It seems that the stock market is a leading indicator for future economic behavior. Even if it is not true this time, businesses are cutting back to bolster their profits to make sure they are prepared for anything that happens. So what should organizations do about the big digital trend facing them as well? There are three responses that organizations will likely consider in the coming months and years. Organizations can cut back on the digital bet, double down on digital or keep the bet constant. No matter what the direction changes will be made to tune the digital investment.
Digital Cut Backs:
There are a range of cut back approaches that can take place, but some things are changed forever. What shouldn't be changed is the "outside in" view of customer / constituent interactions because organizations will be punished in the long term for ignoring digital customer demands. Organizations that are leaning in this direction should pick digital options that bear short term financial benefits. This will work in the short term, but there are risks that your competition will stay the course and make smart adjustments to hurt your organizations future. A slash and burn strategy is a sign of desperation and it does not bode well except for a very short period of time.
Digital Double Down:
It might be time to accelerate certain digital efforts especially around dealing with expensive knowledge or service work. It might be time to apply cognitive computing to the more complex work that is characterized by ambiguity and dynamic information rich problems. This kind of work has been largely overlooked for cost reduction. Those organization that are aggressive with digital may now pay significant attention to this rich pay dirt. Digital can be aimed at this fluid type of work to displace cost. This is a bit riskier strategy, but these times warrant a bit more risk because there are few sure things right now.
This approach keeps the focus on "staying the course", but it prioritizes digital activities that deliver hard benefits first. This includes assertive customer prospecting, optimizing operations with more business intelligence combined with processes improvements and refining policies / business rules for better tangible results. Some organizations will cut staff to offset the incremental digital costs. Nobody wants people cuts because they are generally random, but focused cuts driven by digital results is a good proven strategy.
The power is shifting back to the financial folks and they will be relentless in their attacks on any investment that doesn't deliver hard benefits in a timely fashion. Do not "cave in" and cut digital in a random fashion. Be smart in aiming your digital efforts in the best way for your organization.