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Management teams have operated in a generally benign environment: Stable trade flows, low inflation, cheap debt, predictable monetary policy and globally optimized supply chains. Notwithstanding global shock events, leadership teams have focused on optimizing for efficiency not volatility. That world is gone. With resurgence of politically motivated tariffs, unpredictable in scope, scale, and timing is destabilizing global trade. Simultaneously, the headwinds of rising interest rates, FX volatility, energy costs, and supply chain shocks are exposing operational fragility.
Most leadership teams lack "experience" or tested playbooks for this kind of systemic dislocation. But this moment is more than a defensive challenge: The greatest failure will be missing the window to reposition, lead, and capture growth while your competitors hesitate.
How can management teams transform this inflection point into a platform for value creation? By building the capabilities to absorb shocks and move faster than dislocated markets to drive growth.
"Volatility isn’t just a risk, it’s the opportunity to gain advantage while others hesitate."
Winning teams will treat tariff and macro volatility as a strategic accelerator, not merely a risk to manage. Seizing this opportunity requires a dual response: leveraging the volatility and bridging a capability gap:
Leverage volatility for growth:
- Make bold strategic moves: Redefine your right to win by rethinking footprint, partnerships, or product strategy to break through uncertainty.
- Acquire stranded share: Move where slower competitors struggle with inertia and cannot adapt to pricing or supply.
- Expand into geographies or categories: Target areas that have become newly compelling amid disruption.
- Respond to shifting demand: Reconsider customer segments and implement dynamic pricing to stay ahead of demand-side shifts.
Mitigate the capability gap:
- Tighten the balance sheet: Refocus capital deployment to support new objectives, create balance sheet insulation and a war chest to deploy rapidly to exploit opportunity.
- Strengthen financial infrastructure: Enhance treasury sophistication and build liquidity buffers to manage FX and capital volatility.
- Offset input cost pressure: Conduct margin stress tests and diversify supply chains to reduce vulnerability.
- Build resilience into the investment equity narrative: Portfolio company leadership and their financial sponsors should reframe growth aspirations. The targets should remain however the governance frameworks guiding decisions should be recalibrated.