and strat­e­gy for the year, but like, maybe you’re going to iter­ate it more, more more than you would have some­times the annu­al plan­ning is like set it and for­get it and let it run. I don’t think this is the time to do that. So maybe you do month­ly mini review meet­ings. And you know, out­side of your prop­er full quar­ter­ly meet­ings, I don’t know we’ll fig­ure out your own rhythm, but as to be open to dif­fer­ent paths and to tweak­ing those paths along the way. So you con­tin­ue to thrive and adapt in what­ev­er way you need to, I almost want­ed to use that word piv­ot that we use much trend COVID. So that’s the idea.

Brad Giles 25:09

But we’re not going to use that. But we’re not going to use that word piv­ot because that would not be appro­pri­ate. Very good episode. Okay, so plan­ning to win in 2023. We don’t know what’s going to hap­pen. There are things that aren’t in our con­trol that we can con­trol. And there are things that are out­side of our con­trol that can real­ly dis­tract us. Focus on what is most impor­tant again, and make sure that yeah, that you I guess, pay atten­tion to the next few episodes where we dig deep in to each of these. Very good. My name is Brad Giles. You can find me at evo​lu​tion​part​ners​.com that are you, Kevin Lawrence, my co host, you can find it Lawrence​and​co​.com. And then we’ve got YouTube chan­nel. Of course, like and sub­scribe us there if you’d like to see the video ver­sion. And you can also like us on your favorite pod­cast are­na, what­ev­er that might be. I hope you’ve enjoyed the episode today. Oh, I for­got to men­tion we’ve also got newslet­ters. We always say that you’ll enjoy it. We do all sorts of inter­est­ing stuff. I hope you’ve enjoyed today’s episode. I look for­ward to chat­ting to you again next week. Take care