Outsell Outlook 2023
As I wrote last week, we could have spent the entire Outsell Signature Event co-produced with JEGI CLARITY, discussing the 2023 outlook! This year more than ever, the geopolitical, economic, M&A, and talent outlooks are a tangled ball of yarn — the pieces are intertwined, jumbled and knotty.
To smooth out the picture and create some clarity, we spent an entire afternoon in an interactive session discussing what’s ahead. Thank you to the panelists who joined us:
- Rodger Baker, Executive Director of the Stratfor Center for Applied Geopolitics at RANE Network Inc.
- Ryan Sweet, Senior Director of Economic Research at Moody’s Analytics, Inc.
- Scott Mozarsky, Managing Director at JEGI Clarity
- Christina Correira, Chief Human Resources Director at Bloomberg Industry Group
- Craig Fuller, CEO and Founder of FreightWaves, Inc.
- Chris Seiple, Vice Chairman of Energy Transition and Power & Renewables Practice at Wood Mackenzie
Here’s what we learned.
Geopolitics
The familiar global framework that was established after WWII is breaking down. Our differing concepts of the relationships between people, government, and industry is causing fragmented globalization. As trade agreements break down, countries are returning to economic nationalism.
Russia and China are motivated by climate change, energy, and trade. Russia’s insecurity is driven by geographically insecure borders. Securing them is the core of their strategic vision, which explains why the country feels like the West is encroaching on it. Ukraine is a key piece of its security puzzle. They also have the longest unprotected coastline in the world because of climate change. As for China, in the past decade, it has become dependent on international trade; it is no longer self-sufficient.
We learned how Russia and China view their physical maps, and those pictures paint a thousand words. The world view map used by the Western world is quite different from those used by Russia and China. Quite literally, their maps are drawn to encourage and drive geopolitical views.
Finally, geopolitics and climate change go hand in hand. Issues about water are critical, driving migration. Mining and minerals that drive semiconductors, clean energy, and more are part of the picture, too.
Economy
Given the Fed’s need to reduce inflation, the US is dangerously close to recession, but will avoid one. This was met with some doubt from attendees; some leaders feel we are already in a recession.
The view in Europe and the UK is less optimistic. Thanks to unwise fiscal stimulus policies, stagflation (stagnant demand, high unemployment, and high inflation) is a real risk. The war in Ukraine continues to hurt energy prices and inflation in general.
Global GDP growth will slow over the next two years, with China and India still in 5–6% growth projections. There is a perception that spending cutbacks are coming and interest rates will continue on the rise with the next 12–18 months being tough and “nowhere to go but up.”
In the US, 40 million millennials are going into their first-time home-buying years, and this remains a concern. If high-interest rates keep buyers out of the market, it will drive rental prices up — another inflation driver.
The economic outlook is consistent with the Outsell CEO Sentiment Study: things are positive but slowing in the US, worse in the UK and Europe, and slower — but still growing — in Asia.
Mergers & Acquisitions
Our industry is still seeing a lot of mergers and acquisitions (M&A) being driven by private equity (PE), although buyers are more cautious than they were in 2021, and deals are taking a bit longer to seal. Public and private markets are not necessarily correlated, and companies finding it hard to obtain money may come to market early.
The second half of 2022 will be slower for M&A, but hot sectors, such as legal and compliance, remain. Strategics are still in the game, but changing stock market valuations and debt levels could impact competitiveness, and that could be offset by lower valuations that make properties more affordable. We discussed what drives valuations. Those operating against those drivers are finding better exits and outcomes. There is little interest in the information services properties that don’t embody them, creating a tale of two markets.
Talent
The data we’ve gathered and everything we read is reinforcing what we heard at the event: the workforce demands flexibility, and that isn’t going to change. Flexibility drives people’s decisions and feelings about returning to the office. Returning to the office is no longer about COVID and safety, but about choice and flexibility.
Communication and clarity are key for new employees. It’s essential to onboard new team members in a planned way. Effort up front pays off; individuals see they’re being invested in from the outset. It is also essential for new team members to be given meaty assignments immediately.
We discussed focusing on candidate potential instead of pedigree and noted the importance of companies providing what was promised in interviews.
Talent came up in discussions about oil, energy, and supply-chain, too. Vocations and vocational schools are exceptionally important. During the last ten to fifteen years of technology hubris, certain industries were made out to be “backwater,” but their need came roaring back during COVID with climate disaster these past few years. We need to keep our economy running. Talent in industries such as transportation, construction, front-line workers, and many other fields is needed to keep us going. So it’s essential to open more education opportunities outside of BS or BA degree programs and to look at hiring “outside of the box.”
We spoke of the importance of mining and minerals for clean energy. Our policy-makers and investment community are moving away from fossil fuels, but at a time we have and are facing peak energy demand. Because of this, shortages will continue.
We must unfurl the disconnects or we’ll end up with no talent, inflation, and shortages of essential goods. One thing is for sure: In the words of Anthony Scriffignano, SVP and Chief Data Scientist at Dun & Bradstreet, our opening keynote speaker who presented before the outlook session, continued change is on the horizon. Get used to more “disrupted disruption.”