Digital Leaders Should Remember The Cliché That Fortune Favors The Brave
Brands have often viewed digital business as an efficiency play: Think of the cost take-out mindsets behind customer service chatbots or the high-street retail push into e-commerce. This positions digital leaders well for any substantive downturn. In Forrester’s Digital Business Strategy Survey, 2022, 75% of North American digital strategy professionals estimated their budgets wouldn’t decrease next year.
If anything, inflation means digital budgets are flat in real terms — but that means pressure from boards and senior executives to show the ROI of these investments.
Digital leaders: 2023 should be a year of focus, prioritization, and building foundational capabilities while the budget is there. Leaders should also prepare for the upturn when it comes. Double down on investments that extend your lead over digital competitors, as now is not the time to be timid. To be bold and brave in the face of a downturn, you should:
- See 2023 as an opportunity to refine your digital talent management strategy. Yes, hiring freezes have become the norm for many brands, and headcount reductions are affecting sales, marketing, and poorly performing divisions. But these developments don’t alter the overall talent trend: Brands face a critical dearth of digital skills, and finding and developing folks with those skills remains a pressing challenge. Don’t lose focus of your medium- to long-term business priority: the need for digitization and a future fit talent management strategy. Use the coming months to build a strong digital team by attracting the right digital talent under less time pressure than during boom times. To fully understand which digital investments have merit, invest in not only product, asset, and experience creation talent but also testing and measurement experts. Coordinating those two functions will be key to your success, but that may require those groups collaborating more than usual. If so, you must sell each group on the merits of the engagement.
- Shift your focus from operational to financial metrics. Some 71% of digital strategy pros in Asia Pacific say that digital initiatives will have a lot of impact on future business growth. Now’s the time to test those assumptions and tie digital strategy to business metrics — showing the customer story and, more importantly, the money story your board demands. Operational metrics like digital adoption, cycle time, and digital customer experience are insufficient, unless you rigorously tie them to financial metrics like cost and revenue at the organizational level. Too many digital leaders have relied on the touchy-feely story of “customers are rapidly becoming digital and we need to respond to all of the digital disruptors” as a way to justify investments. Tell your board that you’re taking a focused growth approach to the digital business to get ahead of retrenching competitors; give specific examples of which projects will leapfrog competitors; and forcefully communicate that they shouldn’t fear failure as much as inaction.
- Winnow your partner list to those with the broadest skill sets. Due to the digital talent shortage, brands’ digital teams have an oversize reliance on contractors. Many of those contractors are raising their prices to match inflation, so you must become more disciplined about which of their services you purchase. Anything that they historically offered as “free” (e.g., trips to innovation studios, innovation newsletters) was never really so, as it was bundled into the price. It’s time to home in on outcomes and demand that their pricing reflect this. But this is a delicate balancing act: If you push on price too aggressively, you’ll end up with lower-quality services. Instead, focus on key strategic partners with whom you’ll work more closely; terminate partnerships that have limited scope or capabilities. Once you start the cull, your remaining partners will be just as scared as you are (maybe more so) and will fight for the extra business.
- Help IT — facing its own inevitable cuts — help you. In this downturn, as in every one before it, IT will see the biggest cuts. Eventually, as the backlog of IT projects grows, this might start to slow down digital delivery. If your digital team doesn’t have dedicated developers, consider shifting your own talent strategy and bringing some to the team. To speed up digital delivery, train your team on low-code tools and work with IT colleagues on low-code governance. To help with prioritization for IT or for your own development talent, pore over your wish list. Kill, or at least significantly de-emphasize, your investment in “innovation theater” projects. This should make it easier for your peers to contribute to the organization’s near-term digital success.