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.

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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 evolutionpartners.com that are you, Kevin Lawrence, my co host, you can find it Lawrenceandco.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