As business technology leaders, we’ve been through downturns before and have learned a thing or two about navigating macro-economic uncertainty and the geo-political forces that disrupt our world, our business, and our employees’ lives.
The question is, how do we navigate the choppy economic waters? Do we . . .
A. Hunker down — pull back, preserve capital, reduce spend, and ride it out with our customers?
B. Double-down — make the big strategic transformations our business demands now to emerge stronger post-crisis and go all in?
C. Strategic bet — focus on and shift funding to a few critical initiatives during times of uncertainty while tightening our belt in specific areas?
D. All of the above?
Here’s what we know in the Acceleration Economy. No matter the economic environment, customers are not slowing their demand for access, speed, experiences, and how they want to do business. Not only that, but their expectations are even higher. History shows us this is the time to focus on the most high-leverage initiatives and invest in smart technology, customer insights, and process transformation to modernize business models, co-create with our customers, and eliminate our business’ low-performing elements.
Tough times require us to make hard decisions. These often turn out to be smart moves that advance our company and organization. So, what can we do now to increase innovation as we navigate economic uncertainty and uneven markets?
Make Strategic Bets
Acceleration Economy CXO analysts — leaders who have been there before — agree this is not the time to hunker down and hope bad news doesn’t linger on. Rather it’s time to focus. Pick the one, two, or three strategic initiatives that will catapult your business to get closer to your customers. To name a few we are hearing about every day: Modernize your business models; restructure your organization to be more agile; or make the full move to cloud apps.
The most important bet is to surround and double down on your customers. Literally, sit down with your customers to better understand them and develop a game plan to lock arms with your best customers’ key people. What are your customers’ biggest needs that your organization can work on or co-create new capabilities to bring to market together? How can you adapt your pricing terms, increase your support effort to fill gaps, and/or bring in partners to add value? Bob Evans, my fellow Acceleration Economy analyst, highlights a few in recent articles. The first on Oracle and Microsoft coming together (“wait, what?”) to work with FedEx and the other with Google and automaker Renault.
Apply the 80/20 Innovation Rule
Traditionally, CIOs and business tech leaders would allocate 90% or more of the budget to meet current company requirements, leaving single digits for innovation and strategic bets. This mindset is changing. Because of the speed of business and advancements in cloud-based technology and low code/no code development, initiatives that took two to three years can be in motion in two to three quarters. Leading CXOs report more of an 80/20 “keep the lights on” to innovation mindset, noting that the latter can also drive more profitability and larger margins, not just growth.
Reward and Highlight Your Talent’s Innovation
Even in tough times and in the face of layoffs from the significant hiring in the last three years, talent is still a scarcity in many industries. This is an ideal time to put your arms around your top employees and challenge and empower them to drive changes required in the business. This mindset also uncovers and then allows the company to streamline inefficiency and squash bloat. This is the best of both worlds — innovation and efficiency.
At a recent roundtable I moderated, business leaders were all for innovation, but with a word of caution learned from the past. Avoid “shiny object syndrome.” This translated into deep discussions around a few key “traps” companies can fall into:
- Turning to tech to solve your challenges before you have nailed the right strategy and worked on your company culture that is ready to adopt the new direction is an important lesson from the past.
- And buying tech for tech’s sake, thinking this is innovation, is an expensive, cautionary tale. Leaders have learned the hard way that tech alone does not equal innovation.
Now Is the Time to Innovate
The bottom line is that a commitment to innovation in uncertain times can identify both inefficiencies and shift the focus to more strategic bets that advance the business. Remember the adage — “Never waste a crisis or a recession . . . to make changes to your business.” Accordingly, at Acceleration Economy, we do not see strategic initiative investments slowing down. What we do see changing from the last few economic cycles is the belief that technology itself is the innovation. Leaders are rallying their people; modernizing their processes; relying on data insights; and deploying today’s tech solutions more thoughtfully. Our bet is when we look back three or four years from now, we’ll marvel at the innovation that has been applied in the market during this choppy economic period.
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