Leaders should leverage technology to turn crisis into opportunity
3-Steps to pivot and address crisis imperatives while investing in technology to accelerate recovery and growth post-crisis
Introduction
When Winston Churchill was working to form the United Nations after World War II, he famously said, “Never let a good crisis go to waste”. As history bears witness, the creation of this international organization out of the crisis of WWII, has been instrumental for the past 75 years in maintaining international peace and security, developing friendly relations among nations and promoting social progress, better living standards and human rights.
Today we face another unprecedented crisis in the form of COVID-19 pandemic that has upended nearly every aspect of personal life, claimed thousands of human lives, destroyed jobs, wiped out companies and negatively impacted markets all around the world. It is becoming clearer with each passing day that we are also in the middle of a global recession, maybe even a longer-term depression, while experts provide an ever changing alphabet soup of recovery pattern predictions.
In these circumstances, it is no surprise that companies are reducing expenditure and deprioritizing investments to concentrate on shoring up their core business, conserving cash and minimizing risk while waiting and watching to see how things evolve.
However, in a time of crisis, leaders need to focus on the immediate survival needs of the business short-term while also taking actions to ensure the business can thrive and grow once the recovery happens. To strike the right balance between changing customer expectations, urgent survival needs, new opportunities, innovation and building a foundation for the future, leaders should follow a hierarchy of needs approach to determine where the investment and effort should be focused during these tough times.
This article introduces a ‘needs-based’ framework and strategy canvas that leaders can leverage for building, refining and pivoting their digital transformation plans to address both ‘crisis imperatives’ arising from the current situation and also ‘fundamental shifts’ that will create opportunities for growth and recovery post-crisis.
All needs are not created equal
In 1943, Abraham Maslov proposed the hierarchy of needs theory in a psychology paper titled “A Theory of Human Motivation”. Maslow’s classification hierarchy states that human needs operate in a hierarchy of levels and lower levels in the hierarchy must be addressed first before moving onto higher pursuits in the upper layers.
Maslov’s hierarchy is often portrayed in the shape of a pyramid with the more basic needs as the lower three layers (Survival, Safety and Relationship) and higher order growth needs (Esteem and Actualization) as the top two layers.
All organizations, regardless of whether they create products or services, have a hierarchy of needs that is similar in nature to Maslov’s theory. Basic needs have to be addressed for normal functioning, smooth operation and survival of the enterprise. When these needs have been addressed, then higher order needs such as diversification, innovation and brand building can be pursued for organization’s advancement and growth.
Organizations move up and down different levels of the hierarchy depending on how they are doing with market share, business operations, economic conditions, trends in customer demand, threat from competition and product / service lifecycle.
Most successful and resilient organizations build business moats around lower levels in the hierarchy through competitive advantages (network effect, cost, intellectual property, regulatory barriers, brand, etc.) that secures their basic needs and thus allows them to work on growth needs, strategic differentiation and develop brand capital.
In times of crisis, it is important to ensure that technology investment is preserved in the lower three ‘basic levels’ to increase the odds of survival and mitigate threats that may arise from changes in market conditions as well as the evolution of the competitive and regulatory landscape.
However, a crisis also creates opportunities and changing customer expectations mean that investments also need to be made in the two upper ‘growth levels’ to adapt the business to new market dynamics. This can take shape as new partners, ecosystems, digital and direct sales models, new products / services and adaptation to customer behaviour shifts. Targeted investments here will create capabilities and assets that can provide an organization with asymmetric advantage once the crisis is over.
Technology investment is critical for both basic and growth needs of the organization
As organizations look at business transformation efforts, to either weather tough times or to build capabilities for growth post-crisis, it is quite evident that technology has a prominent role to play across all levels in the organization’s hierarchy of needs.
It is therefore important to segment technology enablers by the organizational hierarchy of needs. This segmentation provides a framework for prioritizing effort and investment, especially in a business climate where leaders are confronted with constrained capital and resources.
Level 1: Operational Technology & Infrastructure
Technology and infrastructure that are essential for business functioning and the delivery of core products / services. This segment includes systems that support manufacturing automation, quality assurance, e-commerce, order management, fulfillment, logistics, distribution, payment processing and all the infrastructure required for mission critical business operations such as networking, communications, robotics/automation, digital services, etc.
Level 2: Enterprise, Facility & Employee Platforms
Applications and platforms that enable consistent operations, safety and structure for employees and business. This segment includes critical back-office systems that support facility management, security, health & safety, human resources, procurement, finance, etc.
Level 3: Customer & Partner Platforms
Digital customer and partner engagement platforms that enable relationship building, multi-channel touchpoints and intimacy with customers and partners. This segment includes systems for customer relationship management, multi-channel marketing, sales, customer experience, etc.
Level 4: Research, Development & Product / Service Innovation
R&D platforms that enable strategic differentiation through core product / service innovation, lifecycle management of existing offerings and the development, commercialization and market launch of new products / services. This segment includes support of core product R&D, external collaborations, digital innovation labs, market testing/trial, commercialization, etc.
Level 5: Social Innovation & Sustainability Platforms
Experimentation and exploration of innovation that can provide solutions for broad issues and potentially have a massive impact on the environment and society. This segment includes platforms and technology support for basic research, social innovation, academic collaborations, sustainability, etc.
Develop a ‘needs-based’ technology strategy
Unless an organization has been operating on a remote island and cut off from the rest of the world for the last few decades, it is quite likely that there are technology initiatives already underway, including plans for digital transformation and technology modernization.
As we all go through these uncertain times and organizations struggle with a tough business climate, it becomes imperative to evaluate the relevance of existing digital technology plans against the urgent needs and fundamental shifts that the organization faces.
Having clarity on where the investment should flow across your digital technology portfolio will be of strategic importance in the coming 12 months.
For developing this clarity, business leaders can use the following 3-step process to create a technology strategy and action plan that is directly rooted in the organization’s hierarchy of needs.
Step 1. Identify CRISIS IMPERATIVES and FUNDAMENTAL SHIFTS
Identification of crisis imperatives and fundamental shifts emerging from the current situation will have nuances depending on the industry and whether core products / services are digital or physical. The key objective of this step is to define “What you need to do” as a strategic response to the crisis.
Some examples here include: retail stores ramping up e-commerce, grocery stores offering click and collect, corporate offices moving to remote working, healthcare providers offering telehealth, sales teams moving from in-person to digital, manufacturers accelerating robotics and automation of the shop-floor, workplace software prioritizing video and collaboration, telecommunication providers adding additional network capacity, etc.
Step 2. Identify CURRENT TECHNOLOGY, PLATFORMS & INITIATIVES
For the action plan and strategy to be grounded in reality, it also has to take into account industry digital maturity and the organization’s current state of technology adoption and infrastructure. The key objective of this step is to capture “What you are doing” already for digital transformation.
Step 3. Identify the REQUIRED PIVOTS and ACTION PLAN
Once the crisis imperatives and fundamental shifts have been identified, leaders need to take a hard look at current digital transformation plans and reconcile them with the organization’s hierarchy of needs. The key objective of this step is to identify what initiatives need to START / STOP / CHANGE / CONTINUE so they can be mapped into an action plan that will guide the priorities for technology investment over the next 2 years.
The Strategy Canvas
The strategy canvas below combines these three steps into a single tool that can be used to document an organization’s critical needs with a clear action plan to address them through investments in technology.
Final Thoughts
We are at a truly unprecedented time in history where on one hand technology advancement is providing massive disruption and growth opportunities for business enterprises, but at the same time we are also faced with the twin crises of pandemic and recession.
During this time, the natural response for most organizations, as in our personal lives, is to retreat into safety and security. This is indeed essential to weather this difficult period and cannot be ignored as a genuine organizational need. However, this crisis is also an opportunity to be strategic about investing in technology and build capabilities that will help your organization bounce back stronger when the crisis does end in the near future.
Leveraging a hierarchy of needs approach and the strategy canvas introduced in the previous section, leaders should take a critical look at their technology investments and digital project portfolios. In times of crisis, applying this segmentation lens is absolutely critical so that smart choices can be made in deploying limited resources towards the most impactful initiatives.
Making these crucial choices right now will allow the business to address urgent needs, meet shifting customer expectations and capitalize on opportunities being created by a changing landscape in the short-term, while balancing with strategic investments in digital technology and creating capabilities that will drive growth and differentiation for the next 3–5 years.
For any questions regarding the application of this framework or building a strategy canvas for different B2B and B2C organizations, please contact me directly.
Email: nemathur@gmail.com
LinkedIn: http://linkedin.com/in/neeraj-mathur
