In 2008, during the last great recession, many of today’s rising business leaders were graduating from college and starting their careers. Digital was in its infancy and MySpace was the third most visited social media site. The world really looked different!
Fast forward over a decade and those emerging leaders are now tasked with navigating a new reality filled with geopolitical and economic challenges. But something else has also changed: access to data.
To navigate an economic downturn, CEOs must harness the power of data. Most businesses operate in an environment that is somewhat budget constrained, so how can they ensure that they prioritize the most important initiatives? How can they promote projects that contribute to revenue growth?
Instead of guessing or wasting time on trial and error, data and analytics can help chart the path forward. Not only will leaders reduce the pressure on their resource-constrained teams, but they will also chart the course for present and future business goals more accurately than any historical model alone could predict.
For example, large retailers plagued by supply chain slowdowns during Covid-19 were unable to accurately predict 2022 demand because they relied only on historical data. Because their modeling failed to account for changing customer behavior, retailers like Target struggled to move excess inventory, forcing them to rely on early holiday sales to clear shelves ahead of gift-giving season. of 2022.
Business leaders don’t need to collect Moreover data to bring insights into these and similar issues, they just need to analyze what they have, both internal and external data, and put those insights into action. Predictive insights can also give your business a competitive edge. Take, for example, TikTok, whose impressive AI-powered algorithm keeps users in the app for hours on end, or Netflix, whose recommendations have created a unique sense of virality for the most streamed shows. Strong insights about your customers make your product or service stickier.
Tap into data to effectively prioritize capital expenditures
When everything seems to be a top priority, choosing which initiatives to double down on can take as much time as actually executing them. To accelerate the process, use insights from data to determine which initiatives are driving and will continue to drive revenue growth. Focus on spends that improve time to market, build partnerships and improve CX. The data will tell you what to put on the back burner.
Data is everywhere; however, a large amount of data generated daily often goes unnoticed, unanalysed, and unused. Untapped data assets, especially proprietary customer data, can be used immediately to make some of these mission-critical decisions. Additionally, the data will enable teams to uncover a single truth, without debate: Projects and expenses with the least impact on revenue can be deferred. Every leader in the c-suite has a role to play in deploying capital efficiently. Here are some specific areas of the company where the CEO can align with other leaders on ways to use data to make decision making seamless:
• Purchasing and inventory management: The biggest obstacle to streamlined procurement is the regularity with which disparate channels are used to record data and manage processes. CPOs need to move beyond Excel spreadsheets and invest in tools that add a layer of connection to their workflow. Such tools, like Focal Point procurement software, use your data to unearth seven-figure savings opportunities that are much harder to spot without procurement unification.
• Marketing and advertising: Historically, marketing and advertising spend has only been allocated based on the performance of previous campaigns. But as customer behavior changes, data analyzing the entire customer journey becomes critical to predicting product demand and anticipating changing preferences. Predictive models built with data from multiple marketing channels and sources (social, SEO, promotions, shipping, etc.) provide more accurate insights to create effective media mix modeling (MMM) and customer acquisition strategies.
• Technological investments: Keeping shadow IT in check is becoming a top priority for CTOs and their teams. To reduce unnecessary spending, they should be conservative about what’s in their technology stack because SaaS tools are often underutilized. As leaders prepare for 2023, they should limit SaaS renewals to only those that don’t overlap with existing tools and are critical to advancing business goals. Pay close attention to SaaS dashboards to gather as much data as possible and move marginal operational improvements to times when cash flow isn’t an issue.
Democratize data to solve problems
One exercise to help leaders use data effectively is to first identify and define a key problem. Once a problem is highlighted, teams can brainstorm possible solutions given the available resources. They should be encouraged to ask open questions and think unconventionally. This will likely lead them to a dataset not previously considered valuable, providing a clear lead. How will that data prevent future missteps?
As the push for more data democratization is in our near future, all levels should be educated and encouraged to use data on a regular basis. Organizations that can train their employees to maximize the value of first-party data will now be well positioned to step forward as data privacy regulation and governance tightens. As these measures take shape, teams should consider other ways to gather essential data, whether through surveys, focus groups, or other methods.
The future is digital and data will continue to be key
While companies of all sizes are critical of their spending and face tough decisions about which initiatives to pursue, there are two important factors leaders should not overlook as they continue to course-correct.
First, even when budgets must be carefully allocated, leaders should not abandon forward-thinking technology. Decentralization, cryptocurrencies, the Web3 and the metaverse will eventually be integrated into corporate culture, granted, maybe not the way it looks today, but certainly the foundational technologies will come into play sooner rather than later.
In the metaverse, more and more individual interactions will move online, between humans (such as consumers, employees, patients, citizens, service providers, government agencies, and intermediaries) and machines or processes. These digital interactions generate a wealth of granular and nuanced data that will enrich decision-making from IT to marketing teams.
Second, leaders should continue to keep an eye on customer sentiment, letting it, above all else, drive project prioritization. If you listen, your customers and clients will give you insight into when is the right time to make a change. Additionally, your clients (especially in highly recession-hit industries like BFSI) will come to you for guidance with strong messaging and consistent communication. Dig deeper into data to meet the unique needs of your customers, and be open to responding as those needs evolve.
New leaders’ approaches to navigating through an economic downturn will vary, but it will be made easier as they rely on all available data to figure out what to prioritize. Today, guessing what the right decision should be is simply frivolous. The priority should be learning how to use the available data to know with relative certainty which initiatives will help weather the recessionary storm.