A ripple. A whisper no one wants to say too loudly for fear of giving it more weight and pushing it towards reality.

“The market is down 15%.”

You’ve suspected it for months. Seen estimates in forecasts, experienced customers delaying decisions, and exchanged observations with peers at events and conferences.

Many conversations I have with businesses at the moment seem to follow a similar pattern.

Life in and around business is hard. Harder than it was eighteen months ago. Contraction, scale-back, reduced budgets, redundancies.

We can lay the blame on trade uncertainty, geopolitical instability, costs, confidence, or changing demand. In reality, I suspect it is an amalgamation of many interconnected factors in a complex web that no one can find the initial thread of.

It is uncomfortable. Changes the dynamic of entire planning discussions and leadership conversations.

Perhaps, for any individual business, the more useful consideration isn’t necessarily how we got here, but what we do with the information once we have it. Because the number quickly stops being a piece of market intelligence and begins influencing expectations, decisions and behaviour.

What do the numbers even mean?

Regardless of what is happening in the market, businesses are still expected to grow year-on-year. Protect margins, win customers, grow revenue. Forward trajectory only.

When you hear that the market is down by whatever percentage compared with the previous year, it is uncomfortable information. Discomfort, particularly for those who are tasked with delivering growth.

Reality check. An aggregated number of market contraction doesn’t really tell you where (or what) movement is happening underneath it.

What does that number really mean? What does it even tell us? Where does it come from?

It sounds so much more precise than the understanding it can provide. Leaving individuals and businesses to interpret and add context where perhaps there was none.

Opening even more questions around how reliable the information is, what the number is related to, or whether any particular market or geography is impacted.

One segment could be down by 30% while another grows. One geography could be stable and resilient while another struggles. Customers may simply be deferring investment rather than abandoning or withdrawing from purchasing altogether.

Sure, the headline number can offer context, but it isn’t exactly telling us what is happening in our particular position within that market.

At what point do we start to mistake market performance for company performance?

False certainty through partial knowledge

Once leaders start hearing that “the market is down X%”, two extremes appear to emerge.

The first is denial and unrealistic optimism.

The push to continue growing regardless. All that is needed is to do even more marketing (with less budget of course), and be more assertive with our sales conversations. Ignore the market signals and merely push it into submission.

The other is utter resignation and defensiveness.

Doom, gloom and disaster. The market is down. There is nothing that can be done, so there is a strong need to weather the storm and hope for the best.

Neither of these is inherently helpful. Nor practical. It certainly is not providing strategic direction either.

I would almost go as far as saying that they are both potentially limiting for business.

We stop questioning what is actually happening in the real world. Building new assumptions based on incomplete data, and then developing strategy or decisions around them.

The more practical and useful response isn’t necessarily to find that middle ground between the optimistic or pessimistic reaction. Rather, it remains in curiosity. To acknowledge what we know while continuing to delve into the questions that sit just below the surface.

It may well be that the challenging conditions are confirmed. Yet the value there comes in knowing that the decisions that follow are fully grounded in what is happening within your market and its direct impact on your business, rather than an uncertain top-level number.

Information rather than destiny

There will always be elements outside of our control. In business and in life. How we choose to query the evidence and decide what to do with it, however, remains ours to influence.

It is easy to feel a dash of pessimism when hearing rumblings or seeing evidence of a slowdown in the market. Equally, ignoring the signals in pursuit of a plan made under different conditions is unlikely to serve the business particularly well either.

Realistically, a contracting market matters. It changes what is achievable, forces uncomfortable decisions. The challenge is making sure that such evidence is neither dismissed nor made to become a defensible explanation for anything that follows.

Perhaps that remains the test of how businesses weather the changing tides.

As with many elements of business, a number should provide the intelligence on which you can build and derive direction.

It should influence decisions. It shouldn’t make the decisions for you.

Photo by Jonny Gios on Unsplash

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