Even as recession indicators sound the alarm, financial analysts and even central banks remain split on the likelihood of a recession. In July, Scotiabank economists downplayed the likelihood of Canada falling into a recession in 2022, pointing toward a high level of pent-up demand which should keep the Canadian economy from falling into a recession.
However, with inflation continuing to rise, low consumer confidence and rising interest rates, now is a good time to revisit lessons learned from prior downturns — in particular that industry leaders accelerate in downturns by proactively and speedily investing in initiatives that matter. Right now, those investment decisions are all about digital, and this moment presents clear opportunities to invest in drivers of future growth.
That growth imperative is now complicated by the unique “triple squeeze” on performance — inflation, scarce/costly talent and disrupted/constrained global supplies — that represents a new combination of variables for IT leaders.
To tackle the triple squeeze head-on, organizations must identify actions that will drive competitive position. Organizations should focus digitalization on differentiating their cost and capital structure, as well as products, pricing, employee value proposition (EVP) and risk profile.
Take 9 Key Actions Across Three Main Areas
Manage resources and spend strategically
- Trade-offs: Create a prioritized list of the resource trade-offs you will make in cost management and budgeting. Develop a clear narrative that explains your thinking and that you can communicate to stakeholders to build buy-in.
- Cloud migration: Accelerate movement to the cloud as part of purposeful digitalization of critical business needs. This creates the potential to reduce the impact of rising energy costs and supports the movement to a more agile adaptive organization.
- Workflows: Radically challenge collaboration approaches, workflows and processes to make them faster and simpler.
Be agile in securing digital talent
- Work models: Fundamentally rethink the way your organization leverages its people. Consider flexibility, location, hours, part vs full time, and in-house vs. outsourced.
- Employee value proposition: Clarify your EVP so you are positioned to attract and retain the right digital talent.
- Digital talent: Aggressively seek to secure the right digital talent needed to help you accelerate your digital plans. Snap up talent cut loose from digitally native companies that retrench.
Accelerate key digital and technology initiatives
- Customer and employee vision: Reimagine your customer and employee value propositions to accelerate the requisite digital investments.
- Predictive and autonomous: Invest in predictive and autonomous digital projects that make your organization faster and leaner, including in its decision making.
- Digital metrics: Narrow the metrics you use to measure digital initiatives and monitor their progress to ensure you focus on the few that align to outcomes.
Watching and waiting is not an option
The specific pressures that leaders face today vary by sector and industry — and the depth of impact from the triple squeeze and a possible recession. It might seem prudent to wait and see the full impact of these headwinds but worsening economic conditions will make these actions more important, not less.
Sanil Solanki is a Managing Vice President at Gartner, Inc. where he advises clients on digital economics, IT financial management and the business value of IT. Gartner analysts will provide additional analysis on leadership through inflation and recession at Gartner IT Symposium/Xpo 2022.
