How to keep investing in growth and innovation as a recession looms

With a recession coming, how can companies maintain their investment in innovation and growth? That was the topic of a Fortune dinner conversation last night, held in collaboration with Bain & Company. The short answer to the question: It’s not easy. Here’s how Silicon Valley Bank CEO Greg Becker put it:

“I’ve been at the bank for 30 years. I’ve been through many cycles…And the earnings calls all go the same way when you hit a downturn. ‘Why are you not cutting more aggressively? It makes no sense.’ And my response is, ‘If we didn’t believe in our outlook, if we didn’t believe in the long-term trajectory, you would be making a really good point. But we are not going to cut the muscle in the foundation right now that’s going to impact us in two years, three years, four years, and five years.’”

Leslie Donato, chief strategy officer for AmerisourceBergen, made similar comments, but added that, on the merger and acquisition front:

“It’s actually creating opportunities for us…We are seeing more opportunity for strategics to get into certain areas that have really been dominated by private equity for the last at least few years.“

Earlier in the day, I moderated a virtual CEO roundtable discussion, held in partnership with Deloitte, where participants reported seeing only the faintest signs of the much-predicted recession. Here’s Tony Bates, CEO of Genesys:

“I’ve certainly seen some odd behavior where we’re about to sign, you know, very large deals, and then they just sit on the CFO’s desk, or the CEO just says, ‘No, I’m not signing until I see what’s going on.’”

Yet the CEOs also reported the battle for talent continues unabated. Here’s Brian Niccol, CEO of Chipotle:

“We’ve got more turnover than we like, and the capabilities of those people that are in our organization are lower than they’ve been, because they haven’t been with the company long enough to get a lot of experience.“

Most significantly, a number of the CEOs say they have never been in an environment where the range of possible future scenarios is so broad. Here’s Ron Coughlin, CEO of Petco:

“I’ve never developed plans with such a span of differentiation. The pet category could be up 8% to 10% next year…But at the same time, there is a catastrophic view that there is zero growth. I’ve never had as broad of an array of outcomes.”

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

TOP NEWS

Musk’s Twitter

Elon Musk’s Twitter purchase seems on track to close by the end of this week, after banks started sending $13 billion in cash to back the tycoon’s takeover. Twitter reportedly told its staff to expect direct communications from Musk on Friday, and the poly-CEO himself tweeted a very dad-jokey video of himself entering Twitter HQ. Wall Street Journal

Emissions rising

There were record-breaking jumps in the amounts of CO2 and methane in our atmosphere over the past couple years, the UN’s World Meteorological Organization has reported. The UN says countries’ current emissions-reduction commitments are not enough, and are set to allow a devastating 2.5 degree Celsius rise in global temperatures by the end of this century—that’s a full degree above the limit everyone’s trying to stick to. Washington Post

Credit Suisse

Credit Suisse this morning posted a $4 billion loss for Q3, which is nearly 10 times what analysts expected. Switzerland’s second-largest bank now hopes to raise, er, $4 billion to fund a massive restructuring that will see the breakup of its investment bank, with a hived-off advisory and capital markets unit getting the old First Boston branding. Job cuts are also coming, with the aim of reducing the workforce from 52,000 to 43,000 by 2025. Reuters

AROUND THE WATERCOOLER

Mark Zuckerberg refuses to give up on the metaverse—even after Meta investors have, sending the company’s shares tumbling 20%, by Bloomberg

Carlyle is searching for a new CEO. Here are some internal candidates who want the job—and one high-profile external exec who probably doesn’t, by Luisa Beltran

Russia’s oil power ‘will never return,’ the IEA says. ‘The rupture has come with a speed that few imagined possible,’ by Vivienne Walt

Global daily COVID deaths will almost double in the coming months, health experts predict, by Chloe Taylor

A day after being cut by Adidas over anti-Semitic remarks, Kanye West showed up at Skechers’ headquarters—and they wouldn’t let him in, by Alena Botros

This edition of CEO Daily was edited by David Meyer.