Top CXO Priorities (and Advice) for Resilience & Growth During Uncertainty
- February 28, 2023
According to our annual Innovation Index research, organizations are more prepared than ever for global changes and are ready for growth. The fear of negative impacts from climate change, natural disasters and health crises has dropped from 61% to just 23% since last year’s study.
The pandemic-induced changes and acceleration of digital technologies have paid off. But the impending recession was playing on the minds of some of our respondents when we surveyed them in the middle of 2022.
- Organizations have mitigated disruptions to supply chain operations — a year ago, more than two in five (43%) feared a negative impact, today it’s down to 10%
- Fear of competitive threats and disruptions has dropped from 48% to 25%
- 16% of organizations said they feared negative impacts from economic factors
- 53% did not anticipate any changes to their operations and overall performance in the next two years
Organizations must become perpetually resilient to quickly pivot and thrive in the face of constant change; brought on by continued global, competitive, and macroeconomic challenges.
So, what’s next? The business and IT leaders we surveyed said that controlling costs/increasing profitability (48%), and increasing process efficiency and productivity (37%), were among the top three focus areas for the next two years. Organizations must become perpetually resilient to quickly pivot and thrive in the face of constant change brought on by continued global, competitive and macroeconomic challenges.
Business and IT leaders should prioritize the following:
1. Remove complexity and cost by investing in foundational and digital enterprise technologies
According to our study, more than 50% of organizations most effective at driving reductions in operating costs have integrated modern technologies into their business processes, with 89% using partners to assist in the modernization and transformation efforts. Besides, leaders are investing in foundational and digital enterprise technologies — specifically Cloud, AI and Predictive Analytics.
- Organizations using public cloud solutions are up by almost one-third, from 58% to 76%, boosting financial and ROI value.
- AI is trending fast, and organizations say AI is helping them reduce risks and increase resilience:
- Three quarters (75%) of organizations are now using AI versus 57% last year;
- One-third say that it is in place in most or all functions; and
- 93% of companies expect it to be in everyday use within two years and 100% by 2027.
- Predictive data analytics:
- 46% are using it today;
- 70% will use it in two years, rising to 94% in the next five years.
According to our study, more than 50% of organizations most effective at driving reductions in operating costs have integrated modern technologies into their business processes, with 89% using partners to assist in the modernization and transformation efforts.
By the end of 2022, 30% of spending on IT and business services was driven by the need to strengthen digital resilience to adapt to future business disruptions rapidly. NTT DATA expects this number to grow in FY2023 and 2024 as funding shifts enhancements, modernization, and digital transformation efforts, yielding agility and resilience for organizations.
- Shift to a variable cost structure that allows you to operate on a consumption model as opposed to a capital investment model
- Invest in core competencies and the areas that directly impact how you deliver value to your customer, optimize the rest; invest in customer-facing applications
- Lean out your development value streams; identify and eliminate waste and bottlenecks that exist; get your teams to focus on value-added activities
2. Maintain your fast-twitch muscles and find ways to play offense to meet stakeholder demands and impact performance
Fast is today’s motto, especially for those wanting to get ahead of disruptions. And the good news is that three out of five organizations (58%) in our survey say that the pace of technology change will positively impact their operations and performance. This result is heartening (and also expected), especially after the exponential rise of technology adoption during the pandemic, which has set the bar for customer engagement even higher. We have grown used to that speed and quality today and expect no less from organizations.
To sustain or improve growth expectations, organizations must continue to focus on their organization’s ‘fast-twitch’ muscles. They must rely on digital technologies to play offense during the headwinds, even as new entrants challenge existing value propositions and customer needs change quickly.
- Launch products and services quickly and incrementally after testing your hypothesis and market conditions. Once thriving, build the scale and additional features needed for broader growth and success with a focus on the following:
- Engaging customers across new channels
- Bringing market extensions and new concepts to market
- Ruthlessly prioritize new development work with a focus on:
- Customer facing applications
- Areas where technical debt is preventing you from realizing your commitments
- Funding products that support value streams
- Don’t stop innovating and improving
- Embrace continuous improvement models as opposed to wholesale change and start by identifying those incremental changes that will have most impact for you and your customer
- Look for ways to increase efficiencies by investing in new ways of working and increasing internal collaboration
- Find ways to automate intelligently; freeing up operational time let’s your team focus on improving work as opposed to just getting things done
3. Hold the line on new ways of working and innovating to stay relevant and ahead of the curve
We all learned how to operate differently during the pandemic. And organizations that were able to pivot quickly did particularly well. But pivoting is difficult unless you can innovate. Innovation emerged as a key theme in our survey, and organizations reinforced how critical it is to create and sustain a competitive advantage. Remember, innovation need not be groundbreaking or disruptive. 42% of our survey respondents said creating gradual, continuous improvements on existing products and services would significantly impact their organization over the next two years. Comparatively, as compared to innovation that “creates a new technology or business model that disrupts an existing market” or even less “creating a new technological breakthrough that creates a new market” (9%) altogether. And leaders in our survey recognize the importance of the right business models on product and service innovation too (43% vs. 36%) But developing an innovation culture is challenging. Even as more than two in five respondents (41%) feel they are above average at developing an innovation-focused culture, inadequate and outdated technology (57%), lack of worker incentive (51%) and restrictive budget (43%) continues to hold organizations back.
- Embrace global delivery models that broaden the available talent market
- Double down on new ways of working and invest in developing a talent development model, which will give you the skills you need over the next three years
- Over-invest in collaboration and the tools your enterprise needs to work together
Focusing on these three key priorities will help control or, in some cases, reduce operational costs, increase profitability and productivity, and position organizations to become more resilient in the face of constant change.
You don’t have to go it alone. Another interesting piece of research from the Innovation Index revealed that confidence in using partners is high in helping an organization become modern, resilient and agile. 66% said their partners had a significant impact in deploying additional security measures and adjusting their risk management approach (47%), and creating new products, services and business models (45%). And more than 50% of business and IT leaders said their partners significantly impacted modernizing their technology infrastructure.
To learn more, check out our eBook: How to Drive Perpetual Resiliency.
To better understand where you are on your resilience journey, take our quiz.