Considering all the crazy twists and turns in the U.S. presidential race so far, I’d be nuts to make firm predictions of any kind, economic or political, for 2016. But I’ll make just one: No matter what happens, the year will be full of events that could be threats or opportunities for business leaders, and a key test separating excellent leaders from mediocre ones will be how they respond.
For example, will there be a U.S. recession? The economy has been growing for 6 ½ years, and many economists say it’s about time for a downturn. Most business people regard that as a threat, but the best leaders will remember that recessions are when the competitive order within industries gets rearranged in long-lasting ways – a giant opportunity. In a robustly growing economy it’s easier for businesses to do well and harder to leave a competitor in the dust. But in the last recession, Best Buy dispatched Circuit City for good, and Bed Bath & Beyond doomed Linens ’n’ Things, for example. McKinsey found that in the severe tech recession of 2000-2002, 47% of high-tech companies that entered the period as top performers had fallen out of that group by the time the downturn ended just two years later. Conversely, 13% of the previously mediocre-or-worse performers climbed into the top group. Times of turmoil can be a leader’s greatest opportunity
A coming slowdown in China is practically conventional wisdom, and most people are worried about it hurting the whole global economy. But the best leaders will realize that it may also make China an even more attractive supplier. As technology gallops ahead faster every day, we can be sure of more mind-bending disruptions in industries of every kind. A threat for sure – but excellent leaders of incumbent companies will see it as a great opportunity to use their industry expertise to beat the disrupters at their own game.
As for the presidential election, I have no idea what will happen, and neither does anyone else. But the outcome will transform factors that business leaders care about – growth, interest rates, taxes, employment costs. To whom will those changes be threats, and who will seem them as opportunities?
The enduring lesson is that all changes are opportunities if you decide they are, and 2016 will bring lots of them. Make this a great year. You can, regardless of what happens.
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What We're Reading Today
China halts trading after 7% fall
In the new year's first trading day, the Shanghai Index's sharp drop triggered a new mechanism that halts trading if the index falls or rises by 5% or more. Weak manufacturing numbers and oil price concerns related to Middle East conflict triggered the drop. A continued fall could put President Xi Jinping to the test, since he recently said that economic stimulus often creates new problems. USA Today
Saudi Arabia ends ties with Iran
Following a storming of its embassy in Tehran, Saudi Arabia ended diplomatic ties with Iran. Iranian diplomats were given 48 hours to leave the country. Tensions rose after Saudi Arabia executed Sheikh Nimr al-Nimr, a Shi'ite Muslim cleric who spoke against the ruling Al Saudi family. Fortune
Fiat Chrysler completes Ferrari spinoff
Unloading its 80% stake in the luxury brand caused the stock of Sergio Marchionne's company to fall 33% in its first day of trading in Milan this year. Now publicly traded, Ferrari is controlled by Fiat's founding family, the Agnellis, and by Piero Ferrari, the founder's son . Its stock fell 5.6% on its first trading day. WSJ
Michael Bloomberg leads NRA opposition
Gun control advocates have won a number of successes in Connecticut, Delaware, Nevada, and other states by focusing on local and state legislatures. They're using support from Bloomberg, who has donated millions to the cause, boosting organizations like Everytown for Gun Safety. President Barack Obama is expected to take executive action on gun control as early as this week. NYT
Building a Better Leader
New York to lift minimum wage...
...for state university workers. Gov. Andrew Cuomo will announce a plan today that raises the minimum hourly rate from $9 to $15. NYT
Mark Zuckerberg's New Year's resolution...
...is to build artificial intelligence to run his home. Here's how to think big for your 2016 resolutions. Fortune
If you answer email after work...
...then you should also get unlimited vacation time. It's part of the new style of work. Quartz
Positioning for Change
Republican race expected to turn nasty
Sen. Marco Rubio, Sen. Ted Cruz, Jeb Bush, and other candidates are expected to increase attack ads heading into the Feb. 1 Iowa caucuses. Bush started the transition shortly after Christmas, releasing an ad targeting Rubio. As candidates remain bunched behind Donald Trump, they're positioning themselves for an early win that could determine the frontrunners in the rest of the primaries. NYT
Trump's approach to crisis
In 1990, Donald Trump and his companies owed $3.4 billion. To manage the turnaround, he squeezed money from his Atlantic City casinos, told contractors to accept less money than their contracts promised, and fired employees. He also rearranged a repayment plan many times from 1990 to 1996, filed lawsuits against partners, and had his dad buy $3.5 million in casino chips without ever using them. For voters, it's a look into how Trump has handled a crisis. WSJ
Militia continues to occupy Federal building in Oregon
The group, protesting federal rules on land use in the West, continues to remain in the National Wildlife Refuge building. While some would label them terrorists, the protesters led by rancher Ammon Bundy say they will remain in the building and will not initiate violence. Bundy's father, Cliven, was in an armed dispute with federal officials over grazing rights in 2014. Washington Post
Fortune Reads and Videos
Tesla hit 2015 target
It shipped 50,580 cars in 2015, which means Elon Musk's company reached its target of 50,000 to 52,000 vehicles, while also launching the Model X. Fortune
Drug companies in talks over $32-billion merger
The advanced talks have Shire purchasing Baxalta for $46.50 to $48 per share. Fortune
The Consumer Electronics Show starts today
And most of the interest will center on cars, with every major automaker attending. Fortune
Star Wars passes Titanic...
...as the No. 2 grossing movie ever in the U.S. It will likely pass the current No. 1, Avatar, which it trailsby about $70 million. Fortune
Today's Quote
“We’re out here because the people have been abused long enough, their lands and their resources have been taken from them to the point that it is putting them literally into poverty...This refuge here is rightfully owned by the people, and we intend to use it." - Ammon Bundy, leader of the militia occupying a Federal building in Oregon over land use.Washington Post
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