Andrew Marsh, chair of Vistage for the North East and Northumberland, NED and business owner regularly scans the region's business horizon to look at what is ahead and how to respond.
He brings speakers to the region to examine economy, business action and best practice. Here he talks through how to understand the latest macro environment, what they will mean and how to respond accordingly.
“The Macro environment in the UK and our region is ever shifting, and to really get to grips with strategic thinking, they not only need to be analysed but also considered in depth when building out a strategy for stability or growth. Knowing your macros is the only way to identify potential opportunities or hazards that might impact the business.
“By analysing the current macros in building your strategic plan as a leader, you enable and prepare your management team before they need to act with information that assists them in making operational decisions to improve performance.
“Some leaders go as far to employ experts in evaluating macro-environmental factors who then provide recommendations tailored to the company. These experts review broad macro-environmental forces related to factors including politics, the economy, demographics, technology and more.
“A great example that I use to get people in my Vistage and Experience Bank peer groups thinking about the size and scope of macros, is the question ‘how is toast made?’. Some people will start at taking the bread out of its bag or cutting a slice off the loaf and putting in the toaster. Some will start at going shopping for bread or baking it. Others will drill right down into how the bread is made, as far back as the grain being grown in other countries like Ukraine, which then brings in macros of war, freight issues, wholesale markets, retail buyers etc. On the other side, some people will stop when the toast pops out of the toaster, others will go into as much detail of what they put on it and where that was sourced. So, you see, macros that affect you may be obvious or more than likely need a deeper delve.
“Political factors are something that with a relatively new government in place that we are aware are already and that could continue to impact a business negatively. As well as the obvious increase in costs in being an employer, political macros include laws, new regulations and legislations that allow or don’t allow companies or the industry in which they operate to behave in certain ways. These can close market routes, cost money and involve operational upheaval with, as one example, training needed.
“Other macros can include the cost of imported goods, that a company needs to manufacture its products, increasing – it makes sense to strategically pre-plan for this by having knowledge of other suppliers and their costs so you can switch quickly if needed. If there are no other suppliers and your hands are tied to an increase in cost, your strategy needs to be around how you pass that cost on to your customers without losing them. That brings in many of your company’s departments including marketing and customer service!
“There are many tools out there like Pestel which can help you evaluate these risks, but don’t do this exercise with blinkers on. You need to look at your forward customer chains at the same time and make sure you consider all of them, otherwise your goals may not be fully achievable.
“Personally, I think the six main macros that we should all be aware of right now are recruitment issues due a talent shortage, emerging technologies and AI, sustainability and demands to operate in an environmentally friendly way, the threat of recession and rising costs, and the overriding feeling of systemic mistrust. However, at an event I recently hosted for my Vistage members, economist Roger Martin-Fagg painted a brighter future that went some way to lifting this mistrust, so remember to always collect your facts from a range of sources!
“In conclusion, by adopting a macro-management leadership style you are truly focusing on long-term strategy, so it is also important that you prioritise delegating responsibilities with clean lines of authority throughout your team.
“It is also worth remembering that there is not always a need to worry or over panic, the macro environment’s impact on a company depends on how much of its trade is dependent on the health of the overall regional and national economy. There are always ways to refocus, pivot and improve which are often positively highlighted by understanding the influencing macros on your company’s future.”
If you’d like to discuss anything in this article, then please do get in touch on Andrew.marsh@vistagechair.co.uk