The 2021 global economic outlook is more uncertain than at almost any other point in memory, as countries across the world will continue to grapple with the COVID-19 pandemic. Yet, further downside risks—and positive surprises—are both possible this year. With 2021 in full swing, firms will need to pressure-test their geographic priorities and ensure they are investing in the right areas as some markets and customer segments will recover much, much faster than others. While the future of recovery is hard to predict in the long term, there are several quick actions you and your teams can take now to set you up for business success in 2021:

  1. Update your demand planning indicators: The factors that have traditionally driven performance across industries broke last year with the irruption of COVID-19, and the factors that will lead recovery this year will also be different and volatile, affecting quarter-on-quarter performance. Key factors to monitor in 2021 include the timing and magnitude of stimulus withdrawal and enactment of new stimulus measures by governments, vaccination milestones, credit expansion, and the evolution of commodity prices and FX, among others.
  2. Engage in “dynamic” customer segmentation: While at-home FMCG, IT, or home renovation might have been hot industries in 2020, economic reopening and the reshuffling of priorities by governments and companies will create new winners and losers in 2021. Being able to quickly shift resources away from stagnant business units into growth opportunities will be key to capturing pent up demand opportunities.
  3. Time price increases carefully: Relatively low inflation, liquidity challenges for many smaller businesses, and a highly uneven K-shaped recovery in consumer incomes will mean companies are going to find it challenging to raise prices, particularly for their core products, in 2021. This can be especially problematic in markets that experienced deep currency depreciations in 2020. If your company mandates higher operating margins for your new fiscal year, try to negotiate new market share targets, or at least clarify acceptable tradeoffs between margin gains and market share losses.
  4. Don’t fall prey to confirmation biases: As much as we all want COVID-19 to go away as quickly as it entered our lives, the reality is that there are still too many question marks that will continue to impact demand expectations, the operating environment for months (hopefully not years), and overall business success. While cherry-picking the positive news regarding vaccination, new treatments, and market recovery is good for employee morale, make sure that your market intelligence team is providing you with an accurate business outlook that takes into account possible risks, including the possibility of new virus mutations that could render current vaccines ineffective, debt crisis as governments grapple with fiscal issues, and social unrest. If you feel that your company is being too conservative, encourage the inclusion of upside scenarios with clear trigger points that you can action upon.

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