In Rough Economic Waters, Make Digital Innovation Your Lifeboat

This is #1 in a series of articles about the ways digital innovation can help businesses remain resilient in the face of economic disruption. 

Just when fears about COVID’s impact on the economy seemed to be dissipating, fear of a recession is top of mind again. The waters sure look choppy, but how long the downturn will last, how severe it will be, and even the definition of a recession are all up for debate.

However, there is consensus around one thing. Even in a time of shrinking budgets, digital innovation shouldn’t be on the chopping block. Everyone from industry analysts and economists to business leaders and government agencies widely agree on this—and for good reason. The right digitization initiatives can deliver both critical wins in the short term and make organizations more agile, insight-driven, and productive over the long term.

Here are just a few reasons why: 

• The elasticity and scalability of cloud-based solutions are a big advantage in the face of variable demand. 
• Digital customer experiences are increasingly effective—and increasingly essential—in securing customer loyalty. 
• Digitization enhances timely insight into actual demand, operations, costs, and quality, enabling businesses to maximize value even when demand is falling. 

The fresh lessons of Covid

It is rare to see so much agreement about strategy across the board. Then again, the COVID recession is still fresh in everyone’s mind. And as a 2022 IMF report found, businesses that kept digitally innovating in 2020 and 2021 achieved significant short-term value for their efforts versus laggards. Whether they wanted to or not, COVID forced organizations to digitize if they were going to serve customers and keep operations running. Enterprises that chose to stay committed to innovation saw immediate payoff. 

As a 2022 IMF report found, businesses that kept digitally innovating in 2020 and 2021 achieved significant short-term value for their efforts versus laggards.

“If there’s anything we’ve learned in the last two years, it’s the importance of adaptability,” argues the US Chamber of Commerce. “Change is inevitable, so the ability to pivot and be flexible is key to surviving any recession.” 

Now, as we emerge from the initial disruption of 2020, businesses are recognizing the longer-term benefits of their digital investments and have decided to double down on them, with 60% of executives calling digital transformation their most critical growth driver in 2022, a recent PwC survey found. 

The timeless lessons of history

When revenues fall and projected revenues fall even faster, businesses are forced to make tough decisions. And sometimes the hardest decision is to keep spending on initiatives that have not yet yielded results. However, freezing in place can actually be riskier, even if it doesn’t feel that way in the moment.

Recession after recession has shown that innovators not only fare better during downturns but prepare themselves to outpace growth when the economy rebounds, according to a Harvard Business Review (HBR) report. In their analysis of the major recessions since 1980, the top 10% percent of companies actually saw their earnings grow, both during the downturn and beyond. 

The ones who went out of business? The ones who “switched to survival mode, making deep cuts and reacting defensively,” according to the HBR. 

The word on the street

Business leaders may be bearish on the economy, but they are very much bullish on technological innovation. 

According to a new CNBC Technology Executive Council survey, more than three in four tech leaders expect their organizations to spend more on technology this year than they did in 2021. Not a single respondent said they planned to spend less. 

“In other cycles we’ve seen in the past, tech investment was one of the first casualties,” Nicola Morini Bianzino, Chief Technology Officer at professional services giant EY, told CNBC. “But after the pandemic, people realized that in a down, or even potentially recessionary, environment, we still need to keep our technology investments.”

But wait, isn’t digitization risky and expensive?

It can be, especially if you rely on traditional code or low-code. But it no longer has to be. A new codeless approach to development can speed development timelines by 3X or more, so that you can innovate at the speed of changing economic conditions. 

READ: 3 Ways to Recession-Proof Your Business Using Codeless