While the run-up to the UK’s EU referendum constituted a time of uncertainty for business, the result heralds not just another, more extended period of uncertainty, but a more intense one as well. The continuation of the status quo is now no longer a possibility, and the impending change of ministerial leadership means that the nature of what will replace it is not yet clear. Quite apart from the stock market and currency volatility, the differing possibilities for Britain’s post-Brexit trading relationships make it hard to predict how companies operating here will be affected.
The difference between membership of the EEA, as held by Norway, Iceland and Lichtenstein, and a full ‘hard exit’ from Europe is vast, and in any case, the permutations for the global trading agreements that will now have to be renegotiated are myriad. For both UK companies trading internationally, and for overseas companies operating here, it will be some time before there is clarity on what the business environment will look like.
Business leaders must use that time wisely. No respectable affected company will have been without a contingency plan for Brexit, and most will have examined the EEA and ‘hard-exit’ scenarios, but the reality of the result will put those plans to the test. Finance and business leaders will have to engage in scenario analysis very different from anything that most of them will have experienced before. The need to understand the detail of a company’s relationship with markets, economies and regulatory frameworks across its whole geographic footprint has never been greater.
The companies that will continue to thrive in the post-Brexit world will be those that are able to move quickly and easily to adapt to the uncertainty and changes of the next couple of years. That will require not only a truly precise understanding of what really drives value in their organisations (and that is rarer than might be expected) but an objective assessment of different scenarios for international trade settlements, and how they might affect a company’s performance.
Making this happen requires a very high degree of communication and co-operation between management, finance, marketing, sales and operations – as well as the ability to integrate and model the data associated with these functions, and analyse it without restrictions. This is an enormous challenge, but recent developments in predictive analytics and learning algorithms mean that, with a focus on the right data and strategic objectives, it can be achieved within a matter of months. Even organisations with the most basic analysis capability do have time to position themselves well to adapt to the consequences of today’s result. And there will never be a more valid reason to invest in a modern analytics capability than the political, economic and regulatory complexities ahead.