The Gestalt of Corporate Health: Seeing the Total Picture — in conversation with Lisa Pollina
As we catapult toward the next fiscal year, questions continue to emerge about how this year will perform compared to the last two years of economic disruption, which were catalyzed by a global pandemic and worldwide political unrest. How can businesses best understand their relationship to the wider economy and prepare accordingly for a healthier future?
We asked Lisa Pollina, a global corporate executive who has distinct expertise in assessing and advising global business leaders on worldwide macroeconomic trends, what businesses will need to do, or change, to keep or resume growing.
Lisa, time and again, you’ve demonstrated the ability to gauge corporate health — through the wider lens of the global economy. How do you define corporate health, and what should companies watch for as they chart their next steps in a post-pandemic world?
What is a healthy organization? One that has a healthy balance sheet and also makes prudent decisions that improve the health of internal and external stakeholders.
For any enterprise to thrive — from a small- to medium-sized business to a multinational corporation — every aspect of its operations needs to be healthy. The first and most essential aspect of corporate health is financial health. That means having a healthy cashflow as well as the trust of investors and partners to access capital for continued growth. The second key measure of corporate health is the level of satisfaction of a company’s universe of stakeholders, from employees to customers, the community in which the company operates, and ultimately, its shareholders and investors.
Organizations need to look at their position from a ‘gestalt’ perspective, seeing all influencers of business growth. Looking forward to their next destination, they will need to work backward to create a clear timeline — one that enables them to meet key performance indicators of the health of their business and inform any course corrections. Simply trying to get 1–3 percentage points better in revenue or profitability each year does not lead to sustainable growth.
You can’t do that apart from the bigger picture of the global macroeconomy. For example, our lives continue to be affected by COVID-19, as new variants emerge. Trends linked to the post-pandemic world are clear: an increase in remote work puts downward pressure on the commercial real-estate market and curtails business travel; tourism-dependent countries continue to grapple with how to lure back visitors while avoiding new outbreaks of infection; and the Internet dominates as the go-to place for many activities of daily living, such as shopping, banking, and even health appointments. New products and services are emerging to meet the demands of a significantly altered world, yet global economic growth remains uncertain.
The words of the day are inflation, inflation, and inflation. Over the past two years, inflation rates have doubled in 37 of 44 advanced economies, according to Pew Research Center analysis. Corporate leaders need to stay alert to the warning signs of an ‘economic superstorm,’ ask the tough questions, and make often-difficult decisions — even if doing so may mean alienation from their own ‘tribe’ of internal and external stakeholders.
Every prodigious shift in the global economy, including major recessions, affects all businesses — but not always equally. Some businesses and entire industries are hurt, while others open new doors to growth. Bottom line? It’s about building trust with your employees, shareholders, and customers. Trust is the new currency in business — and the imperative ingredient as we move into what will be a unique 2023 and beyond. Make sure that at every decision point you are engendering trust, serving the stated purpose of your company, and taking the steps needed to ensure its stability and longevity.
Lisa Pollina is a business executive who has negotiated over $50 billion in corporate development deals throughout her career. She provides private equity investment advisory services for alternative asset manager Ares Management (NYSE: ARES) on both Growth and Special Opportunities portfolio investments globally. She also serves on the Board of Directors for Munich RE representing the Americas and the ESG water technology firm Energy Recovery. Named one of the Top 25 Most Powerful Women in Finance by American Banker magazine, she has been a seven-year appointee to the Federal Reserve Bank of the United States’ Working Group on Global Markets, providing perspectives on macro trends worldwide.