To drive long-lasting, holistic business success—even during times of uncertainty—balance risk mitigation with making gains
Let’s set the scene: The past few years have been an economic rollercoaster. Many organizations entered 2023 at a low point, leaving little room for error, and it’s still unclear whether this year will boom, bust, or end up somewhere in the middle.
Thanks to this ongoing economic uncertainty, business leaders don’t have the time—or the patience—to wait for results to materialize over long, drawn-out timelines. You want to see your strategic decisions and investments make an impact now.
But, of course, you also don’t want to sacrifice long-term, holistic business success in the name of hitting short-term financial goals.
So how should leaders frame 2023 decision-making to deliver fast results—as well as lasting impact?
Our perspective: The companies that come out on top this year—and in the future—will be those that manage to mitigate near-term risks while still achieving quick wins and making long-term gains.
To strike the right balance, we propose three digital-first strategies:
Last year proved to be a course-correction for an industry that counts innovation as a core value: tech.
Layoffs abounded for Big Tech and startups alike, with more than 159,000 tech workers total let go in 2022. Up-and-coming innovators saw formerly eager investors pull back or had their valuations slashed. Other startups folded altogether.
Does this mean “innovation” has moved from buzzword to bad word? Should organizations across industries—tech, healthcare, manufacturing, banking, utilities, and others—be afraid to create products and services that are new, different, and exciting?
We say no. In fact, there are already new players rising from the ashes of Big Tech, while still-standing startups are capitalizing on the hot tech talent flooding the labor market. If more established organizations err too far on the side of caution, they risk getting blindsided by new market entrants.
That’s not to say you should shoot for the moon. Instead, focus on sure bets by fostering an environment that supports a healthier approach to innovation.
That means building processes for testing, learning, and iteration into innovation cycles—and creating a culture that tolerates failure. In this type of environment, product teams have the opportunity to learn from their mistakes and course-correct ahead of the official market rollout—or even scrap everything and move on to building something customers actually do want.
One of the best ways to support such an environment? Hire top-tier tech talent, including C-level folks—some of whom may be on the market for the first time in years or even decades.
Bottom line: It doesn’t matter what your business model is, or if you don’t consider your organization a “tech company.” A healthy innovation pipeline is not only a big gain. It also lies at the heart of building a thriving digital organization.
Hiring a seasoned CTO or CIO—someone who can help to develop and champion sustainable innovation processes—will allow your organization to avoid needless risk in the name of newness.
Plus, such professionals understand how to leverage proven, market-ready technologies within innovation processes—so your organization doesn’t have to start with a completely blank slate when building new products and services.
Last year brought some significant AI breakthroughs, and the excitement around artificial intelligence has continued into 2023. Just look at the exhibitor directory for the 2023 Consumer Electronics Show, in which 579 companies were listed under the “Artificial Intelligence” category—more than “Metaverse” (176), “Cryptocurrency” (19), and “Blockchain” (55) combined.
Many consumer and tech news headlines have focused on generative AI models such as DALL-E and ChatGPT. But generative AI—that is, artificial intelligence that can produce new things instead of simply analyzing or acting on existing data—isn’t only good for making weird digital art or helping schoolkids write essays. It has true potential for business use cases.
For example, digital-health startup Abridge is using generative AI to turn audio from doctor-patient conversations into summarizations or billing documentation, which could help reduce provider burnout while also increasing patient satisfaction and outcomes. And Salesforce is using generative AI techniques to develop a computer-code generator intended to save time for software developers.
The caveat? You need data—lots of clean, organized, high-quality data—for these kinds of applications. Abridge, for example, says it has a “proprietary dataset derived from more than 1.5 million medical encounters and more peer-reviewed papers about medical conversation AI than any other entity."
Of course, generative AI is still evolving. We’re not suggesting every organization needs to jump feet first into it right now. But we are saying every organization needs to be able to use data to surface business insights. And, as we note in our 2023 Industry Outlooks, there are plenty of ways to apply data and analytics to use cases that matter to a business right now.
For example, data-driven insights help private equity firms develop a more comprehensive understanding of a potential target or explore deals in a new sector. But to gain such insights, firms first need to build a knowledge bank of good data, including industry-specific technology and operations KPIs and business profiles.
Meanwhile, utilities can leverage data to improve performance metrics and asset use. Yet many are hamstrung by unreliable data originating from disparate sources and systems or from operating in multiple data silos. We found utilities that invest in data governance, as well as in hiring or upskilling to boost data fluency across their workforce, are much better positioned to turn data into a driver of value.
Bottom line: Your organization may have no interest in exploring some of the newer, sexier applications for data, such as generative AI (yet). But the ability to access and understand data has become table stakes for every industry—particularly when it comes to providing a better and more unique customer experience.
Organizations that lack the right data (or access to the right data), proper data governance, and data fluency don’t just risk organizational inefficiencies or losing their competitive positioning. They also open themselves up to inaccurate forecasts, lost revenue, expensive fines due to regulatory noncompliance, and much more.
Today’s challenging economy has led many businesses to implement, or at least consider, cost cuts. That may be the right move for some organizations, depending on one’s financial position as well as other factors. But a careful hand is needed to guide such decisions—because cutting the wrong things can create some major risks.
For example, nixing fundamental—and necessary—changes to digitize business operations can put organizations far behind their industry competitors (not to mention born-and-bred digital natives). That’s because digital isn’t a cost center—it’s a strategic resource for accelerating growth and driving better business results in today’s world.
If your goal is to future-proof your business—not go backward—you shouldn’t put business-critical investments on the chopping block. Instead, find efficiencies in new places.
For example, optimizing your operational processes—particularly by leveraging AI and machine learning (ML) to automate where you can—not only makes your organization more efficient. It also creates a better work environment, removing from employees’ plates the types of tasks that have been referred to as dull, dirty, or dangerous. They can instead focus on higher-level work or be reskilled for new digital-centric roles.
Say a business automates some of its data-entry processes. What about the people who formerly performed those tasks? Well, they can be upskilled in data fluency and trained on analytics platforms, allowing them to surface the insights and trends buried within the data. The employees get more interesting work, and the organization gains more valuable outputs from these workers.
The benefits of this strategy don’t cap at the potential to build a more productive, more digitally savvy workforce. Our proprietary data shows that process optimization also offers serious overall savings potential—anywhere from 5% to 30%—in the form of reduced labor hours and operating costs. For example, when we helped a healthcare payer optimize its processes—including by deploying automation—the organization realized $8 million in annual labor savings.
(What accounts for the range? It depends on an organization’s goals and how quickly it wants to realize benefits. Quicker wins, such as process standardization, offer 5% to 10% overall savings potential within a few months, while hyper-automation—or automating everything that can possibly be automated within an organization—will yield the greatest potential savings, but may take six to 24 months to fully deploy.)
And optimization doesn’t begin and end with processes. Other strategies—some of which offer up to 60% overall savings potential—include redesigning organizational structure, outsourcing service delivery, or right-sizing telecom/network/cloud spend, among others. Again, it all comes back to your goals and needs. (Pro tip: We’ve seen the best results when businesses pull organization, process, and technology optimization levers together.)
Bottom line: The difference between cost optimization and cost cutting is more than a matter of semantics. Optimization is about improvement—not whole-cloth elimination—meaning you come out better than before, not worse off.
By balancing smart digital investments with optimization efforts, you can avoid risk to your competitive positioning and drive gains—including cost savings, improved productivity, and a more effective workforce for the digital world.
Balancing efficiency and innovation, hitting current financial goals while driving better business results over the long term—it takes a different mindset to operate this way. You need one foot in the present and one in the future, one eye on the details and one on the big picture. And—we hardly need to say it—2023 promises to be another challenging one for businesses, meaning it will feel all too easy to focus more on the here and now.
But implementing digital-centric strategies, tools, and ways of working—including, but definitely not limited to, the three we discussed here—will help organizations both mitigate risks and make gains, from quick wins to long-lasting improvements. And that’s how leaders will drive positive progress for their organization this year—as well as deliver lasting impact well into the future.
This is Digital, Episode 12: Leveraging Innovation for Companies At Any Scale
This is Digital, Episode 11: Bringing the physical and digital worlds together with iHeartMedia