LeadershipCryptocurrencyInflationGreat ResignationInvesting

The bad news: 2023 is likely to be even crazier. The good news: Tough times make leaders and businesses better

November 30, 2022, 5:15 PM UTC
Photograph by Nigel Parry—The Licensing Project

For business, 2022 has been a dizzying year, and the fourth quarter has only upped the ante on the insanity. In November alone, we watched Elon Musk take over Twitter and decimate the company and its workforce, one tweet at a time. A $32 billion crypto exchange, FTX, was exposed as a de facto Ponzi scheme and collapsed in 48 hours. And bloated Big Tech companies announced plans to lay off more than 50,000 employees, in total, in a quest to become more efficient.

With all this chaos swirling, perhaps the only certain thing is that 2023 will be even more uncertain. With inflation still punishingly strong, and a U.S. recession looking increasingly likely, the biggest challenge business leaders face is how to steer a course between those two dangerous rocks—and come out stronger on the other side.

CEOs can’t fight rising prices without help from policymakers. Our cover story on U.S. Federal Reserve Chairman Jerome Powell explores how he’s struggling to rein in the highest inflation since the 1980s. Powell has followed the classic economic playbook by raising interest rates. But it’s unclear if he’ll be able to land this plane without a crash—especially since years of “quantitative easing” by the Fed have encouraged too many companies and investors to take risky bets with cheap, borrowed money.

As author Christopher Leonard notes, Powell has two choices: “He can tolerate high inflation, and risk that it gathers strength and begins to rage out of control. Or he can tighten the money supply, and risk recession and possibly a financial crisis.”

Both those options are ugly, which is why smart CEOs are focusing on how to protect their companies. Fortunately, seasoned leaders have coped with recessions and inflation before—not to mention the unprecedented dilemmas that came with COVID. Shawn Tully spoke with and studied the work of five battle-tested Fortune 500 CEOs, compiling their top five strategies for steering their businesses in volatile times, including raising prices, taking care of your best people—and seizing opportunities that arise when your competitors stumble.

One inspiring thing to remember is that the strongest businesses are forged in tough times, when leaders are forced to get lean, focus, and execute. When COVID first hit, Airbnb CEO Brian Chesky was put to the test earlier than most. In 2020, his business nose-dived 80%; to save it, he had to lay off 25% of his workforce and get back to his company’s core business of peer-to-peer rentals.

“We were focusing on flights and all these different businesses … we had to get back to our roots,” Chesky told Fortune’s Trey Williams recently. The strategy paid off in a big way, he said: “We did more than $3 billion in free cash flow in the last year, so that means we do roughly half a million dollars per employee.”

The takeaway: Leaders who act decisively in stormy times can reap big rewards when the waters finally get calmer. 

Alyson Shontell
Editor-in-Chief, Fortune

This article appears in the December 2022/January 2023 issue of Fortune with the headline, “Tough times make leaders better.”

Our new weekly Impact Report newsletter will examine how ESG news and trends are shaping the roles and responsibilities of today’s executives—and how they can best navigate those challenges. Subscribe here.