Thriving in a Challenging Economy
Inflation is high, markets are volatile, the supply-chain is brittle. Regardless whether 2023 ushers in a recession, it already feels that way to some, and many businesses are contemplating strategic and operational adjustments. Based on the conversations we are having, corporate marketing spend is being scrutinized, and the best case for most budgets is a modest increase.
The instinct may be to pull back, but as Harvard Business Review noted in 2020, companies that have bounced back most strongly from previous recessions typically maintained, or even upped, their marketing budgets. After all, CMOs and other market-facing executives still have growth targets, even if the economy isn’t cooperating. So: hunker down – or double down?
Q: You speak daily with the C-suite, heads of digital, VPs of sales. How do they plan to weather the next six to twelve months?
Al: One word: focus. Review your organization, understand what is driving growth and what isn’t. Prioritize your resources. Look at programs that aren’t working and consider whether that time and money could be put to better use. Good companies do this regularly. Last week Amazon announced it is reviewing the Alexa business unit. I don’t think Amazon is going to “fire” Alexa, but it does show they’re serious about reconfirming their focus.
However, I take issue with your question: CMOs we speak with don’t want to “weather” the storm. They want to thrive, not just survive.
Eric: I second that, Al. Times like these might cause organizations to slow or cancel innovation programs. But rather than cut across the board, growth-oriented leaders use economic turbulence as a stress test to figure out which products, programs and partners are the core, profit-driving focus.
Q: So, should businesses be consolidating?
Al: Absolutely – if they need to. A global financial services firm we work with has multiple separate UX teams at work on its website. Two separate UX component toolkits, analytics packages, campaign management platforms. That’s never workable. In a down economy, when CMOs need the most bang for every buck, there’s no justifying the redundancy.
They also have vendor partnerships and initiatives supporting these toolkits that were set up in a different economic climate; they are reevaluating them in the context of today.
Q: How did they get into that situation?
Eric: Some companies invested heavily in technology that isn’t being used optimally – specifically, big digital platforms with big support teams. A lot of investment went into them, but it’s becoming obvious that it’s a heavy load to carry.
We are advising our clients to look at new MarTech options that take advantage of modern, lightweight, lower-cost technologies that deliver better, more flexible capabilities than the status quo monolithic platforms. Plus, these organizations will be happier using technologies that are much more aligned to how they work. Of course, making these platform decisions requires cross-functional governance and collaboration among finance, marketing and IT, but we believe this is where the market is headed.
Q: These new, lightweight solutions – you mean headless CMS and decoupled tech – those are an investment, right?
Eric: Correct. Transitioning to decoupled costs money, but you get the return faster. In the mid-to-long run, it costs a lot less than the enterprise software licenses and specialized skills needed for the monolithic systems. Decoupled provides the advantages CMOs want: Getting to market faster. Being agile and able to pivot on a dime. And having a generalized toolkit, a library of reusable components.
Al: The regulated businesses we work with want to move fast but can’t break things. So, that’s another reason for moving to decoupled: It retains the value you’ve invested in your legacy platforms but lets you get product into the market faster, cheaper and with less drama.
Q: How about the people part of the equation. There’s suddenly a lot more talent on the market, isn’t there.
Al: Yes, there is. Some of Silicon Valley’s most in-demand engineers are now available. So, leadership can be more aggressive about making sure they have the right skills and best people in their organizations. And I guess we all figured out that having remote or hybrid-remote teams pretty much works. There is more flexibility to hire talent in lower-cost geographies.
Eric: All our clients are veterans of the “war for talent.” Right now, traditional industry employers may be able to land top-caliber developers. Businesses should adapt their talent strategies and bring these workers on staff or hire them as long-term consultants.
Q: We’re at the end of our interview and you haven’t mentioned managing the business like a product.
Al: We were saving it for the big finish. [Entry Link: Managing your business as a product-led organization] – literally, with product managers outside the usual marketing or IT chain of command – means the business can focus on what customers and the marketplace are telling you they want from the product. Even if the “product” is simply your company website, the product approach ensures marketing and IT are aligned on priorities, roadmap, timelines.
Eric: Product-led organizations can get beyond inter-silo misalignment and focus on the core priorities. And the businesses that do that will be the most resilient in the face of turbulence and will be the winners coming out of this economic period.