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With inflationary pressures, a dip in consumer confidence (ANZ-Roy Morgan, March 2023), and recession fears creating uncertainties, major investment projects are back in the boardroom. While it might be tempting to put digital transformation on hold, a recent PwC survey showed that 84% of New Zealand business leaders are moving ahead with systems and automation projects and 63% in innovation initiatives.
Digital transformation can be challenging in the best of times, so how do leaders navigate new initiatives in a dynamic environment? Here we outline three innovation and renovation priorities that best get buy-ins, lower risks, and position a company now and for the future.
#1. Digital roadmaps that solve low-hanging pain points:
Companies investing in digital technology focused on resolving immediate pain points can strengthen preparedness for the impacts of inflation and recession. Operational efficiency and delivery are key pressure points of rising costs, and many business leaders are re-evaluating if their current approach is sustainable. A well-designed digital roadmap involves input from relevant stakeholders across the organisation – from executives that set the strategic direction to end-users of the digital product. When designing the minimum viable products, ensuring the deliverable relieves a lower-hanging pain point can provide immediate benefit to the business and increase stakeholder buy-ins.
#2. Reduce risks of failure by innovating for existing markets or customers
Investing in digital technology focusing on innovations for existing markets or customers reduces learning curves and risks compared to entirely new products or services. According to analysts at industry research firm CompTIA, companies are expected to continue investing in technology research and product development, but with some conditions. One of the conditions is that the R&D focus will be on high-margin segments with a pragmatic approach. This means that R&D efforts will be directed towards expanding existing markets rather than creating growth from unstable markets. In particular, R&D will be directed towards hot needs such as security, cloud, and AI, rather than newer markets that have yet to prove lucrative.
#3. Digital investments that respond to industry changes
Meso-economic trends will likely continue regardless, and business leaders need to prepare proactively. At a recent Marketing Association event, topics such as first-party data and web analytics were top of mind. While many businesses have started preparing and investing towards a cookieless future, few felt confident about the technological changes and their organisation’s approach to data. It is important to remember that digital investment is more than just new technology. It includes upskilling staff on the use and understanding of the digital solution, changing culture, creating new processes, and phasing out legacy systems. Halting investments critical in responding to change will create long-term disadvantages and hinder a business’s ability to thrive when the economy recovers.
In times of uncertainty, digital innovation and renovation can help businesses strengthen their preparedness for change. By focusing on resolving immediate pain points, innovating for existing markets or customers, and responding to industry changes, businesses can reduce risks and position themselves for success now and in the future.
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CIO. “The Upshot of a Bad Economy: Recessions Spur Tech Innovation | TechTarget,” n.d. https://www.techtarget.com/searchcio/feature/The-upshot-of-a-bad-economy-Recessions-spur-tech-innovation.