SUMMARY
Too many leaders succumb to the fear of missing out (commonly known as FOMO) when new technological trends emerge, demanding that something - anything - using this new technology be implemented immediately. This leads to wasted investment, missed opportunities, and disillusionment about the real prospects for the business. Emerging technologies are essential and require attention and investment, but business leaders must be patient and avoid falling victim to the hype. Responsible exploration is crucial. We present the main lessons on innovation and the key takeaways for leaders to stimulate their company's growth through transformation.
Economic uncertainty, socio-political unrest, environmental disasters, and global health crises continue to impact individuals and businesses worldwide. Yet, amidst each of these disruptions, managers must maintain forward momentum to ensure the success of their organization's teams.
Last year, we saw technology giants fall due to poor management, economic turmoil, a lack of innovation, or a combination of unforeseen circumstances. For the past months, most flagship companies in the technology world have been making significant staff cuts. Simultaneously, new leaders are emerging: companies that have managed to find opportunities in our world of perpetual uncertainty, seize the moment, and take risks to move forward.
Today's digital world demands vigilance. Technology leaders must not only prepare their teams and organizations for disruptions but also ensure that their products and services are agile enough to adapt to unknown future changes.
Global existential forces are not the only drivers of disruption; technology leaders must also contend with new regulatory pressures, unknown cyber threats, a growing IT skills gap, breathless hype about emerging technologies, and more.
Here are five lessons the technology world has learned in the past year about disruption, innovation, and constant change, and the key takeaways for leaders to stimulate growth through transformation in the coming year.
The current economic uncertainty demands strategic digital investment
Inflation and economic recession are challenging businesses worldwide. In times of economic slowdown or downturn, conventional wisdom suggests cutting costs, including technology or IT expenses. Yet, Gartner data indicates that IT spending will continue to rise (albeit tempered by inflation), with a growth forecast of over 5% for the next 12 months.
Technology must play a role in responding to economic turbulence, a potential recession, and recovery. In the 90s, when IT was strictly associated with so-called "back office" activities, it was a cost that could easily be cut. Today, IT and the marketing technology stack both generate efficiency gains and revenue and cannot be reduced without harming business performance.
Economic pressure heightens the urgency to make digital investments pay off, and leaders continue to demand better returns on technology spending. The current economic conditions offer businesses the opportunity to strategically invest resources in technological solutions. Leaders must ensure they are maximizing the return on investment for the business through strategic technology deployments.
For example, migrating to cloud infrastructure services and cloud-native applications can improve IT costs and operational efficiency. Using Artificial Intelligence and machine learning for predictive modeling of consumer behavior to offer a personalized customer experience will reshape revenue streams and optimize conversion rates, encouraging consumer purchases.
Within all business functions of the company, examine opportunities to use technology to reshape revenue streams, alter cash flows, or create new value propositions. Through strategic digitization, leaders can help their business emerge from economic disruptions stronger, leaner, and more innovative.
Labor market volatility is a significant impediment to innovation.
Technology leaders are no strangers to labor market volatility.
From the Great Resignation phenomenon that emerged in 2021 to the mass layoffs at digital giants making headlines in recent months and days, it seems the tech workforce is in constant turmoil. Employees continue to leave their jobs due to burnout and job dissatisfaction. Managers strive to recruit essential tech talent, but when their teams are finally complete, the constant increase in salary demands in technology weighs on budgets and can lead to layoffs.
This type of constant disruption is incompatible with innovation. Gartner analysts have predicted that by 2025, workforce volatility will result in significant business losses for 40% of companies, forcing talent strategy to shift from acquisition to resilience.
In other words, talent retention becomes as important as profit margins or customer loyalty on the balance sheet.
The companies we see addressing the talent volatility issue do so by seeking technical talents likely to stay put instead of continually searching for "unicorns." Instead of focusing on technical magic, they look for individuals with the core skills they need and who have an interest in business operations. Employees who will remain with the organization for five years (or more) are likely to generate much more business value than high-flying superstars who might change jobs within 18 months. Recruiting and retaining the right talents also creates a virtuous circle, as top talents want to work for innovative organizations.
In a recent Gartner survey, over 50% of employees stated they want to contribute to meaningful work that fosters change. In 2024 and moving forward, technology leaders will need to hire individuals capable of staying put and contributing to long-term value.
Look for candidates who want to learn how the business operates and have an impact, who show enthusiasm and aptitude for acquiring new skills, and who are resilient and adaptable enough to grow with the organization and evolve their role in response to a changing business environment. Simultaneously, offer a value proposition that encourages retention. Prioritize factors that are important to top talents, including competitive pay, the opportunity to contribute to meaningful work, and job flexibility.
Sustainability must be a major technology priority.
As political solutions to climate change remain unclear, the technology industry should play a key role in addressing the global climate crisis. IT has a significant impact on organizations' carbon footprints. The embedded carbon in laptops, cell phones, and the countless other devices used in businesses significantly contributes to their greenhouse gas emissions.
Technologies like the cloud and artificial intelligence (AI) consume colossal amounts of energy, which only increase as these technologies gain more computing power. In fact, Gartner predicts that by 2025, without sustainable practices in AI, it will consume more energy than the human workforce.
Yet, paradoxically, it is the application of these technologies that will enable the identification of sustainable business opportunities and drive corporate sustainability efforts. Sustainable AI practices have emerged, such as using specialized hardware to reduce energy consumption, energy-efficient coding, transfer learning, small data techniques, federated learning, and more. Hyperscale cloud service providers (the ability of a technical architecture to quickly scale to meet significant resource demands) are leading the IT sector in environmental sustainability, managing their facilities with world-class energy efficiency and carbon-neutral operations due to increasing customer demand, public reputation, investor appeal, energy costs, and regulatory policies.
A recent Gartner survey found that 87% of business leaders plan to increase their organization's investment in sustainability over the next two years. The same survey revealed that 86% of business leaders consider sustainability an investment that protects their organization against disruptions. Additionally, 83% stated that sustainability activities have directly created short and long-term value for their organization, and 80% indicated that sustainability has helped their organization optimize and reduce costs.
Investing in sustainability offers a "two-for-one" by supporting responsible consumption while simultaneously benefiting the business. Technology can be the driver of these efforts.
Organizations need a new sustainable technological framework that increases the energy and material efficiency of IT services, promotes business sustainability through technologies such as traceability, analytics, renewable energies, and artificial intelligence, and deploys IT solutions to help clients achieve their own sustainability goals. Managers must lead the charge by championing technology-focused sustainability solutions and practices within their teams.
Cybersecurity is becoming increasingly complex in an ever-evolving business environment.
Cybersecurity has become a top priority for businesses. In a recent Gartner survey, 88% of board members stated they view cybersecurity as a business risk, as opposed to a technological risk, demonstrating that security is part of the business's value chain. Within IT, cybersecurity also remains a major concern; CIOs surveyed by Gartner ranked cybersecurity and information security as their top area for increased investment in 2023, and spending on information security is expected to see a double-digit increase next year.
Yet, even as organizations increase their spending and focus on cybersecurity, the rapid pace of business and the acceleration of digitization mean that mistakes are becoming more likely.
Attack surfaces are expanding as risks associated with the use of cyber-physical systems and IoT, open-source code, cloud applications, complex digital supply chains, social media, and more, complicate the ability to successfully protect the business. And organizations are not well-prepared to manage risks associated with emerging technologies like AI: a Gartner survey found that 41% of organizations have already faced a privacy breach or security incident related to AI. Simultaneously, cyber-threat actors evolve to stay one step ahead. Major breaches have highlighted new and emerging attack techniques, while known threats like Log4j continue to haunt organizations months or even years later.
The key takeaway for technology leaders is that adequate protection cannot be achieved through brute-force spending. Rather than trying to protect against all threats, including those that are new and unknown, businesses must prioritize IT spending that protects business outcomes.
Trying to outpace threat actors without a strategic approach to protection level agreements is a battle that organizations will almost certainly lose.
For managers across various functions, the most important lesson is that security is everyone's problem, not just IT's. Security preparedness is regularly impacted by business decisions unrelated to security, and few organizations recognize when this happens. Cybersecurity is a choice. Organizations must choose their levels of protection and investments to strike a balance between the need for protection and the necessity of running the business. Non-IT executives must understand and accept the responsibility that security is a context and consequence of the decisions they make every day for their teams and the company.
Responsible investment in emerging technologies will pay dividends.
Emerging technologies have always sparked excitement. Last year, the metaverse – or the collection of internet-connected virtual worlds experienced in augmented reality – was placed on a pedestal, touted by tech giants and startups alike as the next major disruptor.
Media speculation and vendor hype plunged businesses into a frenzy of anticipation about this immersive digital utopia, with industry leaders like Mark Zuckerberg, Eric Schmidt, and Satya Nadella promising a complete transformation of digital experiences and unprecedented opportunities for those who get on board.
But... the metaverse doesn't yet exist, at least not in its fully realized form.
In a recent Gartner survey, more than half of the CEOs stated that it was highly unlikely for the metaverse to be a key technology for their business development. Moreover, Gartner's Hype Cycle for Emerging Technologies places the metaverse at an embryonic stage of development, predicting that it will take more than a decade for it to be adopted by the mainstream. The metaverse is not the only one considered a promising yet highly publicized emerging technology: Web3, NFTs, superapps, generative AI, and many other innovations have significant potential implications for business disruption, but all are still in the early stages of development.
This year, we've seen the damage that hype can cause - just look at the recent collapse and subsequent bankruptcy of the cryptocurrency exchange FTX. Collapses like FTX and the stablecoin have shaken an already declining market and eroded market participants' confidence, leaving crypto in a precarious state with an uncertain future.
Yet, the precipice of "hype" doesn't prevent emerging technologies from being valuable investments. During the internet bubble, Pets.com and other similar businesses failed due to flawed business models, but internet commerce eventually thrived. Similarly, despite the hype and business failures, today's emerging technologies continue to advance.
Returning to the metaverse, businesses have successfully developed metaverse-like technologies, such as immersive streaming platforms, VR headsets, and haptic gloves, focusing on targeted use cases. For example, immersive environments have helped police services train in de-escalation techniques and crisis intervention. As the market looks to monetize metaverse public offerings, these internal metaverse-related experiences bring immediate and practical benefits to the business.
These emerging technological applications work because they are targeted, researched, and, most importantly, because they offer better value than the non-digital alternative. It's not just about investing in technology for novelty's sake. These high-value use cases bring new business opportunities and innovations that would not be possible otherwise.
Too many leaders succumb to the fear of missing out (FOMO) when new technological trends emerge and demand that something - anything - using the new technology be implemented immediately.
This leads to wasted investment, missed opportunities, and disillusionment with the new landscape. Emerging technologies are essential and require attention and investment, but leaders must be patient and avoid falling victim to the hype.
Responsible exploration is essential.