Uncertainty continues to fuel turbulence Mastering the six turbulence levers
Do you have an agile business portfolio
Handling threats and opportunities in the new normality
5.3%
5.2%
4.9%
4.9% 4.7%
3.1%
3.8%
2003
2004
2005
Source: ECB and OECD
2006
2007
2008
-0.7% 2009
We are out of the recession and stock markets are back 2010
OECD, projection for 2012 Crisis
Baseline
Baseline
Downside scenario
Opportunities
Recession
Solid growth
Recession
Solid growth
Japan
Recession
Solid growth
China
Growth
Growth
The US
The euro area
Source: OECD, November 28, 2011
Upside scenario
Drivers
The conditions of 2011
Looking ahead
Financial
• Debt crisis in Greece and Ireland and potentially Portugal and Spain • US cash problems and downgrade • Set-back in the global stock markets • "Currency war"
• • • •
Political
• The US – power game/status quo • The euro area – Germany unwilling to rescue "risk takers" • Japan – instability in the governmental structure • "Arab spring" continues in Libya, Syria and Saudi Arabia (non-violent)
• The US – consequences of election unknown • EU crisis – Greece must perform! • New governments/elections in Germany, Italy, France and Spain – what will happen? • "Arab spring" enforces strong pressure on Israel and Iran and might lead to war, involving Turkey
"Nature"
• Japan – earthquakes and tsunami • The US – hurricanes across the EC • Bangkok – flooding
• Environmental conditions are changing • Due to heavy interdependencies the effects of catastrophes have grown larger
Governmental debt must be decreased The US dollar faces currency instability No trigger that could create a "bull market" National variances will grow larger – look out for local conditions
World economic prospects depend on events, the nature and timing of which are highly uncertain OECD Chief Economist, Mr Padoan, November 2011
Extend the planning horizon Build a portfolio that embraces both risk and growth
Ensure a financial "manoeuvre room"
Manage each unit in the portfolio individually
Rigorous transparency and performance Create an agile governance and leadership model
Focus areas – self-assessment Yes Do you apply a portfolio mindset in your business?
Do you hedge both risks and growth in your business unit portfolio?
Do you drive unit development differently based on local knowledge and baselines?
Do you have a best-in-class market intelligence set-up ensuring access to deep local knowledge? Do you have a scenario-based leadership and governance model and is it linked to development plans and financial packages? Do you have transparency on the key financial drivers backed with a scenario-based financial "what if" catalogue across relevant markets? Do you have access to sufficient financial resources based on self-imposed covenants and clear communication to financial stakeholders ?
No
?